Global Forex Mar­ket

The Star Malaysia - StarBiz - - Treasury Pulse -

THE dol­lar ended the week ap­pre­ci­at­ing by 0.82% to 92.11 sup­ported by tax re­form talk from Trump’s ad­min­is­tra­tion and stronger eco­nomic data.

Both in­fla­tion and core in­fla­tion ex­ceeded ex­pec­ta­tions at 0.4% mon­thon-month (m-o-m) and 1.7% year-onyear (y-o-y) re­spec­tively, caus­ing in­creased ex­pec­ta­tions of an­other rate hike in 2017. US JOLTs job open­ing rose to a record high of 6.17 mil­lion in July while ini­tial job­less claims fell un­ex­pect­edly to 284,000.

The dol­lar man­aged to pare losses for the week from the stronger pound post-BoE meet­ing and re­newed geopo­lit­i­cal ten­sions sur­round­ing North Korea which threat­ened both Ja­pan and the US.

Brent crude oil con­tin­ued its bullish bias ris­ing 2.73% to 55.25, its high­est close since April as hur­ri­cane con­cerns eased and US re­finer­ies were ex­pected to re­sume op­er­a­tions.

De­spite Irma, the EIA’s weekly re­port showed an in­crease in crude oil in­ven­to­ries by 5.89 mil­lion bar­rels. Ad­di­tion­ally, both Opec sup­plies and the over­all global oil sup­ply are nar­row­ing while stronger-than-ex­pected de­mand growth con­tin­ues par­tic­u­larly in Europe and the US, putting an up­ward pres­sure on oil prices.

The euro fell by 1.06% to 1.191 against the green­back de­spite in­dus­trial pro­duc­tion ris­ing 0.1% m-o-m in July, up from a de­crease of 0.6% in June.

Year-on-year in­dus­trial out­put rose less than an­tic­i­pated by 3.2% while trade sur­plus fell 8% y-o-y to 26.6 bil­lion in June as im­ports rose faster than ex­ports.

De­spite ECB vice-president Con­stan­cio’s stance that the cen­tral bank’s un­con­ven­tional mone­tary pol­icy will be main­tained, con­sen­sus was build­ing around a near­ing re­duc­tion in mone­tary stim­u­lus by the ECB as the euro zone grows.

The pound ap­pre­ci­ated 1.45% to 1.3391, reach­ing a one-year high af­ter the BoE kept rates un­changed and hinted that a rate hike is on the cards in the com­ing months amid ac­cel­er­at­ing in­fla­tion.

UK in­fla­tion rose 2.9% y-o-y in Au­gust, hit­ting its joint high­est in more than five years while unem­ploy­ment de­clined to its low­est since 1975 at 4.3%.

Mean­while, Brexit ne­go­ti­a­tions pro­gressed as the EU re­peal bill won first Com­mons vote. De­spite wage growth fall­ing be­low ex­pec­ta­tions, the ster­ling ended the week on a higher note.

The yen weak­ened against the green­back by 2.17% as North Korea ten­sions re-emerged af­ter it fired a mis­sile over Ja­pan. Mean­while, Ja­pan pro­ducer price in­dex rose to 2.9% y-o-y in Au­gust, com­pared to 2.6% in July while in­dus­trial pro­duc­tion rose in line with ex­pec­ta­tion to 4.7% y-o-y in July.

All Asia-ex Ja­pan cur­ren­cies de­pre­ci­ated against the green­back ex­cept the baht and Hong Kong dol­lar. The Philip­pine peso de­clined by 0.80% as unem­ploy­ment rate rose 5.6% q-o-q in 3Q2017 and in­dus­trial pro­duc­tion fell 2% y-o-y in July de­spite trade deficit nar­row­ing to its smallest gap since Fe­bru­ary 2016.

In China, the yuan slid by 0.9% af­ter its cen­tral bank re­laxed cur­rency controls. Both in­dus­trial pro­duc­tion and retail sales rose be­low ex­pec­ta­tions at 6% y-o-y and 10.1% y-o-y re­spec­tively. Mean­while, the won fell 0.62% af­ter North Korea’s mis­sile launch and as unem­ploy­ment rose above ex­pec­ta­tions to 3.8% in Au­gust.

The ring­git weak­ened slightly by 0.04% de­spite strong eco­nomic data as in­dus­trial pro­duc­tion grew by 6.1%y-o-y in July, above ex­pec­ta­tions of 5.3% while retail sales reached an all-time high at 14.1% y-o-y fol­low­ing a 13.9% gain in June.

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