US Greenback, Singapore Greenback, Indonesian Rupiah, Malaysian Ringgit, Philippine Peso – Speaking FactorsUS Greenback principal
US Greenback, Singapore Greenback, Indonesian Rupiah, Malaysian Ringgit, Philippine Peso – Speaking Factors
- US Greenback principally little modified in opposition to ASEAN FX, IDR weakened
- US earnings season and coronavirus case progress might increase USD
- ASEAN forward: Malaysia & Singapore CPI, industrial manufacturing
US Greenback ASEAN Weekly Recap
The haven-linked US Greenback traded little modified in opposition to a few of its ASEAN counterparts such because the Singapore Greenback, Malaysian Ringgit and Philippine Peso final week. That is as world equities adopted an identical path. The S&P 500, a bell-weather for general market sentiment, barely climbed whereas the MSCI Rising Markets Index (EEM) traded cautiously decrease.
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A notable standout was the Indonesian Rupiah, which weakened to its lowest level in opposition to the US Greenback since late Could. This additionally follows the aftermath of the Financial institution of Indonesia fee determination, the place policymakers took the benchmark 7-day repo fee all the way down to its lowest on report. Moreover, USD/IDR prolonged its advance following bullish technical alerts, as anticipated.
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Final Week’s US Greenback Efficiency
*ASEAN-Based mostly US Greenback Index averages USD/SGD, USD/IDR, USD/MYR and USD/PHP
Exterior Occasion Danger – Earnings Seasons, Microsoft, Coronavirus
The main target for ASEAN pairs corresponding to USD/SGD, USD/MYR and USD/PHP might stay on exterior components that affect market temper. With that stated, all eyes are on america as coronavirus instances proceed to clock in at report every day ranges. If authorities officers are compelled to reinstate lockdowns or pause easing efforts, that would dent future progress prospects and pour chilly water in swift restoration expectations.
Earnings season can also be in full swing with consideration notably turned to tech corporations as they defend their comparatively elevated inventory valuations. This previous week, Netflix overwhelmingly upset as the corporate issued weaker-than-expected steerage. Its share value fell as a lot as 11 p.c in after-hours commerce. Additional dismal information from Microsoft on Wednesday might compound threat aversion, boosting the US Greenback.
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ASEAN Occasion Danger – Malaysia CPI, Singapore CPI and Industrial Manufacturing
The ASEAN financial docket is pretty mild forward. Malaysia and Singapore will launch their newest stories on inflation. Disinflationary pressures will possible preserve central bankers on the dovish facet. Singapore may even be releasing industrial manufacturing information on Friday for a interval the place non-oil exports beat economists’ expectations. Extra upbeat information might assist help world progress restoration bets, pressuring USD/SGD decrease.
Regardless of beneficial properties within the MSCI Rising Markets Index since early June, my ASEAN-Based mostly US Greenback Index has traded sideways – see chart beneath. Maybe what could also be stopping ASEAN FX from seeing additional beneficial properties in opposition to USD are falling regional authorities bond yields. Whereas the Fed has already decreased charges to near-zero ranges, central banks from the ASEAN area proceed slicing, sapping the attraction of their currencies as volatility cools.
On the finish of final week, the 20-day rolling correlation coefficient between my ASEAN-based US Greenback index and the MSCI Rising Markets Index (EEM) stood at -0.66. Values nearer to -1 point out an more and more inverse relationship, although you will need to acknowledge that correlation doesn’t suggest causation.
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ASEAN-Based mostly USD Index Versus MSCI Rising Markets Index – Every day Chart
Chart Created Utilizing TradingView
*ASEAN-Based mostly US Greenback Index averages USD/SGD, USD/IDR, USD/MYR and USD/PHP
*ASEAN 10-12 months Govt. Bond Yield Imply averages these from Singapore, the Philippines and Malaysia
— Written by Daniel Dubrovsky, Forex Analyst for DailyFX.com
To contact Daniel, use the feedback part beneath or @ddubrovskyFX on Twitter