South African Rand
Beating out the dollar for the fourth
consecutive session, the South African rand gained on the day as speculation
fostered by widening interest rate spreads fueled momentum. Sentiment is siding with further
interest rate hikes when central bankers meet next month to decide on short term
rates as consumer demand continues to be worrisome to Governor Tito
Mboweni. Raising three times since
June to 8.5 percent, the central bank would help the currency continue to sport
a considerable rate advantage against the US
economy if a rate hike is decided upon. Subsequently, currently with the
US at 5.25 percent, the market
continues to price in a probable rate cut next year, narrowing the yield spread
advantage further against rand based assets. The notion has kept the currency bid
into the close of the New
York session and ahead of the US Thanksgiving
holiday. Additionally contributing
to the overall optimism surrounding the currency, stocks were also higher on the
day. South African shares continued
their advance for the third session as commodity prices remained supported on
the day. Gold contracts continue to
hover the $628.50 figure on the COMEX after previously rising to $632 an ounce
in the overnight, adding 0.5 percent.
Nickel also remained buoyed as zinc jumped 3.3 percent. The action bolstered stock in BHP
Billiton and Harmony Gold Mining Co., helping to lead other producers
higher. As a result, the FTSE/JSE
African All Share Index added 107.05 to close at 23,899.11. Looking ahead, economic data is expected
for the following week, subsequent to an empty schedule this week. The pickup should inject some action in
the underlying, which has remained relatively staid for the most part.
Mexican
Peso
Paring back positions in the market,
traders took the price back and reversed the action from yesterday as crude oil
prices fell back from yesterday’s $60 a barrel close. Rather closely tied with the commodity
price, the underlying currency suffered on the day as concern arose over the
future of revenue and economic growth in the region. As it stands, oil is the country’s
biggest export and funds approximately 33 percent of federal budgeted
spending. The effect has been so
great that the country now sports a healthy government surplus, the first in
almost 11 years as crude oil spiked to a $78.40 high. Now, however, with the contract down
about a dollar on the day and lower by 24 percent since the high, revenue and
thus spending is likely to have dwindled.
The resultant scenario may be a revisit of the beginning of the year as
the central bank continued to heavily consider cutting rates in spurring
domestic spending. The notion will
likely to be touched upon again tomorrow as consumer price index figures are set
for release, showing a more inflationary environment compared to last month’s
figure. The unemployment rate is
also expected to improve, lending to positive notions of upcoming retail sales
increases. Nonetheless, stock were
higher on the day, rising to a record for a second day following speculation
that a rash of acquisitions are likely to benefit Mexican firms in the long
run. Already speculated on, America
Movil SA, Latin America’s biggest cell phone
company, is expected to buy Telecom Italia SpA’s Brazilian wireless unit. The deal would ultimately add value and
increase valuations and potential on the country’s benchmark index. As a result, the Bolsa Index added 88.33
points to 24, 674.01.
Nordics – Swedish,
Norway and
Denmark
All three Nordics were up on the day,
boosted by crude oil prices in the overnight. Although taken aback in the New York session, crude
oil for January delivery moved higher to above $60 a barrel on seasonal
speculation. The notion boosted all
three Nordics with the prime beneficiary being the Norwegian krone. Helping matters were thin market
conditions as trading remained light ahead of the US holiday. Subsequently, economic figures look
prime positive for the economies as Norwegian unemployment figures are likely to
spark further speculation of higher interest rates before year end. Stabilizing at 3.3 percent, the current
rate is reflective of continually tight labor market conditions in the region,
boosting expectations of advancing retail consumption. Subsequently, Danish consumer confidence
is likely to additionally be stabilized, printing a 9 figure compared to the 9.3
in the previous month. Although a
slight take back, the figure remains well supported and will work nicely with
the overall hawkish sentiment for the area. Both reports, coupled with a surplus in
Sweden, are likely to help in
advancing all three emerging market currencies against the dollar this
week.
Hong
Kong
Dollar
Kept at
bay, the Hong Kong dollar remained in relatively boring fashion, although still
technically gaining on the US dollar in the New York session. Boosting bullish speculation on the
currency seemed to be momentum from yesterday’s gross domestic product figures,
confirmed by cooler inflationary survey results. Rising by 6.8 percent, the overall
growth of the economy is likely to continue heading into next year as exports
and consumer retail strength remain well supported as the inflationary picture
still remains cooler than previously expected. The lower inflationary suggestions
should give way to speculation that tightening policy won’t be implemented, in
turn helping out companies and further investment potential in the region. Still hovering at the 7.7850 figure, the
currency looks to be playing dead as US markets are heading to a close in
observance of tomorrow’s holiday.
Subsequently, stocks were higher in tandem with the underlying currency,
rising to a record on growth speculation.
Adding 242.49 or 1.3 percent to close at 19,250.79, the Hang Seng index
was bolstered by shares in property companies and developers. Cnooc, China’s biggest offshore oil
producer, benefited from the overnight close of crude oil, contributing to the
advance.
Singapore Dollar
Singapore markets were supported on the day as
the index continued to rise to a record on higher crude oil prices in the
overnight. Keppel Corp, the world’s
biggest builder of shallow water oil rigs, led advancing shares on the day as
investors bought up any energy related issue. Chipmakers were also on the rise as
stock in Chartered, the world’s third largest chipmaker rose 4 cents to
S$1.34. All in all, the benchmark
index added 27.14 points to close at 2,830.02, higher by 1 percent on the
day. The only consideration that
seems to have investors concerned in the near term looks to be the upcoming
industrial production report.
Rising a whopping 11.2 percent last month, the October number seems a lot
bleaker as the monthly expectations are pitting for a 3 percent drop in survey
results. Even some optimists are
agreeing, referencing the previous weakness in non-oil domestic exports. With exports lower, and inherently
declining orders, manufacturing is surely to be ill-effected. As a result, the consensus is pitting a
lower mark, with a decline to a more moderate 7 percent for the year. Electronic products, which are estimated
to constitute approximately 36 percent of the country’s manufacturing, also
declined on the month by a whopping 2.6 percent. Subsequently, the sentiment works nicely
into a recent slow down in growth estimated by policy officials as global
tightening continues to place a choke hold on global demand. However, for now, stock bullishness is
driving the Singapore dollar against the counter
into the close, temporarily moving lower through key support at
1.5550.
