FX Ringgit 02 July 2010

[HIDDEN]

hi,

Currency reports and FX news for the Ringgit for the week ending Friday,  9th July 2010 :


Saturday July 3, 2010 : Treasury Pulse By AmResearch
Global Foreign Exchange Market
SIGNS of fragility in the global economy became evident as the week was characterized by a slew of weak global economic data. Fears of faltering growth in the United States, the world’s largest economy, resurfaced following weak spots in the housing, manufacturing and labour sectors. US pending home sales declined to 30.0% in May while manufacturing, as measured by the ISM Index, fell by a higher-than-expected 5.9% in June as export orders softened on the back of uncertainties emanating from the European debt crisis.

Weakness in US economic data precipitated the US dollar to close the week lower against most major currencies. At the point of writing, the US Dollar Index declined 0.9% from a week earlier.

Meanwhile, optimism of a China-led recovery dimmed as Conference Board’s China leading economic index rose only by a marginal 0.3% in April, the lowest since November 2009. Moderation in China’s economic growth is further confirmed by the decline in the HSBC’s Purchasing Managers’ Index in June.

Nonetheless, regional Asian economies remain resilient as South Korea’s industrial production rose by a quicker-than-expected 21.5% in May while Thailand’s exports recorded a sharp rise of 42.5% , also in May. In Europe, initial doubts surrounding banks’ capability to repay European Central Bank (ECB)’s 12-month long-term refinancing operation loan worth 442 billion euros prompted EUR/USD to decline to 1.2100-levels.

However, towards the later part of the week, EUR/USD catapulted back to 1.2500-levels, its quickest gain since May, after ECB announced a marked reduction in its lending to the banks, thus alleviating fears of liquidity risk.

Additionally, some confidence returned after Spain successfully issued its 3.5-billion euro five-year government bond at an average yield of 3.657% (compared to 3.532% at a May’s auction).

Demand was decent with a bid-to-cover ratio of 1.7 times although lower than the ratio of 2.35 times previously.

The rally in the euro also lent support to the British pound which closed the week above the 1.5100-handle against the US dollar.

This came despite a report indicating that UK consumer confidence tumbled to a six-month low in June, prompted by the recent Government Emergency Budget which includes steep spending cuts and tax hikes.

Sagging global equities markets precipitated an initial weakening of Asian currencies against the US dollar, including the ringgit. However, the ringgit recovered towards the end of the week in tandem with other regional currencies following resilient economic data out of Asia. As of Friday noon, the Bloomberg-JP Morgan Asia Dollar Index, which tracks 10 regional Asian currencies, closed the week relatively flat while USD/MYR traded at 3.2230, gaining 0.3%.
End of Article
http://biz.thestar.com.my/news/story.asp?file=/2010/7/3/business/6597674&sec=business


July 10, 2010 13:30 PM : FOREX: Ringgit Likely To Remain Firm Against US Dollar Next Week
KUALA LUMPUR, July 10 (Bernama) -- The ringgit is likely to remain firm against the greenback next week after an interest rate hike and amid a return to risk aversion by investors, dealers said.

Bank Negara Malaysia raised the Overnight Policy Rate (OPR) by 25 basis points to 2.75 per cent, the third time this year, after similar 25 basis points hikes each in March and May. The floor and ceiling rates of the corridor for the OPR are correspondingly raised to 2.5 per cent and three per cent, respectively. According to the dealers, the ringgit will continue to benefit from the positive market reaction to last Thursday's rate hike.

"The overall market picture is more geared toward the strengthening of the ringgit helped by the risk aversion," a dealer said. A forex dealer said the risk appetite would be a key driver behind the ringgit as global growth fears waned, although a clear direction is still absent.

He said many economists predicted positive growth in the next six months on the back of stronger-than-expected growth in the first half of this year. The International Monetary Fund (IMF) raised its 2010 global output forecast to 4.6 per cent from 4.2 per cent in its review of the global economy. The IMF said the growth would be driven by a robust expansion in Asia and renewed US private demand, but the Euro debt crisis remained a major challenge.

It said a double-dip world recession was highly unlikely. During the week, the ringgit, which tracks the performance of the euro, continue appreciating, except on Wednesday, due to profit taking activity. On a Friday-to-Friday basis, the ringgit was higher against the US dollar at 3.1970/1000 from 3.2220/2250 previously. The local unit was weaker against the Singapore dollar at 2.3163/3204 from 2.3118/3163 last Friday but stronger against the yen at 3.6153/6195 from 3.6634/6681 previously.

The ringgit was higher against the British pound at 4.8575/8624 from 4.8981/9030 last Friday but lower against the euro at 4.0520/0566 from 4.0275/0322 previously.
End of Article
http://www.bernama.com/bernama/v5/newsmarket.php?id=512401

[HIDDEN]

hi,

Boy, have the Euro and GBP jumped against the US dollar. And so has the Yen. The MYR and S$ seem pretty steady but they're managed so guess that's why. But it could also be because I haven't been paying attention for a few days so it's a surprise.   

I couldn't find much in the way of opinion on the Euro/GBP rise but here's something from Bloomberg.

15 July 2010 : Yen Heads for Weekly Gain on U.S. Slowdown; Kiwi Drops on Inflation Report
The yen approached the strongest this year against the dollar, as signs the U.S. economy is losing momentum fueled speculation the Federal Reserve will keep interest rates near zero. The greenback was poised for a third weekly decline against the euro before reports today economists said will show U.S. household sentiment deteriorated this month and consumer prices fell in June. New Zealand’s dollar dropped for the first time in two weeks versus the U.S. currency after a government report showed inflation was slower than economists forecast, easing pressure on the Reserve Bank to raise borrowing costs.

“The market is becoming increasingly worried about downside risks to the U.S. economy,” said Toshiya Yamauchi, a senior foreign-exchange analyst in Tokyo at Ueda Harlow Ltd. “As risk sentiment weakens, the yen is likely to be sought.”

The yen traded at 87.24 per dollar as of 11:14 a.m. in Tokyo from 87.40 in New York yesterday, after climbing to 87.17, the strongest since July 7. Japan’s currency has advanced 1.6 percent this week and reached the strongest this year at 86.97 on July 1. The dollar was at $1.2921 per euro from $1.2950, having lost 2.2 percent since July 9. The euro bought 112.70 yen from 113.17 yen.
http://www.bloomberg.com/news/2010-07-16/yen-heads-for-weekly-gain-on-u-s-slowdown-kiwi-drops-on-inflation-report.html

[HIDDEN]

I was watching CNBC this morning and one of thier analysts reckoned that Asian currencies were overbought and Sterling and Euro were oversold. It was always more probable to turn in the favour of Euro/Pound because all the bad news is already out there. Also its seems that big investors are less worried about banks collapsing in Europe and speculation on stress test results seems quite positive.

I think Pound is also affected by the rapidly growing confidence that Government isnt going to collapse any time soon.

Bob