Global Forex Market
THE US dollar declined 0.79% to 93.06 for the week owing to slightly dovish Federal Open Market Committee minutes amid concerns on low inflation as policy-makers grew cautious of another rate hike this year.
The greenback was also weighed down by doubts surrounding the Republican tax plan following a spat between Sen Bob Corker and President Donald Trump.
Meanwhile, August’s Job Openings and Labour Turnover Survey showed job openings falling to 6.082 million (vs expected 6.125 million) while losses pared as September PPI went up 0.4% m/m (vs. consensus of 0.2% m/m) and initial jobless claims slipped to a 6-week low of 243K in week ending Oct 7 (vs expected 251K), returning to levels prior to Hurricanes Harvey and Irma.
Brent crude oil gained 1.13% to US$56.25/barrel largely on a supply factor supported by a rebound in crude oil price after Hurricane Nate caused production disruption in the Gulf of Mexico. In addition, crude oil price continued to rally after Saudi announced its drastic plan to trim oil exports by 560K bpd in November.
The euro appreciated by 0.85% to 1.183 against the dollar as Catalonia fears subsided after Puigdemont proposed a deferred independence to cater for talks with Madrid. The currency was also supported by better-than-expected data in Germany as August industrial production jumped 2.6% m/m, its highest in six years while the trade surplus increased to 21.6bil.
Meanwhile, EU industrial production rose 3.8% y/y (vs consensus of 2.5%) in August. However, the currency pared gains after ECB’s Draghi pledged to keep rates low well past QE.
The pound rallied by 1.50% to 1.326 as positive data fuelled expectations of an earlier-than-expected BoE rate hike and reports cited that EU’s Barnier may offer the UK a 2-year Brexit transition period. The sterling was also supported by British PM Theresa May hinting at cabinet reshuffle. The ONS corrected 2Q unit labour costs to 2.4% instead of earlier reported 1.6% while the August construction output and industrial production reported better-than-expected results of 3.5% y/y (vs. +0.2%) and 1.6% y/y (vs. +0.8%) respectively.
Meanwhile, August UK trade deficit widened to its largest in 11 months to £5.63bil (way above expected £2.8bil gap).
The yen pared losses this week, strengthening by 0.34% to 112.27 having benefitted from the geopolitical tension between the US and North Korea. Further supporting the yen’s recovery was the growing likelihood of the ruling coalition of Liberal Democratic Party (LDP) and Komeito to secure a 233-seat majority in the Lower House election on Oct 22.
All Asia-ex Japan currencies appreciated against the greenback except the rupiah, Hong Kong dollar and Philippine peso. The Korean won was the strongest Asian currency by 1.30% due to strong inflows into the KOSPI which advanced by 1.68% on expectations of robust third quarter earnings.
The peso was the worst performer this week, depreciating by 0.74% as August trade deficit widened to US$2.41bil.
The ringgit gained 0.31% to 4.2238 against the dollar supported by positive economic data as we noticed both August trade surplus and industrial production grew strongly at RM9.9bil and 6.8% y/y respectively, compared to the month prior. However, the FBM KLCI lost traction before ending to a three-month low at 1,754.