v USD dollar recovers from multi-week
lows against Euro and Japanese yen
v Euro surge above 1.10 to mid-July’s
high after stronger than expected German IFO business confidence
v USD/Asia
remains heavy mainly on month-end flows and position adjustments ahead of Fed
meeting
v
RM touches the level of 3.8310, the highest level since September
1998
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U.S. dollar
recovered from multi-week lows against Euro and Japanese yen from a risk-off
starts to the week, which dragged the greenback to slip to two-week lows
against its biggest peers as worries intensified about slowing growth abroad
while Chinese stocks sank more than 8% for their worst day in eight years as
concerns grow over the sustainability of the government-supported market
rebound. Well received US corporate earnings reports were weighed in as well.
US equities settled higher to end five-day of consecutive losses. While US
FOMC kept its policy rate unchanged in this meeting, markets continued to pay
close attention to tone and forward guidance. We are nearing the end of the
year from Fed meeting stand point and participants will be keen to understand
if Fed intends to raise policy rate this year. September seems to be the
target date the market is holding onto, some participants are even suggesting
two hikes could be possible this year, one in September and one in December
respectively.
Euro surged above
1.10 to mid-July’s high after stronger than expected German IFO business
confidence pointing Europe’s biggest economy was weathering uncertainty
related to Greece. However, the currency seems to be in consolidation within
broad range 1.089 – 1.1150 with a lack of catalyst to move in either
direction.
Japanese Yen
continued to inch lower to 123.40 as risk sentiment improved slightly as
Chinese stocks pulled back from a sharp selloff while commodity prices were
showing sign of stability. Nikkei down 0.75% for the week but is 472 points
away from breaking above 21,000 – a level not seen since November 1996.
Data-wise, Japan June large retailers’ sales hit a big miss as it plunged
-0.3% from +5.3% in May.
USD/Asia remained
heavy mainly on month-end flows and position adjustments ahead of Fed
meeting. The resilience of commodity-related currencies was put to test as
commodity prices being challenged. Excess supply still hangs over the market
along with heavy selling from financial investors in recent weeks, which
means an intensifying market share war. As a result of this, Asian currencies
ended the week on weaker footing against US dollar. Leading the pack were
Thai baht, which weakened 0.83% in response to strengthening of US dollar and
the negative macro flows, followed by Singapore dollar and Philippine peso
purely on the US dollar advanced as markets continued to digest the
post-meeting FOMC statement. Meanwhile, Indian Rupee strengthened against the
greenback as Indian custodial banks sold US dollar and local stocks rebounded
and there was also talk of some fund inflows for an e-commerce company.
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INDICATIVE MAJOR CURRENCIES
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