Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Aussie outperforms overnight
Global markets jumped higher overnight after a better-than-expected reading from the US’s weekly unemployment claims report saw US sharemarkets gain.
The S&P 500 gained 2.3% while the tech-focused Nasdaq jumped 3.1%.
The weekly unemployment claims fell from 250k to 233k – the biggest fall in almost a year – and calmed fears sparked by last week’s big miss in the US’s non-farm employment report that was partly behind this week’s market swoon.
The Aussie outperformed with the AUD/USD up 1.1% while Aussie was stronger in other markets most notably gaining versus the GBP.
The NZD/USD gained 0.3%.
The USD/JPY extended its recovery up 0.4% while USD/SGD and USD/CNH both eased.
Yuan looks to CPI
The CNH will be in focus with inflation numbers due today.
While food price inflation may have increased due to seasonal factors and floods, we forecast CPI inflation of 0.1% y-o-y in July, down from 0.2% in June. This is primarily because non-food price inflation is weaker on soft consumption.
PPI inflation is predicted to stay negative in July, staying at -0.8% y-o-y from June due to the continued decline in raw material prices due to weak demand.
After a big fall on USD/CNH, the next strong key resistance will be at the 7.2000 handle.
MYR at one-year highs
The MYR has gained strongly in line with the USD’s fall across Asia.
Despite slower growth in manufactured exports, we anticipate that industrial production growth will pick up slightly in June, rising to 2.6% y-o-y from 2.4% in May thanks to better LNG production.
Another reason for MYR’s outperformance is foreign investors’ renewed faith in Malaysia’s fundamentals, which has resulted in inflows into bonds.
Aussie, kiwi surge on market rally
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 5 – 9 August
All times AEST
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
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