South African Rand
South African Rand bears came back with a vengeance on the day, pushing
the currency pair through key resistance barriers in the overnight. Taking out resistance at 7.1900, the
currency pair is now consolidating above the 7.2000 handle, and ready to close
positive for the session. The move
was impressive and sparked by a lower than expected manufacturing survey in the
overnight. Posting a 55.1, the
Investec Purchasing Manager’s Index survey declined versus previously expansion
with a 59 reading. New orders were
markedly lower for the month, bolstered by gains in the domestic rand, making
the goods and exports from the region less competitive. However, overall the figure still
remains suggestive of expansion in the South African economy, helping to boost
speculation that South African Reserve Bank Governor Mboweni will be retaining a
hawkish bias when policy officials next meet in a month’s time. The survey is likely to support gains
seen in consumer spending, which widely anticipated to support growth heading
into year end. The notion should lend a hand to
next week’s action, likely to add bullish sentiment for a retest of support at
7.1000. Separately, the FTSE/JSE
Africa All Share index were higher for the third consecutive session as
commodity producers and construction shares led advancers on the day. As a result, the index finished higher
by 120.97 points to close at 24,070.92 ahead of the
weekend.
Mexican
Peso
Further geopolitical stress weighed
on the underlying currency in the New
York session, following a physical brawl that occurred
between supporters of President Calderon and lawmakers against his electoral
victory. Already anticipated
by government officials, Calderon had officially taken the oath as the nation’s
president behind closed doors, exchanging the hands of power at midnight last
night. The ceremony was quick and
under the radar, being intended ahead of a public appearance that was heavily
clouded with jeers and whistles by the president’s opponents. The decibel level was so loud, in fact,
that it seemed impossible to actually hear Calderon vowing to uphold the
region’s constitution and common law.
Nonetheless, now with Calderon installed as president of the country, it
should be interesting to see if he is able to maintain control despite major
opposition in Congress.
Additionally exacerbating the loss in the Mexican peso were thin trading
conditions on a day when markets in the country were closed for the
inauguration. Speculation had been
rumoring that institutions were taking advantage of thin conditions to force
back the price in the market even as economic data was positive for the
economy. Released earlier, Mexican
public balance was optimistic, rising to total MXN156.8 billion in surpluses for
the first 10 months of the year, higher by MXN17.7 billion in the month. Now 20.3 percent higher than 2005
totals, the surplus bodes well for the economy. Notably, government revenue was higher
by 13.5 percent with oil revenues contributing on a jump of 14.7 percent. Subsequently, the Bolsa index added
185.92 points to close higher at 24,862.00.
Nordics – Swedish,
Norway and Denmark
Plenty of great economic data boosted
the Scandinavian economies in the overnight. Starting with Sweden, data was
especially good as gross domestic product and manufacturing surveys were higher
following the upbeat retail sales figures.
For the third quarter, growth surged in the country as productivity and
consumer spending remained strong in supporting a 4.4 percent annualized
rate. Combined with the Swedbank
PMI survey that continued to be indicative of growth, the morning’s report lends
to further speculation of near term rate hikes by the Riksbank. Already raising rates 5 times this year,
speculation has mounted on the belief that officials will prefer to tighten
policy before year’s end in order to remain preemptive. Elsewhere, Danish retail sales were also
positive for the month. However,
the figure actually declined compared to the previous 3.3 percent gain and had
some wondering if the pullback was more of a temporary situation rather than a
leading indication of a soft patch.
Quashing rumors and speculation was the subsequent PMI survey. For the month, Danish manufacturing was
markedly higher, posting another expansion suggestion compared to previous marks
and upping the likelihood that the Danmarks Nationalbank will raise rates early
on in 2007. Separately, Norwegian
strength was witnessed on higher crude oil prices as the per barrel cost broke
through $63.00 a barrel in the New
York session.
Additionally boosted by a forecasted cold front in the Northeast, the
crude oil advance was associated with appreciation in the Krone as the two tend
to move in tandem.
Hong
Kong
Dollar
The Hong
Kong dollar resumed its appreciation path as retail sales remained
buoyed in the Asian tiger economy.
Although falling short of the previous figures, suggestive of a near term
slowdown, the month’s advance of 6.9 percent on the year on year was indicative
of future growth, keeping in line with hawkish sentiment. Although there was moderation in
supermarket sales and clothing, the figure was well supported by increases in
durable goods according to the report which is likely to keep the current pace
through 2007. Healthy retail sales
growth is expected in the 5-6 percent range for most of next year, boosted by a
wealth effect on the growing economy and rising consumer sentiment. The notions will additionally keep bears
at bay as previous concerns of lowered US demand are likely to
dissipate. However, contrary to the
sentiment, equity holdings declined on the day, led by an overall continuance of
the week’s roller coaster ride.
Reversing yesterday’s advance, stocks declined, dropping 269.99 points to
close at 18,690.82 ahead of the week.
The Hang Seng has now closed lower for the week for the first time in
nine following the largest decline since September
12th.
Singapore Dollar
The Singapore dollar
lost in the overnight with speculation surrounding an intervention set by the
Monetary Authority of Singapore.
The move was somewhat expected as the underlying currency convincingly
broke through the nine year high, making way for further advancements. However, policy makers, in charge of
maintaining underlying stability, entered the market to rein in the currency’s
gains. Fears can still be felt
ahead of next week’s manufacturing survey.
Expected to decline, survey results are still estimated to have posted an
expansionary suggestion which will confirm the hawkish bias and increase
demand. The impending boost would
have the underlying pair continue its retest of the key level, potential
breaking for a second time within days.
Lending to a downside print have been notion of declining orders and
visibly lower domestic retail sales figures. Subsequently, equities were under
pressure on the day, closing 4.4 points or 0.2 percent worse on mounting
bearishness of property stocks. The
benchmark Straits Times index closed at 2,834.13.
