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The
U.S. dollar weakened across the board due to a combination of listless summer
trade, decline in US yields and disappointing corporate earnings results.
Nine of the ten major S&P sectors ended on softer note. Macro flows
however continued to remain upbeat with weekly jobless claims plunged 26,000
to a seasonally adjusted 255,000 - the best number since 1973 - the year
Secretariat won the Triple Crown in horse racing. The report offered the
final glance of the job market before the Fed renders a decision on July 29.
Meanwhile, the Conference Board LEI for the U.S. increased again in June,
with the yield spread and building permits continuing to make large positive
contributions to the index and prices of existing homes sold in the U.S.
vaulted to a record high in June, topping the mark set in 2006, as sales
increased at their strongest pace in more than eight years.
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Euro
rose from lows near 1.084 to highs of 1.099 - tested the upper limits of a
confined range, touching its strongest in more than a week attributed to
profit-taking on the US dollar’s advance and constructive news on the Greek
debt crisis. Bearish sentiment ebbed in news that Greece’s parliament had
approved another strong dose of austerity, the price to win a third bailout of
about €85 billion from its lenders and remain in the Eurozone. Next deadline is
August 20 when Eur3.2 billion must be paid to the European Central Bank (ECB).
Spain, another soft EU nation is also beginning to show sign of improvements.
Japanese
Yen held relatively steady in a tight trading range of 123.5-124.3 given the
lackluster performance on Nikkei and decline in commodity prices over concerns
about ample supply that weighed on trading sentiment. Brent crude fell to
US$54.62 a barrel - the lowest since March.
Asian
currencies ended broadly weaker against US dollar due to selling in local
equities. Top losers were Thai baht that fell 1.35% followed by Korean won of
1.34% and Taiwan dollar of 0.77% against US dollar. Foreigners sold Thai share
for fourth straight days, which drove SET index to close below 1450 – its
lowest level since start of the year. Bank of Thailand is said to closely
monitoring market due to rapid weakening of the currency, which will make it
difficult for the economy to adjust. Korea’s KOSPI extended its losses to below
2041 from start of the week of 2073 due to biggest foreign selling seen in
electronic and motor-related counters.
Ringgit
Malaysia held relatively steady in a tight range of 3.793-3.810 given the
stability in cross SGD/MYR and range bound 1-month volatility. Selling pressure
on local equity, rise in 5-year credit default swap rate, fall in oil prices
and more than expected drop in foreign exchange reserve however kept the local
currency on bearish bias against US dollar. The international reserves of BNM
fell 4.7% to US$100.5 billion from end-June – lowest in almost 5 years.
Year-to-date, the reserves had contracted by 13.3% or –US$15.4 billion respectively.|
INDICATIVE MAJOR CURRENCIES
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