· South African <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Rand Currency Reverses Ahead Of Monetary Report<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
· Mexican Peso Further Violence Keeps Peso Stable
· Nordics Traders Await Consumer Price Indexes For The Nordics
· Hong Kong Dollar Data Thins As USDHKD Gains Are Capped
· Singapore Dollar SGD Strengthens In Light Of Straits Losses
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" />
A weakened stock market and concerns over a bearish assessment over the current account deficit by the central bank weighed heavily on the rand. Dropping from a two month high, the South African currency suffered as speculation remained pre-emptive ahead of the Reserve Bank of South Africas bi-annual monetary policy review. In the report, expectations are high for negative mention of a shortfall that now represents 6.1 percent of GDP and is the widest in 25 years. Consequently, the wider gap is likely to erode at overall expansion in the economy, jeopardizing interest rate expectations, leading the currency lower. Stocks additionally suppressed gains with the benchmark FTSE/JSE Africa All Share Index dropping below the record 24,000 close yesterday. Leading shares lower were declines in BHP Billiton and Anglo American Plc. The worlds biggest mining companies took a hit on the day following a drop in copper contract prices as gold and platinum contracts declined in the overnight session. Gold contracts now stand $9.40 lower at $618.30 while platinum prices have dropped $30.30 to $1,162 an ounce. All contracts aside, little action has been witnessed aside from the cross market capital flow. Economic data will be presented tomorrow in the form of manufacturing production, however, which should spark some speculative action in the currency makrets. Manufacturing production in the month of September is expected to have tapered off on a non-seasonal basis. Although detrimental to the underlying currency, the overall figure still remains well supported and will likely add to further speculation of higher interest rates. For the record, production is expected to rise to 3.5 percent, lower than the previous months 4.2 percent advance.
Mexican Peso
The Mexican peso was slightly lower on the day, while still remaining within the trading range that has kept the currency in lockdown for the past week. With no economic data, the peso remained under pressure following increased patrolling in Mexico City following the explosions that roiled the city a couple of nights ago. Stepping up security around government buildings and financial institutions, officials have recognized the intent for another round of attacks vowed by the responsible party. In an interview, coalition leaders vowed to strike businesses and government buildings, following through on promises to fight the government till occupation in Oaxaca was relieved. Although the length of time required is unknown, the increase in security will likely be in place till shortly after December 1st, when President-elect Calderon takes office. Separately, on the economic front, Mexico deputy central bank Governor Guillermo Guemez stated that the recent surge in inflation was likely temporary, as price increases are likely to decline heading early into next year. Rising to 4.09 percent in the month of September, prices are expected to drop below 4 percent as early as December, making central bank decision a lot clearer cut. Speculation had mounted, slightly, on a possible rate hike next year as recent expansion would likely contribute to consumer inflationary pressures. The comments are preceding the consumer price figures set for release tomorrow for the month of October. According to the consensus, prices are expected to move higher by 4.4 percent on the year.
Nordics Swedish, Norway and Denmark
The Norwegian Krone was the only currency of the three to gain against the US dollar in relatively narrow trading today. Spurring Norwegian bullish sentiment was additional employment data for the third quarter. Supplementing the overall national rate released by a week ago, the unemployment rate dipped to 3.3 percent. This backs the more accepted fall to 2.2 percent seen on November 2nd. Record setting, the report continues to purport further central bank rate increases as labor wages are surely to increase wage costs figures and consumer spending. Employment suggestions were also released in Sweden in the overnight. According to a survey by the Swedbank AB and the Federation of Private Enterprise, employment in smaller Swedish companies are restrained as a shortage of qualified workers is visibly present in the European economy. Survey results rose to the highest market since 2000 as rising expansion has supported optimism of further sales and orders and spells good news for further rate hikes by the Riksbank. Currently at 2.75 percent, markets are beginning to price in an aggressive move by the central before year end as inflation remains on the topic of central banker themes. The sentiment is likely to feed into this weeks releases of consumer price inflation, available in all three Nordic economies. Subsequently, a confirmed increase in all three reports is likely to lend further strength against the dollar as it all but confirms higher rates in the very near term.
Hong Kong Dollar
Gains in the USDHKD currency pair were capped during the session after an earlier onslaught by Dollar bulls pushed the pair through the 7.7860 figure to the session high. With no economic data on schedule, price action seemed to be dictated by further declining momentum early on with little cross market surprise in the equity market. Pulling back from previously historic highs, the Hang Seng index retreated, dropping 128.07 points to 18,811.24. Leading the move lower was Hang Lung Properties Ltd. The stock had the biggest drop in eight years as properties developers came into focus, with the decline being exacerbated by shares in China Mobile. The indexs best performer in the past month, China Mobile shares moved lower on expectations that current market valuations would likely top out in the near term. Subsequently, activity is likely to be thin and slow in the next couple of days, ahead of the US trade balance data set for release tomorrow. Should the shortfall widen once again to a record against China, bullish sentiment is likely to be beneficial to HKD positioning. Separately, the International Monetary Fund maintained its support for the Hong Kong dollar trading band, stating that the currency has moved quite well in the currently instituted band. The world organization also reiterated its growth forecast for the economy which is expected to expand between 5.5 and 6 percent in the year.
Singapore Dollar
Continuing on yesterdays momentum, the Singapore dollar rose against the US dollar counter in the overnight session. There was little news on the front for further appreciation except for automobile COE open bid reports. All three categories rose on the month boosting the notion, albeit far reaching at best, that consumer sentiment is rising and increasing the bids for automobile licenses. However, with the 1.5600 handle proving to be a formidable support barrier for the currency pair at the current moment, SGD bulls will likely need further evidence of expansion in the country to make a push past the figure. The evidence will more than likely not be served till next week when retail sales figure for the month of September are to be released. Expected to remain at a healthy 2.1 percent annualized figure, the strength in the consumer sector should additionally be reflected in the subsequent gross domestic product figure which is expected to show a whopping 8 percent rate of expansion in the third quarter. All in all, market sentiment should still side with an appreciate Singapore dollar and hawkishly biased Monetary Authority. Subsequently, the Straits Times index dipped from record territory as investors saw market valuations as slightly overextended. Leading shares lower were developers like CapitaLand Ltd.. The equity benchmark as a result, dipped 13.92 points to close at 2,735.30.
