10 March 2010
Asia Closing Highlights
- Taiwan: A bank official said that the central bank has been using open-market operations to drain excess cash from the nation's financial system to keep asset prices in check. The central bank official said that adjusting interest rates has a more far-reaching impact and may not be an appropriate tool to target certain issues.
- Singapore: MAS survey showed Singapore 2010 GDP to grow by 6.5% (2009 actual: -2.0% y/y) and Q1 GDP to hit 9.5% y/y (Q4 actual: 4.0% y/y). The USD/SGD is seen at 1.35 by year end.
- Indonesia: The govt plans to raise $1.1 bln via single Samurai bond issue end April or end May to plug the budget deficit.
- Philippines: Treasury chief Tan also said that there are no more global bond issue plans for the year and that if such a need arises the government will look at tapping the domestic markets.
- Thailand: BoT kept rates unchanged at 1.25% as widely expected.
- Thailand: PM Abhisit vowed to maintain peace and stability saying that sufficient security forces had been deployed to contain any potential instability.
- Thailand: DPM Suthep elsewhere cautioned that the intelligence sources had warned of numerous small bombings across the capital, though assured that legal action would be taken against the anti-govt forces if any important locations were seized.
- India: Planning Commission's Ahluwalia said the govt might frontload higher proportion of the borrowings to first half of FY11 i.e. by Sept, out of the cumulative INR 4.57 tln.
- German January trade surplus EUR8.7bln vs EUR16.6bln in Dec, vs exp of EUR16bln, Exports -6.3% m/m, imports +6.0%. While final Feb German CPI revised up to 0.4%m/m, +0.6%y/y, HICP up to 0.4%m/m, +0.5%y/y.
- ECB Board Member Jose Manuel Gonzalez-Paramo says Eurozone countries must coordinate their fiscal policies more. Measures taken by Greece convince ECB, IMF and European Commission. Best Contribution from IMF on Greece is its analysis of the situation, with responsibility for Greece's future lies with Eurozone countries.
- NKS: Major foreign businesses are leaving Japan one after another to chase better opportunities elsewhere. French tire maker Michelin plans to end its manufacturing operations in Japan in July. Japan's balance of payments data for 2009 shows that foreign direct investments in Japan plunged 55.7% on the year. The number of foreign businesses listed on the Tokyo Stock Exchange has also declined sharply, with just 15 remaining as of Tuesday, compared with a record 127 in 1991. Meanwhile, no new foreign company stocks have debuted since 2008.
- FT: US regulators have told banks not to increase dividends or buy back shares until political and economic uncertainty surrounding the industry dissipates, in a move that will delay by months the return of capital to shareholders. Some investors in financial stocks argue that winners of the credit crisis, such as JPMorgan Chase and Goldman Sachs, have profitable businesses and strong balance sheets and should consider raising dividends or buying back stocks. NY Federal Reserve and the Treasury, told banks they would have to wait until the economic and legislative picture became clearer before returning funds to investors.
- FT piece by Martin Wolf: Ever since the federal republic was founded, Germany has had two over-riding strategic objectives: sound money and European integration. The euro embodies these aims. Now they conflict with each other...Yet, establishing the EMF would require a new treaty, as would exclusion from eurozone institutions (while a country could not be stopped from using the euro itself).. Germany's structural private sector and current account surpluses make it virtually impossible for its neighbours to eliminate their fiscal deficits, unless the latter are willing to live with lengthy slumps. Now that the private sector's bubble has burst, the synthesis is a eurozone fiscal disaster. Ironically, Germany must become less German if the eurozone is to become more so.
USD/Majors: Late Asian session saw the Greenback gaining some ground as traders covered USD shorts on expectations that there could be some changes in the Fed statement brewing - notably the removal of reference t o low rates for "extended" period of time. Sterling took the brunt of the hit dragging the EUR lower earlier, but the latter managed to catch its footing below 1.3550 levels while GBP bounced off the sub-1.49-figure lows trimming, but not reversing USD gains. Antipodeans though were well supported given the commodities and CNY lin kages.
Cross/JPY: Upside in the JPY crosses either stalled - as was the case with the more sure-footed pairing like the AUD/JPY and the NZD/JPY - while the rest of the Majors lost some ground against the JPY; and nowhere as much as was given up in the GBP/JPY. With eurozone issues still lurking, risk appetite was seen pulling back at the margin and the GBP came off getting the short end of the FX stick.
USD/Asians: With EUR bears resurfacing in late Asian trades, USD/AXJ retained the firmer tone despite most of the bourses ending the session in small positive territory. The Chinese stock markets were the sole bourse in red weighed probably by expectations that the need to wind-up stimulus measures could intensify following the strong trade numbers. Thailand's central bank kept the rates unchanged at 1.25% and did not eke any reaction from the financial markets, with politics still the main focus. BoK and BSP meet tomorrow and we expect steady rates from both the central banks citing domestic recovery uncertainties and benign inflation.
Oil was stable in late Asian trades. Crude oil last traded at $81.52/bbl.
Gold also stood rooted and saw little change from early trades. Spot gold trading at $1124.45-1125.45/oz at last indication.
NORTH ASIA
USD/KRW: While pressure was persistent given broad-based gains in the regional pairings, BoK was insistent on the support at 1130 and the paring closed just at lows of 1130.8, but above 1130.
USD/CNY: the late short-covering also caught some of the NDF short positioning triggering a mini bounce off 6.6300-ish levels towards 6.6400.
USD/HKD: Consolidation theme persisted as the pair hovered within 7.7580-7.7610, with flat Hang Seng.
USD/TWD: Suspected official bids towards closing sent USD/TWD to finish higher at 31.847 after consolidating around the 31.750-mark for the whole session.
SOUTH ASIA
USD/SGD: EUR slip in late trades amid USD short-covering saw the USD/SGD bounding off 1.3970 lows, but offers remained above the 1.3990 levels.
USD/MYR: After tumbling to 3.3140 lows, prices flirted with the 3.32-figure into closing as dollar strength stalled downsides.
USD/IDR: Prices were lackadaisical in sub 9200 levels in the afternoon with a firmer dollar lending support.
USD/PHP: Bearish moves in the USD/PHP were checked preventing a test below the 45.60; first stall was due to BSP intervention while late USD short-covering contributed to slight retracement to 45.64 close.
USD/THB: Prices showed scant reaction to BoT's decision to keep rates unchanged. 32.67-32.70 range seen, with bias for gains.
USD/INR: Trades were little changed in the pm session of Far East session, with the pair wading near lows at sub-45.45. SENSEX remained in slight positive terrain.