· South African Rand <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Rand Reverses In Tandem With Lower Gold<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
· Mexican Peso Peso Declines For The First Time In Four
· Nordics Swedish Unemployment Adds To Rate Hike Speculation
· Hong Kong Dollar Hang Seng Makes Record Close
· Singapore Dollar SGD Gains On Upcoming NODX Report
South African <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Rand<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Initially gaining the most so far this month, the South African rand has pulled back in afternoon trading following a report that reflected optimistic improvements in manufacturing activity for the Philadelphia region. However, gaining to an 11 week high, the underlying currency showed continued advances as traders seem to be stepping up their assessment of a rate cut in the US economy in early 2007, making rand investments attractive. Currently, rand based assets are offering an 8.5 percent interest rate compared to the USs 5.25 percent. Technically, the emerging market currency pair initially broke through the 7.2000 figure before finding support at the 7.1000 level, rising 1500 points in midday. The absence of economic data worsened the move against the rand, following a drop in South African stocks. Led by major mining companies, the benchmark index ended lower as gold contracts declined on the session. The FTSE/JSE Africa All Share Index lost 223.17 to 23,436.27, down by 0.9 percent intraday. Subsequently, Anglo American Plc stock was lower, dropping 3.92 rand to 335.26 as gold and platinum contracts declined during the session. With crude oil prices pulling back from above the $60 a barrel market hit last week, now below $57 a barrel, inflationary concerns have abated and reduced the need for price increase protection through gold positioning. Contracts on the COMEX division are lower by $2.10 at $621.70 as traders continue to pare back long positions in the precious metal.
Mexican Peso
The Mexican peso declined on the session, the first in four, ahead of a report later this afternoon that could show lower growth prospects in the Latin American economy. For the third quarter, constant annualized gross domestic product is expected to pullback slightly from the 4.7 percent rate in the previous quarter. The 4.5 percent consensus, surprisingly, is subsequent to an announcement by the Economy Ministry earlier today that showed healthy foreign direct investment in the country. Foreign investors increased investment in to the economy by a whopping 9.5 percent for the first nine months of 2006, on an annualized basis. The increase translated into a receivable of $14.1 billion, adding to the already expansive environment taking place in the country. Subsequently, prospects are still relatively high for a surprise to the upside as industrial production figures were better than expected yesterday. Estimated to have increased by 4.9 percent, the actual advance in production was higher by 5 percent in the month of September, bolstering further bullishness for the Peso. Separately, benchmark stocks were little changed, but slightly higher, on the day. The Bolsa index advanced 44 points to 24,359.58, rising to a seventh session record high. Sentiment on higher stock valuations should contribute to underlying currency strength and bring the pair back below the 10.85, barring a highly negative GDP report.
Nordics Swedish, Norway and Denmark
The Nordic currencies were relatively inactive on the day once again with US data crimping any momentum that may have existed from yesterdays gains. In the overnight, both Norway and Denmark schedules were devoid of anything important to the markets. Meanwhile, Sweden released continually optimistic employment data. For the month of October, Swedish unemployment declined further to 4.6 percent against consensus estimates of 4.8 percent. Boosted by rampant higher on increased expansion and production, the lower unemployment rate should bolster speculation of further growth for the country as wage earnings are additionally likely to move higher. The notion will likely support rate hike increases in the near term by the Riksbank before yearend as policy makers continue to be wary of inflationary pressures that may continue to head north. The next indication of price increases is set for next week when producer prices are likely to have climbed by 3.5 percent in the month. For the record, the jobless number declined to 211,000 from 254,000 in the same comparative month last year.
Hong Kong Dollar
Equity markets helped to boost the underlying Hong Kong dollar in the overnight as the Hang Seng index record close was widely coupled with positive unemployment data in lending a helping hand. For the second day, Hong Kongs benchmark stock index closed at a record as shares of mainland companies continued to support advances in the overall market. China Mobile Ltd. shares continued to advance as China Merchants Holdings Co. rose to the highest in six months. Airline stocks also led the market higher with Cathay Pacific Airways climbing for the second straight day. As a result, the Hang Seng index added 61.07 points to close out at 19,154.07, helping to break a three day US dollar rally. Additionally on the HKDs side was a decline in the countrys unemployed. For the month of October, the economys unemployment rate declined to 4.5 percent, a 64-month low compared to earlier consensus estimates of a 4.6 percent print. Consequently, expansion and continued hiring by firms have helped to fuel domestic demand, contributing to a higher retail sales volume. Retail sales volume was higher by 5.8 percent in the same month. Ultimately, the better than expected unemployment figures are likely to boost speculation ahead of the consumer price index report early next week which may fuel speculation of restrictive measures by the monetary authority in the near term.
Singapore Dollar
Reversing the losses seen in the previous session, the Singapore dollar made incremental ground against the US dollar ahead of tonights anticipated non-oil exports reports. Optimistic, the report falls in line with the explosive growth being witnessed in the economy, purporting further ground to be won by the Singapore dollar bulls. Last month, figures stood more than impressive as exports soared by 8.3 percent. Even more surprising was the fact that non-electronic exports soared 17 percent higher, while trade with the US rose for the seventh consecutive month. Although expected to pullback, the report should continue to advancing in the month of October, likely purporting rising growth in the city-states domestic population. Subsequently, positive report results would feed nicely in to the electronics report and the upcoming gross domestic product report for the third quarter. For the final print, overall growth is expected to double to 6.6 percent against the previous 3.4 percent monthly rise. Singapore stock advances also contributed to supporting the underlying currency, rising for the third day to a record close. Boosted by Chartered Semiconductor Manufacturing Ltd. shares, the Straits Times index climbed 20.83 points to 2,798.45 at the close. Chartered, which manufactures chips that power game consoles like the Xbox, was supported by a positive report on the manufacturing activity in the Philadelphia region.
