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ASEAN Fundamental Outlook
ASEAN currencies depreciated against theUS Dollarthis past week Focus forUSD/SGD , USD/PHP remains on the US-China trade war Neutral reiterance from the Fed risks compounding market pessimism Trade all the major global economic data live and interactive at theDailyFX Webinars . We'd love to have you along.
US Dollar and ASEAN FX Recap The US Dollar outperformed against its major counterparts this past week,climbing alongside the S & P 500towards the latter-half of the past 5 days. Gains in US equities occurred despite simmering US-China trade tensions. There was a bout of market optimism asthe US delayed imposing auto tariffsand Walmart and Cisco delivered rosy earnings reports.
Unsurprisingly,ASEAN currencieslost ground against their US counterpart, as anticipated. A notable underperformer was the Singapore Dollar. Weakness in the Philippine Peso was compounded by theBSP cutting bank reserve requirement ratiosas the Bank of Indonesia stepped up efforts to Guard the Rupiah following the latest interest rate decision.
US-China Trade War May Escalate The focus for ASEAN currencies continues to be the threat of US-China trade wars given a relatively light regional economic calendar docket. The Singapore Dollar will likely look past local GDP data for developments in sentiment. During the final moments of last week, a report from CNBC crossed the wires noting that talks between the world's largest economies stalled.
As a reminder, US President Donald Trump threatened to impose an additional $325b in Chinese import tariffs at a rate of 25% (on top of the current $200b). For the Philippine Peso, the prospects of cheapercrude oil , due to the commodity's sentiment-linked status if stocks fall, can help curtail aPHP selloffin the event of more gains in the very liquid US Dollar.
FOMC Minutes and Fed Chair Jerome Powell Another risk for currencies such as the Indonesian Rupiah and Malaysian Ringgit could be a speech from Fed Chair Jerome Powell and the latestFOMCmeeting minutes. The former will occur towards the beginning of the week on Monday at 23:00 GMT while the latter is set for Wednesday at 18:00 GMT.
This is because the markets have been pricing in a rate cut from the Federal Reserve towards the end of this year, following a general dovish shift in policy expectations in central banks across the world. Locally, both the Philippine and Malaysian central banks delivered cuts. However, the Fed may reiterate its neutral stance. This may fuel risk aversion, boostingUSD .
For more timely updates on ASEAN currencies and the impact of US-China trade wars on them, you can follow me on Twitter@ddubrovskyFX
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