top fx market movers

·          Trade Balance Expected To Widen Even Further For South Africa

·          Mexican Peso Weakens On Rising Deficit

·          Singapore Dollar Breaks Through Nine-Year Resistance

South African Rand

No economic data could spur South African rand bulls as the emerging pair lost to the US dollar for the third straight session.  The absence of data was coupled with further altercations in the African nation as fighting in Somalia has caused heavy casualties and added downward pressure, albeit minimal, to the underlying currency.  In addition, the currency pair moved in contrary to gold bullion contracts in the New York session, rising by $3.40 a troy ounce to hit $630.30 in the overnight.  Although the underlying currency tends to move in relation to the commodity, the underlying pair’s price action strayed likely buoyed by US fundamental data in favor of gains in the economy’s housing sector.  Subsequently, things could turn for the worst for the rand ahead of tomorrow’s trade deficit data.  Already expanding to uncomfortable levels, the trade gap is expected to widen even further, tripling the gap that was witnessed last month.  The resultant monthly figure could add to further speculation that rates will no longer be increased early on in 2007, placing the South African Reserve Bank in an interesting situation.  At the same time, the economy is struggling to contain rampant inflation as consumer spending has become credit intensive.

Mexican Peso

The Peso lost for the fourth consecutive session as fundamental reports worked alongside technical support in boosting the US dollar against the Mexican currency.  Rising temporarily above the 11.00 figure, the currency pair has found near term support at the 10.90 level and will likely close higher with bids supporting the currently traded figure.  Fundamentally, morning reports sparked weakness in the Peso after it was revealed that the country’s trade deficit widened in the month of November.  The highest level in almost two years, the gap was fueled by increased holiday spending, supportive of a rise in imports by a whopping 6 percent from a year earlier.  As a result, Mexico printed a trade gap of $1.57 billion according to the Finance Ministry compared with a previous deficit of $1.23 billion.  Subsequently, the new figure was slightly better than consensus expectations, but continues to place added weight to an already bearish sentiment in the market for the Mexican currency.  Boosted by expectations of positive growth in the Mexican economy, the figure was widely expected as the economy is set to expand at the fastest pace in six years, posting a 4.7 percent annualized growth rate.  However, with a widening trade gap, policy makers are unlikely to deter from the current neutral/dovish bias, likely leaving the current benchmark rate at 7 percent.  Incidentally, the market is likely to side with a more dovish approach in the new year as forces have already begun pricing in a potential cut in the second half of the year.

Nordics – Sweden, Norway, Denmark

Scandinavian currencies were mixed today with the Danish Krone being the lone bullish outlet in the market.  However, attention will likely shift to the Swedish Krona tomorrow as a long laundry list of economic data is expected to hit the newswires.  Remaining stable are likely the economy’s trade balance, standing at a surplus, with manufacturing confidence repeating the previous November’s posting of a 7 figure.  Retail sales are additionally expected to remain buoyed, rising by 7.7 percent, as the economy continues to expand helping along consumer demand.  Notably, consumer confidence is expected to give the underlying a boost as the consensus anticipates an increase for the month of December.  Coupled with holiday sentiment, the survey is expected to rise as expansion is widely fueling optimism in the country.  A tight labor market, higher wages and an uptick in manufacturing and production have boosted consumer sentiment and consumption lending to speculation that rates will continue to rise.  The Riksbank, incidentally, has already stated an already established hawkish bias, lending to increased speculation of near term action early on in 2007.  The notion will lend some support for the underlying currency ahead o fthe Swedbank PMI survey to wrap up the week.

Asian Bloc – Singapore and Hong Kong

Both Asian currencies made headway in the New York session as traders look ahead to tomorrow’s list of economic data.  Notably, the bid tone for the Singapore dollar has helped it to move above the nine year resistance that was the site of consolidation over the past couple of weeks.  Breaking through the 1.5400 figure, the currency pair is likely to close lower on the support level, an indication that further downward momentum is likely in the near term.  Helping along the sentiment is tomorrow’s expected release of the month’s money supply figures.  Already rising by 14.3 percent in the month of October, the report is expected to remain buoyed as the economy continues to expand in 2006.  In turn, with more capital flowing through the economy, inflationary pressures are estimated to keep the Monetary Authority of Singapore hawkishly biased.  In contrast, Hong Kong is additionally expected to show a schedule of data, with many traders banking on the trade balance figures for the month of November.  Encouraging, consensus estimates are forecasting an 8.5 percent rise in exports as imports have noticeably pared back to 10 percent compared with an 11.2 percent rise in the same month.  Subsequently, the figures are expected to lend a bullish bias to the underlying Hong Kong dollar, coupled with encouraging retail consumer spending figures previously reported.

• free demo account
• forex courses
• open an account
• forex stream
• free webinars