FX Insights

With market sentiment having turned decidedly 'risk-on' on Friday, US equities rallied. US Treasuries continued their decline, finding mixed support from stronger than expected existing home sales data and a pullback seen from the Conference Board leading economic indicators release. Oil prices soared nearly 9 percent as a cold snap boosted demand for heating oil and investors took advantage of the lowest prices since 2003 to close out some of their more profitable bets on price declines.

    The January FOMC meeting headlines a crowded economic events calendar this week. The consensus (including us) is for no rate hike announcement out from the Fed. The January FOMC is without any updated Summary of Economic Projections or scheduled press conference by Janet Yellen (decision due on 28 January, 3am Singapore time) and that probably reinforced the expectations for the Fed to stay on pause especially with the current state of the US and global financial markets and more importantly, the weakness and volatility in oil prices. Other data releases over the week will include consumer confidence and S&P Case-Shiller house prices on Tuesday, new home sales on Wednesday, and then both durable goods orders and pending home sales on Thursday. Also, around 134 firms listed on the S&P500 will be releasing earnings across the week.