Global Forex Market

The US Dollar Index experienced increasing selling pressure this week, erasing gains made earlier in the week to close at 101.00 amid the Fed’s less hawkish FOMC minutes and US Treasury Secretary Steve Mnuchin’s failure to unveil further details on the ”phenomenal” tax reform promised by President Trump. The S&P 500 climbed by 0.5% with funds flowing into all sectors except for consumer discretionary, energy and industrials on the back of higher crude oil prices which boosted investors’ appetite for riskier assets. On the macro front, initial jobless claims climbed to 244,000 from 238,000 in the week ending Feb 18. The Markit Composite Index flash estimate dropped in February to 54.3 from 55.8 in January, showing growth albeit at a slower pace

Brent crude oil averaged at US$56.31 due to smaller-than-expected gain in crude oil supplies as the impact of Opec output cuts is finally realised.

The euro depreciated against the US dollar by 0.3% amid continued political concerns surrounding the French election. The Euro Stoxx 50 climbed by 0.8% this week amid the weaker euro. Inflation in the euro area accelerated to 1.8% y/y in January 2017, the highest reading since September 2013 while according to its flash estimate, the Markit Manufacturing PMI rose to 56 in February from 54.4 in January.

The pound strengthened against the US dollar by 1.1% this week amid the weaker dollar causing the FTSE 100 to drop by 0.4%.

The yen appreciated by 0.1% against the weaker US dollar. During the week, the Nikkei Japan Flash Manufacturing PMI rose to 53.5 in February from 52.7 in January while the trade balance in January declined by 1086.9 billion yen after posting a surplus for four consecutive months due to stronger import growth compared to export growth.

All Asia-ex Japan currencies appreciated against the US dollar, except the Philippine peso. In Thailand, the economy eased for the second consecutive quarter to 3% y/y. Meanwhile, headline inflation in Singapore rose at its fastest pace in over two years to 0.6% y/y in January. The faster uptick in inflation was led by a jump in private transport costs as well as recovery in oil prices which increased the prices of oil-related items including electricity and petrol as well as higher services inflation.

The ringgit was the third-best performing Asian currency after the won and the Singapore dollar. The ringgit gained 0.2% against the greenback as Federal Reserve minutes failed to change market expectations for a US interest rate hike in March. Besides, the local currency was also lifted after global oil prices increased on a declining supply. In January, headline inflation accelerated to its highest reading in almost a year at 3.2% y/y. Both food and nonfood inflation gained as higher fuel prices translated to an increase in transport fares.