According to analysts, releasing oil from the US Strategic Petroleum Reserve (SPR) would not aid the delayed global supply response that only higher oil prices can overcome. And prices are expected to rise much further. If such a release is verified and succeeds to keep oil prices low, it would generate clear upside risks to our projection.

In Asia, major FX rates were relatively calm with the USD showing some strength against the yen, euro, pound, pound sterling. Some of the moves were minimal, while others were merely minor. EUR/USD, for example, is about 15 points lower than it was in late US time. 

The Canadian dollar remained relatively stable, and oil prices rose, which aided. NZD/USD remained likewise stable. The Reserve Bank of New Zealand’s monetary policy meeting is scheduled for next week, on Wednesday, April 24th. A 25bp rate rise is expected. Although I would argue that 50bps is not on the agenda, it would be disingenuous of me not to remark that market pricing is not dismissive of the possibility. Next week, we’ll have more to say on the RBNZ.

In Japan, Prime Minister Kishida unveiled the new stimulus package. Which includes around half a trillion USD in additional fiscal expenditure. According to sources, the Chinese government is looking at methods to reduce taxes and fees by 500 billion yuan. The US Congress considered Biden’s Build Back Better initiative.

The AUD/USD is expected to reach 0.7500 before the end of the year.

Commodity price support appears unstable in the short term. With China’s steel production falling and the possibility that iron ore’s four-month slump continues. 

Near-term potential for a test of 0.7220, but this could be appealing for longs looking for a recovery to 0.75+ by year’s end as Australia’s domestic recovery roars. 

Moody’s predicts that Chinese property developers will continue to encounter liquidity issues.

• liquidity stress will persist amid tight credit conditions and lower sales; 
• more developers will meet the three red lines requirement as debt growth slows; 
• limited funding access, slowing contracted sales, and weakened controls over project-level cash will dampen cash flow; and 
• refinancing risk for developers, particularly financially weak ones with material near-term debt maturities, will remain high in China.

Meanwhile, Evergrande reports that a unit has resumed work on 63 house construction projects in Guangdong. 

The dollar is holding steady so far today after a modest loss in the previous sessions – more of a push and pull vibe – while stock futures are looking up after Wall Street set new record highs in trade yesterday.