FW: RHB FIC Rates & FX Market Update - 9/1/18

 

 

 

 

9 January 2018

 

 

Rates & FX Market Update

 

 

German Political Negotiations Key to Watch Over the Coming Days

 

Highlights

 

¨   Global Markets: The European currency fell across the board, a decline which had little to do with macroeconomic data and more with a technical retracement alongside the resurgence of political risk ahead of the negotiations for the new German "grand collation". Positive EU data indicating that the solid economic recovery in the EU continues were indeed being ignored (January Sentix Investment Confidence and November Retail Sales). Although the EURUSD pair broke below the 1.2000 handle, it technically approaches the 1.1955/1.1930 zone where the pair could get supported; remain mildly bullish EUR.

¨   AxJ Markets: Indonesia's foreign reserves climbed to USD130.2bn in December, driven by export and tax revenues, and an USD4.3bn climb from November. While the IDR fell in the month of December, MTD performance of the Rupiah appears solid so far, given foreign inflows into Indonesian bonds. We remain neutral towards the IDR, with any natural drifts in the USDIDR over 2018 likely to remain limited.

¨   In the UK, PM May started to reshuffle her cabinet far from the radical refresh that was expected ahead of the phase 2 of Brexit negotiations (still at an unknown date). Several senior members of the cabinet refused to move while the Secretary of State for education quitted illustrating the PM keeps a fragile authority over her party. That said, the political noise did little to the currency as the GBPUSD ended the day almost flat at +0.04%; remain neutral GBP.

 

 

 

 

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