Global Forex Market

AMIDST a short working week in the United States due to Independence Day on July 3, the dollar weakened by 0.12% to 97.32 on upbeat economic and jobs data release which helped sharpen risk appetite. Data release for the week includes: (1) June unemployment rate easing to 11.1% from 13.3% in May (cons: 12.3%); (2) non-farm payroll adding 4.8 million jobs in June from 3.2 million in May (cons: 2.9m); (3) June participation rate up at 61.5% from 60.8% in May; and (4) ISM Manufacturing PMI shooting up to 52.6 in June from 43.1 in May (cons: 49.5).

However, the losses were capped due to spikes in coronavirus infections which threatened to once again put the brakes on economic activity.

Brent crude oil price surged 5.17% to US$43.14 per barrel supported by: (1) a drawdown of stockpiles by 7.2 million barrels for the week ending June 26, versus inventories build-up of around 1.4 million in the previous week (cons: -0.7 million); and (2) positive global manufacturing data.

The euro rose 0.18% to 1.124, boosted by buoyant economic data i.e. (1) June’s economic sentiment data that shot up to 75.7 from 67.5 in May (cons: 80.0); (2) faster June EU preliminary headline inflation, up 0.3% year-onyear (yoy) from 0.1% yoy in May (cons: 0.1%); (3) Markit Manufacturing PMI that climbed to 47.4 in June from 39.4 in May (cons: 46.9); and (4) May’s factory-gate inflation picking up to -0.6% m/m from April’s -2% m/m (cons: -0.5% m/m).

The pound appreciated 1.07% to 1.247 against the dollar, partly due to less bearish comments from Boe’s Haldene who brings positive news on demand which has more than counterbalanced the rise in downside risks to employment and data in which the Markit/cips Manufacturing PMI for June rose to 50.1 from 40.7 in May (cons: 50.1).

The Japanese yen fell 0.26% at 107.5 due to weaker economic data release i.e.: (1) May unemployment rate jumped higher to 2.9% from 2.6% in April (cons: 2.8%); and (2) May preliminary industrial production at -25.9% yoy from -15%. yoy in April (cons: -11.3%).

The majority of the Asia ex-japan (AXJ) currencies strengthened against the dollar. The Indian rupee led the race, rising 0.83% to 75.01, followed by the Philippine peso that eged up 0.36% to 49.75. In contrast, the Indonesian rupiah weakened 1.11% to 14,378 weighed by the rising bets of a rate cut after inflation came in below the central bank’s target range. Locally, the ringgit appreciated 0.10% to 4.286 against the dollar. Rather an eventful week, the economy saw: (1) foreign trade returns to surplus at Rm10.4bil in May from Rm3.6bil of deficit in April, while exports contracted 25.5% yoy from -23.9% yoy and imports slumped 30.4% yoy from -8% yoy; (2) May’s producer price index dipped 5.5% yoy in May from -5.1% yoy in April; while (3) June’s Manufacturing

PMI rebounded to 51.0 from 45.6 in May.