News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Bullish
Wall Street
Bearish
Gold
Bearish
GBP/USD
Bullish
USD/JPY
Mixed
More View more
Real Time News
  • Commodities Update: As of 10:00, these are your best and worst performers based on the London trading schedule: Gold: -0.93% Silver: -1.67% Oil - US Crude: -2.28% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/zljwnQwRbk
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out: https://t.co/td5WA4hCZC https://t.co/GgrFV6rChg
  • Prior to the oil blockade in January, Libya had been producing circa 1.1mbpd https://t.co/ZS6LPcKbyF
  • Forex Update: As of 10:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.42% 🇨🇦CAD: -0.23% 🇦🇺AUD: -0.39% 🇪🇺EUR: -0.50% 🇬🇧GBP: -0.58% 🇳🇿NZD: -0.65% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/0EqnRHMZJ3
  • Libya has restarted oil production by 90kbpd and will resume an extra 220kbpd on September 24th, according to sources #OOTT
  • Indices Update: As of 10:00, these are your best and worst performers based on the London trading schedule: US 500: -1.50% Wall Street: -1.78% France 40: -3.30% Germany 30: -3.41% FTSE 100: -3.62% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/2G6XT0J6v5
  • Tune in to @nickcawley1 's #webinar at 6:30 AM ET/10:30 AM GMT to prepare for key UK events and markets in the week ahead. Register here: https://t.co/xewSeUoDaT https://t.co/I8N4F5SmRK
  • Germany 30 IG Client Sentiment: Our data shows traders are now net-long Germany 30 for the first time since Sep 08, 2020 when Germany 30 traded near 12,883.80. A contrarian view of crowd sentiment points to Germany 30 weakness. https://www.dailyfx.com/sentiment https://t.co/PrXKfwUQbT
  • UK's Hancock says final decisions have not been taken in response to surge in COVID cases $GBP
  • #SP500 futures tumbling through Bear Flag support at the 3300 mark. Implied measured move suggests a push to 3000 could be on the cards if price breaks below the June high (3231.25) $ES $SPX https://t.co/o26aOMmin8 https://t.co/pS7A9CVmt6
US Dollar Fundamental Outlook: USD/SGD, USD/IDR, USD/MYR, USD/PHP

US Dollar Fundamental Outlook: USD/SGD, USD/IDR, USD/MYR, USD/PHP

2020-08-03 03:00:00
Daniel Dubrovsky, Analyst
Share:

US Dollar, Singapore Dollar, Indonesian Rupiah, Malaysian Ringgit, Philippine Peso – Talking Points

  • US Dollar drop continued against ASEAN currencies
  • ASEAN external risk: US fiscal stimulus and jobs data
  • ASEAN and South Asia risk: GDP, RBI rate decision

US Dollar ASEAN Weekly Recap

The haven-linked US Dollar extended losses against its ASEAN counterparts last week, with the Singapore Dollar, Malaysian Ringgit and Philippine Peso seeing some of the best performance. The Indonesian Rupiah and the Indian Rupee were little-changed – see chart below.

USD Forecast
USD Forecast
Recommended by Daniel Dubrovsky
What is the road ahead for USD in Q3?
Get My Guide

Market sentiment spent most of the past five trading sessions broadly improving, and this is what ASEAN FX paid most attention to – as expected. All eyes were on the Federal Reserve as the central bank left interest rates at near-zero levels while Chair Jerome Powell hinted for the need in a prolongment of accommodative policy measures. The Fed highlighted that this is due to the considerable risks the coronavirus poses.

All eyes were also on key tech earnings last week as Facebook, Amazon, Apple and Google smashed expectations, pushing the Nasdaq 100 higher. In Malaysia, the nation reported a larger-than-expected trade surplus. The markets have also been shrugging off rising US-China tensions. Ebbing stock market volatility and accommodative central bank policy around the world have been depressing the US Dollar.

Discover your trading personality to help find optimal forms of analyzing financial markets

Last Week’s US Dollar Performance

Last week's US Dollar performance

*ASEAN-Based US Dollar Index averages USD/SGD, USD/IDR, USD/MYR and USD/PHP

External Event Risk – US Fiscal Stimulus, Non-Farm Payrolls Report, Lockdowns?

External event risk for ASEAN currencies somewhat fades this week, but USD/SGD, USD/IDR, USD/MYR and USD/PHP will likely remain sensitive to market mood. The US Congress ended last week without an agreement on the next fiscal package as the $600 extra unemployment benefit per week expired. While hopes remain high for a deal, a delay would risk sparking a selloff in stocks that boosts USD.

Markets continue to shrug off the surge in US coronavirus cases and what has recently been a spike in fatalities as well. It may be because the measures taken thus far to contain the spread are being seen as insufficiently disruptive to materially throw off the outlook for future GDP. Harsher lockdowns remain an upside risk for the US Dollar in the event that such steps stoke demand for preserving capital and liquidity.

All eyes at the end of the week turn to the US jobs report for further information about the health of the labor market. Data still tends to outperform relative to economists’ expectations. A rosy jobs report, combined with an ultra-loose Fed, may boost equities further. That may propel the SGD, MYR, IDR and PHP higher towards the end of the week.

Introduction to Forex News Trading
Introduction to Forex News Trading
Recommended by Daniel Dubrovsky
What does it take to trade around data?
Get My Guide

ASEAN, South Asia Event Risk – Indonesia and Philippine GDP, Reserve Bank of India Also Due

The economic calendar is fairly busy as more will be revealed about the damage Covid-19 has done. On Wednesday, Indonesian GDP may contract about -5% y/y in the second quarter, a historic amount. Then on Thursday Philippine GDP could shrink about -9% over the same period. Aside from a material miss relative to expectations, IDR and PHP may look past these as markets are forward-looking.

Investors may already be pricing in these outcomes and looking forward to the anticipated economic recovery ahead. More timely releases include Philippine trade data as well as Singapore retail sales. China, a key trading partner for the ASEAN group, will release Caixin composite PMI data on Wednesday followed by the latest trade balance figures on Friday.

In another part of the Asia Pacific region, the Reserve Bank of India will have its interest rate decision on Thursday. It may reduce its benchmark repo rate to 3.75% from 4.00%. However, expectations for a 25-basis point cut are fairly split. This is a key ingredient for potential volatility in the Indian Rupee depending on what side investors find themselves. Follow me on Twitter for updates in USD/INR.

At the end of last week, the 20-day rolling correlation coefficient between my ASEAN-based US Dollar index and the MSCI Emerging Markets Index, excluding China, (EMXC) stood at -0.89. Values closer to -1 indicate an increasingly inverse relationship, though it is important to recognize that correlation does not imply causation.

Forex for Beginners
Forex for Beginners
Recommended by Daniel Dubrovsky
Learn how to become a more consistent forex trader
Get My Guide

ASEAN-Based USD Index Versus MSCI Emerging Markets Index (Ex China) – Daily Chart

US Dollar Fundamental Outlook: USD/SGD, USD/IDR, USD/MYR, USD/PHP

Chart Created Using TradingView

*ASEAN-Based US Dollar Index averages USD/SGD, USD/IDR, USD/MYR and USD/PHP

-- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES