· South African Rand Hawkish Comments Weigh On Stocks, Good For <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Rand<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
· Mexican Peso Protests Continue To Hamper Markets
· Nordics Continued Momentum Rides On Record Unemployment
· Hong Kong Dollar Hong Kong Stocks Close On Record
· Singapore Dollar Manufacturing Suggestions Keep SGD Spirits Supported
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Pressure on the South African Rand continued for the second straight session even as economic data and some inflationary comments led the Rand higher against the US dollar in the morning. Trading as low as 7.3325, the emerging market pair rebounded to trade at 7.4225 just before the close in New York. However, sparking some bullishness in the transition from the London session were comments by Governor Mboweni of the Reserve Bank of South Africa. Speaking to students in Durban, South Africa, Mboweni stated that although lower crude oil prices have added to declining inflation, the dip cannot be taken for granted and oil prices continue to pose an upside risk to our inflation outlook. The remarks widely spurred further speculation that interest rates are likely to continue their heightened bias as central bankers continue in their attempts to curb inflationary pressures which have been bolstered by a depreciated currency and stronger consumer spending. Currently, inflation is running at a 5.1 percent clip, a three year high. The remarks subsequently, helped to weigh on benchmark stock issues as the FTSE/JSE Africa All Share Index dipped 72.90 points to 23,527.62. Concerns over higher rates helped to suppress shares that were already downtrodden on lower oil prices. Bellwether oil shares led decliners on the day with BHP Billiton and Sasol Ltd sliding on crude oil contracts that touched upon $57.92 a barrel in the New York. However, there was a brighter light in economic data with the Naamsa Vehicle Sales report. Suggestive of demand for durable goods, the vehicle sales survey jumped by 14.1 percent in the month of October.
Mexican Peso
Sliding for a second day, the Mexican peso broke through consolidation above the 10.70 support floor, to close in on the 10.90 figure. With both US data depressing traders and Mexican economic data absent on the day, market participants concentrated once again on the political situation in the city-state of Oaxaca. Already a more than five month conflict, tensions spiked on the day when incumbent President Vicente Fox ordered the breakup of the last stronghold retained by major protestors in OaxacaCity. Using tear gas and water cannons, the public university campus was taken by force, relegating protestors to fighting back with sticks and stones, hopefully not breaking any bones. Already on the minds of traders, todays situation continues to make it increasingly difficult to buy up Pesos as it seems the administration still has conflict reserved in the near term. Subsequently, stocks werent in much of a mood to play with the Bolsa index dipping almost 5 points lower on the session to 23,042.28. Still higher by 26 percent on the year, some concern is now arising over the potential effects of a delayed resolution to the protests. Should the situation be carried over into the new administration, which takes place in one months time, pessimism may lead benchmarks lower on slight confidence. As a result, policy makers and government heads have pressures President Fox to resolve the issue before stepping down to President elect Calderon.
Nordics Swedish, Norway and Denmark
Ranges were definitely narrowed in the Nordics, but still in favor against the US dollar as momentum from yesterdays bullish interest rate speculation lingered to boost all three currencies. However, there was a pairs worth of data that lifted the Norwegian and Danish majors in the session. In Norway, following the deposit rate increase, unemployment improved to the lowest rate since October of 1988. A record rate in 20 years, the survey dipped a notch to 2.2 percent as employment prospects remain abundant in the oil rich Norway. Staggering enough, taking a deeper look into the figures and its no wonder why expectations continue to be supportive of another near term round of rate tightening by the Norges bank. In a country of 4.6 million, only 53,400 people are said to be registered as completely unemployed in the month, according to the Norwegian Public Employment and Welfare Service. The improvements are likely to spur further consumer spending and growth in the economy, however, simultaneously bolstering higher prices. Separately, Denmarks central bank reported that its currency reserves declined slightly in the month of September to 179.5 billion krone as the state repaid foreign loans without further transactions throughout the month.
Hong Kong Dollar
With investment visibly healthy, the Hang Seng index advanced on the day, boosting the Hong Kong dollar in the currency markets. Led by realty and property holding companies, the benchmark index jumped 261.13 points to 18,714.78 at the close. The indexs biggest advance since October, the healthy bid tone keeps the domestic currency supported as investors continue to look for avenues of higher return on a stall in interest rates in the US and opportunities connected with Asian economies. Shares in Sun Hung Kai Properties, the citys largest developer, gained 0.9 percent to close higher at HK$86.40. Surprisingly, however, the underlying currency continues to remain slightly hesitant of further moves lower even following the more optimistic retail sales figures. For the month of September, retail sales value was higher by 7.5 percent, with volume increasing by 5.8 percent. Although declining on both ends below the consensus figures, the report results still lend strength to the economy which is expected to grow at a healthy pace of 5.2 percent for the year. The report subsequently beat the average growth rate of 6.8 percent in the first nine months of the year. Separately, the economic growth figure is widely being compared to the most recent expectations of below two percent growth for the United States, boosting HKD demand.
Singapore Dollar
Expansion was additionally witnessed in Singapore in the overnight as the months manufacturing survey continued to add to overall bullishness for the underlying currency. According to the Singapore Institute for Purchasing and Materials Management, purchasing activity on orders rose to 53.4 as the electronics sector was buoyed higher to a 54.4 print. Both results were above the consensus figures as export orders accelerated for the month of October with the key production component rising to 56.4, adding 3.4 points in output for Southeast Asias fourth largest economy. As a result, the positive reports continue to confirm the central banks assessment of growth, which is pitted to rise to the top end of estimates ranging from 6.5 to 7.5 percent. However, the good spells werent felt throughout all markets as the benchmark index lent to some near term weakness in the underlying currency, keeping the range uncharacteristically narrow towards the end of the day. Falling for the first time in three sessions, the Straits Times index dropped on expectations that exports may falter in the near future on slower US growth. Dropping 6.8 points, the index closed at 2,730.98 as four stocks for every three declined on the day.
