South African Rand
Advancing
in the overnight, the South African Rand gained against the dollar on momentum
established from last week’s speculation that the yield advantage on domestic
fixed income instruments will widen further against most major currencies. Helping the bid tone on the day was
healthy demand for speculative gold contracts. Already bid higher through the previous
week, precious metal contracts on the COMEX strengthened growth and expansion
potential in the South African economy as a fifth of the country’s exports are
dedicated to precious metal exports.
Gold contracts, in the overnight, advanced a healthy $3.40 or as much as
0.5 percent to $642.15 a troy ounce.
Subsequently, traders are taking recent movements into consideration with
tomorrow’s gross domestic product figures.
Expected to show healthy expansion, positive figures are more than likely
to spur an advance through the technically formidable 7.1000 figure. Consolidating for the past week, the
report, which is expected to show a 4.8 percent quarterly improvement, should
provide enough impetus for bidders of the South African currency to crunch
through the current barrier.
Separately, the FTSE/JSE Africa All Share index lost on the day as
further appreciation in the domestic currency and a transaction led sentiment
lower. Although gold metal prices
boosted mining stocks initially, overall bearishness adversely affected gains as
concern over the recent appreciation of the rand has exporters scared of
decreased competitiveness. Subsequently, assisting the benchmark in closing down
by 181.15 points to 23,809.72, were shares of Shoprite Holdings Ltd. Pacing losers on the day, issues of the
company were battered on news that the company had agreed to a takeover at a
price below market. With minority
shareholders screaming bloody murder, Shoprite officials agreed to a price 7.1
percent less than the closing price on November 24th, settling for
13.2 billion rand.
Mexican
Peso
The Peso
weakened for the fourth straight session following further disruption in the
city-state of Oaxaca.
In the overnight, police intervened in further violence as protestors
continued to pressure the local government into a resignation of the incumbent
governor. Setting buildings ablaze,
protestors also clashed with police, setting fire to vehicles and government
buildings. The unrest left 43
people injured and helped to raise further concern of the stability that the
president-elect Calderon can bring when he finally takes office this
Friday. As a result, with most
situations involving political unrest, traders bid the peso lower against the US
dollar, helping the currency pair to break through technical resistance at
11.00. Coincidentally, the
political turmoil led shares lower on the session with the Bolsa index dropping
350.10 points on the day to close at 24,442.79. The declines were despite a slight
rebound in crude oil contracts.
Usually moving in tandem with the NYMEX based contract, the Mexican peso
declined as crude oil rose $1.09, or approximately 1.84%, to settle at $60.33 a
barrel. Resurgent demand was
witnessed throughout the overnight as speculation mounted on comments by
Saudi
Arabia’s oil minister. Although not definitively agreeing with
the first round of supply cuts, the country’s minister stated pending support of
a second round of planned cuts that may prop up prices at year
end.
Nordics – Swedish,
Norway and Denmark
Both
Swedish and Denmark currencies extended their
five session gain as the Norwegian Krone joined in and gained against the US
dollar. Resurgent demand for crude
oil contracts supported all three emerging currencies, with most notable
benefits being seen in the Norwegian economy, a major global exporter of the
commodity. The gains were posted in
spite of economic data that is expected to suggest a near term soft spot in the
region. In the overnight, Swedish
consumer confidence remained positive for the month of November. However, the report did visibly dip
below the previous month’s figure, declining to a 14.1 print against October’s
19.5. Even though the report does
reflect a more cautious consumer base, it seems as though the concern has
stemmed from an evaluation of the economy. In this case expansion may be
somewhat concerning as effects of appreciation may be negative on the
economy. Nonetheless, the report
does continue to bolster support of another round of rate hikes by the Riksbank
before yearend as officials continue to beware of latent inflationary
pressures. Coincidentally, focus is
being placed on this week’s retail sales figures in the Norwegian economy. A little disconcerting, the report is
expected to dip to 6.9 percent, after rising by 8.1 percent in the month of
September. The annualized
comparison is still positive considering the consensus expected decline of 0.6
percent in the monthly evaluation.
Hong
Kong
Dollar
The Hong
Kong dollar gained for the fourth straight session despite an equity
benchmark that declined on the day.
Fostered by further foreign speculation surrounding this week’s
potentially tepid US gross domestic product report,
sentiment is siding with the notion of further strength in the once British
owned colony. Just last week gross
domestic product in the Asian economy paced ahead at a 6.8 percent rate, far
above the 1.8 percent expected by the consensus for the US economy. The general idea has boosted demand for
a currency that is increasingly tied with one of the fastest growing economies
currently running, China. Coincidentally, this has widened the
spread between both countries’ interest rates and was well supported by the
morning’s trade figures. For the
month of October, exports from the Hong Kong
economy almost doubled, rising by 7.9 percent on the annualized comparison. Far above the 6.8 percent expected
figure, the report trumps the 4.7 percent previous advance, and makes a case of
near term continuation in the economy.
However, one consideration which does have some bullish traders on the
sidelines is the increase in imports.
For the month, imports to the country rose 11.2 percent. Nonetheless, the trade deficit narrowed,
falling short by a simple HK$3.1 billion compared to the HK$11.7 billion gap
witnessed last month. Separately,
the Hang Seng fell on fear that shares have gone too far too fast. With the index already higher by 29
percent for the year alone, investors in the market doubt that further ground
can be attained. Adding to measure
is the technical fact that indicators are pointing to widely overextended
conditions, purporting many participants in considering a selloff heading into
year end. As a result, with
Hong Kong Exchanges & Clearing Ltd stock
and China Construction Bank Corp. shares leading the way, the benchmark index
dropped 21.06 points to close at 19,239.24.
Singapore Dollar
Resilient in the face of last week’s
dour industrial production figure, the Singapore dollar has kept pace and
continues to advance on the nine-year high, visited last week. With no economic data set for release in
the next few days, it was higher demand on the equity front and consistent bid
interest in Asian assets that kept the Singapore dollar supported in the
overnight. Stock markets closed to
a record once again on positive news surrounding several key listed
companies. Sparking off the advance
was news that Keppel Corp., the world’s biggest builder of shallow water oil
rigs, may ultimately win out on $3 billion worth of orders placed by
Qatar’s Gulf Drilling
International. Subsequently, the
news was followed by further bullish sentiment over rising takeover candidates
following Carlyle Group’s offer for Advanced Semiconductor Engineering Inc. The underlying notion supported shares
of Chartered Semiconductor Manufacturing Ltd. Speculation is not without substance as
the economy is set to continue its healthy pace of expansion in the near term,
despite some lowered forecasts of immediate term growth. As a result, the Straits Times index
advanced by 26.13 points to 2,840.94, rising above the high already set back on
November 23rd.
