19 May 2017
Rates & FX Market Update
BI Committed to Maintain Economic and
Financial Stability
Highlights
¨ Global
Markets: Yesterday’s risk-off flows proved temporary, with the DXY
retracing 0.31% stronger while the front part of the UST curve ticked 1-2bps
higher overnight. Yields on 30y USTs however fell c.2bps, with 2s30s trending
to the lowest level since October 2016. Both weekly initial and continuing
claims data due fell w-o-w, as US labour market continues to exhibit strength; eye
10y UST yields to average 2.40% over 4Q17 on robust safe haven flows. Australian
labour data came in strong for the month of April, with employment ticking
higher by 37.4k (consensus: 5k) amid a surge in part-time employment, while
unemployment rate ticked lower to 5.7% (consensus and Mar: 5.9%). While the
AUDUSD pair jumped on the better-than-expected data, gains were subsequently
retraced as the dollar recovered ground; remain neutral AUD.
¨ AxJ
Markets: The MYR fell marginally against the USD overnight as risk-off
flows impacted regional currencies, although the Ringgit declined the least
among peers. USDMYR remains largely within a tight range of 4.31-4.35, with the
pair’s volatility staying subdued still; stay neutral MYR over the medium
term, although the currency has the potential for further gains over the
short run. Over in Indonesia, BI maintained its 7D RRR at 4.75%, in line with
consensus and our expectation, amid lingering external and domestic risks
balanced by the need to maintain the current growth momentum. The Bank noted
that inflows arising from the improving sovereign rating outlook have supported
the IDR, despite the escalation in geopolitical and political risks globally.
BI also reaffirmed its commitment to a stable IDR; stay neutral IDR.
¨ GBPUSD
fell 0.28% overnight, although the pair briefly broke the 1.30 resistance level
intraday after April retail sales beat consensus estimates (4.0% y-o-y;
consensus: 2.1%; Mar: 2.0%, including auto fuels). The pair flash-crashed
during the US session, after the dollar retracement likely triggered
selling/stop-loss orders near the 1.2980 region; we reiterate our neutral
GBP stance ahead of the UK snap election.
This message is intended only for the use of the person(s) to whom it is
addressed and may contain information that is privileged or otherwise protected
from disclosure. If you are not the intended recipient you are hereby notified that
any use, review, disclosure or copying of this message and the information it
contains is prohibited. If you receive the message in error, please notify the
sender by reply e-mail and discard all its contents.
Thank You.
|
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.