· South African Rand – Trade
Balance Shrinks, Lends Plenty Of Rand Optimism
· Mexican Peso – Inflationary
Suggestions Continue To Lift Peso
· Nordics – Higher In New York On Upcoming
Norges Bank Decision
· Hong Kong Dollar – Manufacturing Continues Onward In Hong Kong
· Singapore Dollar – Straits Times Index Buoyed By Exporters, Adds To SGD Strength
South
African Rand
Rand bulls
came back roaring on the Halloween session in the US
as the South African denomination rose over 1500 points against the US counterpart.
Backing the strong move was a much
better than expected trade balance figure which additionally lent some optimism
to the equity markets. For the month of
September, the trade gap narrowed immensely to 175 million rand, improved
against the 5.3 billion rand shortfall in August according to the South African
Revenue Service. Spurring the likelihood
of further rate increases by the Reserve Bank of South Africa before year end, the
report also strengthened stocks on sentiment of overall growth. As a result, the FTSE/JSE Africa All Share
Index added 0.6 percent to 23,338.16. Looking
a bit deeper into the report, the monthly trade balance improvement was visibly
seen as crude oil prices dipped and exports increased on a depreciated
currency. Exports for the month
increased by 4.62 percent and outpaced an 8.37 percent decline in the volume of
imports to the South African region. Ultimately,
the report should add to further bullish speculation in favor of the rand ahead
of tomorrow’s purchasing manager’s index report. Expected to continue higher, the report’s
expansionary reading should give traders the impetus to initiate long positions
as results will all but confirm further rate tightening in the near future. Coincidentally, heading into the New York close, the currency
pair is seemingly finding support just above the 7.3500 figure.
Mexican
Peso
A monthly budget
surplus and inflationary comments lifted the Mexican peso during the North
American session, taking the underlying price action below yesterday’s close of
10.7965. Sparking things off in the
morning were hawkish comments from Mexico central bank Governor
Guillermo Ortiz. Stating the inflationary
rate increased by 4.5 percent in October, the governor continued in confirming
that price increases are likely to remain at that level in November on higher agricultural
good prices. This places annualized
inflation at the highest level since mid 2005 and will like be enough for
policy makers in at least considering a rate hike in the near term, accompanied
by already stabilized decisions. Furthering
the cause was the release of the August budget surplus, which came in line with
consensus estimates. The Finance
Ministry reported that the monthly budget surplus was at 33.5 billion pesos, as
revenue rose 14 percent. The report not
only serves as an optimistic harbinger for the economy, it fulfilled the
current administration’s target of a balanced budget this year and opens the
door to further improvements towards year end, lending some longer term
momentum to the currency. Stocks fed off
the optimism as Mexican issues rose for the first day in four bumping the Bolsa
index higher by 541.21 points to 22,911.30. The biggest gain since mid July, the index was additionally supported by
investment notions that the 4.4 percent fallout since October 25th may
have been overdone.
Nordics –
Swedish, Norway and Denmark
All three
Nordic components found footing on the day with all three jumping an average of
270 points against the dollar base, in anticipation of near term data releases.
The only report for the day came from
the Norwegian credit indicator growth for September, which jumped by 15
percent. The figure was comparatively
higher against the 14.6 percent consensus. The report sets up nicely for the anticipated rate announcement by the
Norges bank with the market already pricing in a 25 basis points tightening to
3.25 percent. Subsequently, further
attention will likely also fall on the accompanying suggestions and ultimate
dismissal of the “small, not too frequent steps” phrase, lending a highly
hawkish bias heading into the end of the year. Effects of this can already be witnessed as market participants are also
expecting corresponding central banks in both Sweden
and Denmark
to raise interest rates in sink, causing for more foreign money to gain
interest in the region. And why not, economic
data has been rather optimistic in the regions with retail sales reports likely
to set the tone tomorrow in Denmark. Although expectations are for a mild
pullback, the figure is still expected to remain positive and will likely
compliment a subsequent expansionary suggestion in the purchasing managers
index. Comparatively, traders in the
mood for Krona will be dealing with their own version of PMI, which is expected
to remain stable according to the previous month’s gain.
Hong Kong Dollar
A slew of Hong Kong based data was cast
aside for optimistic US based data, keeping the range on the USDHKD cross pair
tight as usual. Taking center stage on
the session were money supply figures for the month of September, which rose by
16.3 percent year over year with M1 supply rising 4.7 percent. All three components of the report jumped
above the previous month’s figures and continued to lend an inflationary bias
to the underlying economy. However, this
will likely not do anything in the immediate foreseeable future as the currency
remains pegged in the market. Subsequently,
this placed increasing focus on the Brunswick PMI report. For the month of October, expansion was once
again in the cards for the Hong Kong dollar as
the survey printed a 54.4 reading, above the previous 53.7 in September. Continuing the expansionary track, the report
continues to show improvement and will likely lead to further speculation of
rising growth figures set for the end of the month, lending some near term strength
to the HKD. Separately, Hong Kong’s Hang Seng index advanced amid lower crude oil
prices as expectations are that costs are headed lower for airlines including
bellwether Cathay Pacific Airways Ltd. Subsequently,
shares of the airliner headed higher by 1 percent to HK$16.98.
Singapore Dollar
With economic
data that was overwhelmingly positive, the Singapore dollar currency pair broke
slightly below the technical support that was highlighted yesterday, indicating
a possible continuation in the overall downtrend of the emerging market pair. According to the Ministry of Manpower,
unemployment dropped to a record level of 2.7 percent in the region as the
longest stretch of expansion in five years has spurred companies to increase
their labor forces. As a result, with
higher job creation, to the tune of 41,600 workers last quarter, consumer spending
is likely to add to the already strengthening economy. Subsequently, money supply reports were
relatively in line, keeping the current tightening bias intact for the moment. Sellers on Singapore dollar strength were also
out and about today, ahead of the upcoming purchasing managers index and
electronics sector index reports. Both
are expected to remain stable, confirming the current MAS bias towards a
hawkish stance but still offer a hint of weakness, following in line with
recent reports that have been relatively warm in recent months. As a result, expectations are for the pair to
test technically, while pullback potential remains slightly on the fundamental
aspect in the longer term. Growth
prospects are still healthy, nonetheless, with the economy expected to grow at
an 8 percent pace on the year on year. Additionally,
underpinning the currency’s strength in the session was an advance in the
benchmark Straits Times Index. Rising
for the first time in three days, the index was lifted by exporters as
expectations were sparked for further spending in the US after crude
oil prices dropped the most in over a year. As a result, bellwether Venture Corp shares
were higher adding to overall optimism in the market.
