FW: RHB FIC Rates & FX Market Update - 7/12/17

 

 

 

7 December 2017

 

 

Rates & FX Market Update

 

 

UK-EU Negotiations at Stalemate

 

Highlights

 

¨   Global Markets: A risk aversion sentiment dominated markets yesterday as global stocks and commodities were under pressure. As a result, US Treasuries were supported (10y: -1.2bps) and a despite a stronger broad US Dollar (DXY: +0.29%), the Japanese Yen strengthened, +0.29% vs. USD, and against its G10 peers. Looking forward, we continue to expect the USDJPY pair to trade in a sideways fashion within its multi-month range with both downside and upside risks limited; remain neutral JPY. The Sterling Pound remained under pressure as Brexit negotiations are at a stalemate against major currencies. We keep the short term view that the GBPUSD pair has further room to go down while we are now waiting for a break below 1.8000 on the GBPSGD cross to play further drop.

¨   AxJ Markets: MYR logged marginal losses overnight despite strong October trade numbers amid broad USD strength; exports and imports expanded 18.9% and 20.9% y-o-y respectively. Trade demand is expected to continue supporting Malaysia's growth over the remainder of 2017 and early-2018, which should continue to bolster sentiment towards the MYR; we are now mildly constructive towards the nation's currency.

¨   AUDUSD fell 0.58% overnight as the weaker-than-expected GDP print continues to feed through into AUD trading sentiment. Trade balance due this morning did little to lift confidence, as October surplus fell to AUD105m (consensus: AUD1.4bn), compounded by declines in iron ore prices; expect AUD to remain under pressure over the coming weeks, ahead of the Fed's December meeting.

 

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