Key overnight events:
- Initial jobless claims for last week came in at 274,000, higher than the 260,000 expected. US nonfarm payrolls for April are expected to come in tonight at 200,000, lower than the 215,000-increase in March. Odds of the Fed hiking in June linger around 10%, according to Fed Funds futures data, even after two US policy makers signalled next month’s meeting was in play.
- The S&P 500 Index ended up largely unchanged, falling less than 0.1%, as investors awaited tonight’s jobs report for clues on strength of the world’s largest economy. The Bloomberg Spot Dollar Index lingered at a three-day high, after reaching its lowest level on Tuesday in almost a year.
- Crude oil futures expiring in June climbed for a second day, settling 1.2% higher at $44.74/bbl after rising as much as 5.2% earlier in the session on news that wildfires in Canada may affect more than 1 million bpd of capacity. In addition, data showed US oil production dropped 113,000 bpd to 8.8 million last week, the lowest level since Sep 2014.
- The Fed’s James Bullard reiterated June’s meeting is a live one and that the committee is keeping its options open. His colleague, John Williams, commented that two to three hikes this year would be reasonable.
- Japan Prime Minister Abe said he’s ready to respond to “excessive” FX volatility; the yen has actually weakened 0.7% against the dollar this week.
- In its quarterly statement released earlier today, the RBA forecast core inflation is unlikely to reach the bottom of its target this year and will probably do so in the ensuing two years. Underlying inflation was revised lower and is expected to be 1-2% in 2016, down from the 2-3% it forecast in February. No guidance on interest-rate outlook was provided. Australian 3-year yields reached a record low of 1.567% following the news.
- Spot 1.3595
- USDSGD edged past the 1.3600 handle this morning, climbing 0.1% to a session-high of 1.3612.
- The 50-day moving average lies another 0.1% higher at 1.3624. The 1.3738 level would provide more significant resistance.
- Spot 0.7397
- In reaction to RBA’s statement earlier today, AUDUSD plunged as much as 1.1% to 0.7394.
- The currency pair has fallen 5.3% in two weeks. It remains to be seen if the support at 0.7385 can hold.
- Deputy Governor Philip Lowe is set to replace existing RBA Governor Glenn Stevens when his term ends in September this year.
- Spot 1.2875
- USDCAD has advanced for three straight days and is currently looking to extend its winning streak to four as it climbed further by as much as 0.3% higher today to 1.2881.
- The currency pair is currently in a key resistance area – 1.2850 to 1.2900.
- Canadian jobs report for April will be released tonight; 1,000 jobs were expected to have been added last month, while unemployment rate is expected to tick 0.1% higher to 7.2%.
- Spot 6.5171
- The PBOC set its reference rate weaker for the third day, lowering it by 0.11% to 6.5202 against the US dollar. Fixing has been lowered by 0.95% this week, the most in a week since 10th Jan.
- USDCNH remained largely unchanged; the currency pair climbed 0.1% to its session high of 6.5235, before paring gains back to the previous day’s close of 6.5187.
- Spot 8.1872
- USDNOK climbed to a week-high of 8.1873, capping a three-day advance of 1.9%.
- Citibank predicts that Norges Bank’s policy statement next week will keep a 2H cut on the table, as signalled in March.