Global Forex Mar­ket

The Star Malaysia - StarBiz - - Treasury Pulse -

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.

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