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US futures drop, Singapore eases monetary policy

US futures drop, Singapore eases monetary policy

Asian markets posit to start the week with a downbeat tone, with US futures falling 2% at market open and crude oil prices plummeting over 5%.

This suggests again that the false rally in a super bear market won't last for too long as investors continue to evaluate deteriorating economic conditions and an escalating pandemic situation.

WTI crude oil price has likely broken down a key support level at US$ 21.7 (200% Fibonacci downward extension) and gapped down at US$ 20.4 this morning. Technically, this might open room for more downside towards the US$ 18-19. Global energy demand is drastically falling in a time when major producers namely OPEC+, Russia and North America show no signs of cutting back production yet. As the price war continues, smaller and more vulnerable energy companies may not be able to sustain this for long and thus drilling activities will naturally fall, countering the effect of lower demand.

Singapore's central bank, the Monetary Authority of Singapore, has unexpectedly announced an easing monetary policy by adjusting the slope of its currency band S$NEER curve to zero, allowing the Singapore Dollar to stop appreciating against a basket of its trading partner currencies. This measure is very much needed as the city-state is facing its biggest economic crisis since independence.

Singapore's STI opened 2.5% lower and erased some of last week's gain. The market could turn bearish or range-bound this week as global sentiment has likely turned bearish again.

This week a string of economic data will reveal the initial impact of the Covid-19 pandemic to the global economy. Key data to watch include:

Monday: European consumer confidence (Previous -6.6, Expectation -11.6)

Tuesday: Japan Industrial output (Previous 0.8%, Expectation 0.1%), China NBS PMI (Previous 35.7, Expectation 45), US consumer confidence (Previous 130.7, Expectation 112)

Wednesday: Eurozone PMI, US ADP private payroll report (Previous 183k, Expectation -154k), DOE Crude oil report

Thursday: US unemployment claims (Previous 3.28 mil, Expectation 3.0 mil)

Friday: Australia Retail Sales (Previous -0.3%, Expectation 0.4%), US Non-farm payroll (Previous 273k, Expectation -100k)

Crude Oil West Texas - Cash

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