Key overnight events:
- US new home sales rose 16.6% month-on-month, its largest monthly spike in 24 years and reaching its highest level in 8 years, suggesting the economy is strong enough to withstand a Fed hike. The consensus estimate was a 2.4%-increase.
- The S&P 500 Index jumped 1.4%, its biggest advance in 2 months, as bank and technology shares led gainers.
- The Bloomberg Spot Dollar Index added 0.3% as the US dollar gauge enjoyed its highest close since 25th Mar. The sterling jumped 1.8% against the euro and 1.1% versus the dollar as an ORB survey for the Daily Telegraph found older voters, previously found to back leaving the EU, are switching sides.
- WTI futures expiring in July advanced 1.1% to settle at $48.62/bbl, and added a further 1.5% to reach $49.35/bbl earlier today. US government data due for release tonight is expected to show that crude stockpiles fell by 2 million barrels last week.
- According to Fed funds futures pricing on Bloomberg, the odds for a June hike has crept up to 34% from 32%, while the probability that a hike to occur by the end of July rose to 54%. Gold fell for a fifth straight day, as the prospect of higher US rates continue to dampen the precious metal’s appeal.
- Spot 1.3798
- The Singapore economy grew 0.2% quarter-on-quarter, less than the median forecast of 0.6% on Bloomberg, but better than the government’s earlier forecast of no growth. On a year-on-year basis, GDP grew 1.8%; the consensus estimate was 1.9%.
- Services-producing industries contracted 5.9%, worse than the 3.8%-contraction expected, while the manufacturing sector grew 23%, better than the 18.2%-increase forecasted.
- The government maintained its 2016 growth forecast of 1% to 3%. In a separate report, International Enterprise Singapore said non-oil exports will probably decline 3% to 5% this year, compared with a February projection of 0% to 2% expansion.
- Following its advance of 0.2% yesterday where fresh two month-highs were made, USDSGD reversed gains today, falling as much as 0.3% to 1.3793.
- Spot 0.7204
- AUDUSD fell 0.8% yesterday to its lowest levels since early March after RBA Governor Stevens said inflation is “probably a little bit too low” and the picture at the moment is one of slowing growth and lower unemployment, prompting speculation of further rate cuts in the near future.
- The currency pair rebounded as much as 0.6% earlier today following a recovery in iron ore prices overnight, although AUD bears remain in control of the 200-day moving average at 0.7254.
- Spot 1.3107
- USCAD gave up as much as 0.6% to 1.3086 last night following a rebound in oil prices.
- The Bank of Canada will release its May interest rate statement tonight. No change is widely expected although there is a chance the central bank will downplay expectations of stronger economic growth due to the still-undetermined impact of the Alberta wild fires.
- Spot 6.5657
- The PBOC weakened its currency fixing to the lowest since Mar 2011, amid the US dollar’s continued strengthening. Earlier today, USDCNH rose 0.1% to trade just below the 6.5700 handle.
- Early economic indicators for China have indicated possible sluggish growth in May, coinciding with signs that Beijing wants to cap rising debt, even if that acts as a brake on economy, Bloomberg reported.
- Spot 8.3447
- USDNOK slipped 0.4% to a session low of 8.3305, following a recovery in oil prices overnight.
- The currency pair continues to remain capped below its 50-week moving average of 8.3863.