Market Outlook 20 July 24 July 2015

Transcription

1 Highlight Treasury Division TMU 01 :(66) TMU 02 :(66) TMU 03 :(66) Market Outlook 20 July 24 July 2015 Last Week: Last week, the Thai baht dramatically continually depreciated against the dollar as investors expected that Fed would raise interest rates within this year while concerns over Thai economics pressured on Thai baht. In Europe, the Greek concerns have been softened with possibility that Greece will receive funding program from its creditors. In New Zealand and Australia, the rate cut from RBNZ and the release of the meeting from RBA have weakened the currencies. This Week: This week the market will focus on the FOMC meeting as market awaits for signals from the policy makers on the timing of interest rate hikes. USD The dollar hit its three-month high against a basket of major currencies on Monday (20/7), after solid U.S. inflation and housing data supported the expectations of a possible rate hike by Federal Reserve in the very near future. The dollar still appreciated after St. Louis Fed president, James Bullard, suggested that the central bank is likely to raise rates in September as inflation is set to climb toward its target and unemployment is poised to dip below 5%. The dollar extended its gain on Wednesday (22/7) after existing home sales reaching an 8-1/2 year high in June. Moreover, the first-time fillings for weekly unemployment benefits fell to 255,000, the lowest level since November However, the dollar fell against a basket of currencies on Friday (24/7) as unexpected fall in new home sales in June, the lowest level in 7 months, at an annualized pace of 482,000 units, lower than forecast at 546,000 annualized units

2 Graph: Dollar Index (DXY) Source: Reuters Comment: The focus will be on the July Fed meeting to see if policymakers provide any hints for the timing of the rate hike. In addition, the market awaits the data for Markit PMI (28/7), Pending Home Sales (29/7) and UoM Consumer Sentiment (31/7)

3 EUR & GBP After the Greece debt situation likely to be solved, the EUR gained its momentum during the week with the limited upside after the stronger USD. The EUR started the week at /35 USD/EUR. The EUR rebounded from its ground after German Chancellor, Angela Merkel, won supports from the German parliament in negotiating deals with Greece to receive the new funding terms, also Greek banks started back their operations across the country under withdrawal limits today after having been shut down for 3 weeks. In addition, the currency continued to rise after Greece successfully repaid money owing to the ECB and IMF, and Greek lawmakers voted in favor of the second set of reforms, signaling that negotiations on an 86 billion European Union bailout can begin. The EUR has appreciated throughout the week before closing at /85USD/EUR with varied in a range of USD/EUR. The GBP was opened at /10 USD/GBP. The Pound opened the week with a strong appreciating trend as BoE s Carney said that a rate hike decision would be in sharper relief by year end. However, the sterling gains was capped by the hopes for the Fed tightening policy. The GBP was moved in a limited range during the week after the minutes of the Bank of England's latest policy meeting revealed a unanimous vote in favor of maintaining its monetary policy. The minutes of the BoE's July meeting showed that all nine members of the Monetary Policy Committee were in favor of leaving the key interest rate at a record low of 0.5% and making no changes to the central bank's 375 billion asset-purchase program. The GBP gradually dropped at the end of the week before closing at /16 USD/GBP with moving range of USD/GBP during the week. Graph: EUR &GBP Daily QEUR= Cndl, QEUR=, Bid 27/07/2015, , , , , , (+0.78%) SMA, QEUR=, Bid(Last), 14 27/07/2015, /07/ /07/2015 (GMT) Price USD July Daily QGBP= Cndl, QGBP=, Bid 27/07/2015, , , , , , (-0.03%) SMA, QGBP=, Bid(Last), 14 27/07/2015, /07/ /07/2015 (GMT) Price USD Source: Reuter July

4 Comments: It seems that the Grexit concerns were gradually vanished from the market with a great possibility that Greece will receive new funding program from creditors. However, the EUR could be pressured by the aspect that Fed could raise their low-interest rate sometime this year. The EUR could confront some more downside after a weak economic data showed that the Euro-zone economics still needed some improvement. We expected that the EUR will move in a range of USD/EUR. As for the Sterling, there were some improvements last week. However, we believe that the GBP will mildly supported by hopes for a rate hike by the Bank of England later in the year. We believed that the Sterling will move between USD/GBP

5 AUD & NZD The Australian dollar and New Zealand dollar opened on Monday (20/7) at /72 USD/AUD and /16 USD/NZD, stable from Friday (17/7) closing level at /72 USD/AUD and /13 USD/NZD. Last week, the Australian and New Zealand dollars hovered near six-year low on Monday, weighing down by weak commodity prices and diverging interest rate outlooks compared to the United States. The Australian dollar was also under pressured after the Reserve Bank of Australia (RBA) Governor, Glenn Stevens, said on Tuesday (21/7) that the prospect of more interest rate cuts remained on the table, but cautioned that too much easing could lead to longer-term dangers through risk-taking and excessive borrowing. Moreover, the Annual core inflation at around 2.3%, well within the RBA's target band of 2 to 3 percent. The New Zealand dollar was also under pressure after The Reserve Bank of New Zealand, this week, cut interest rates from 3.25% to 3.0% on Thursday (23/7). Moreover, markets are pricing in roughly two more rate cuts in New Zealand in the next 12 months. Last week the Australian dollar and New Zealand dollar was moved in the range between USD/AUD and USD/NZD. Then closed on Friday at /82 USD/AUD and /73 USD/NZD. Graph: AUD and NZD Daily QAUD= Cndl, QAUD=, Bid 27/07/2015, , , , , , (+0.11%) 16/07/ /07/2015 (GMT) Price USD July Auto Daily QNZD= Cndl, QNZD=, Bid 27/07/2015, , , , , (+0.61%) 16/07/ /07/2015 (GMT) Price USD July Auto Source: Reuters

6 Comments: This week the Australian dollar and New Zealand dollar remain under pressure on concerns about China and the falling commodity prices. This week Australia and New Zealand will release a Jun building permits on Thursday (30/7). We expected that the Australian dollar and New Zealand dollar will be moving in the range of USD/AUD and USD/NZD respectively

7 JPY The Japanese Yen opened on Monday (20/7) at /15 JPY/USD, slightly depreciated from closing level on Friday (17/7) at /11 JPY/USD after market expected that the Federal Reserve would raise the interest rate within this year from more confidence of better-thanexpected U.S. economic data recently. In the midst of the week, the yen recovered after the Bank of Japan Governor, Kuroda, commented that Japan s inflation was well improved and he expected that the 2.0% inflation rate target would be achieved without further stimulus program. However, this week the Yen, as well as the region s currencies, was moving in a fluctuating trend. Also, the economic data released recently showed a sign of concerns in consumption and export sectors. Japan s July manufacturers' sentiment index was at 14, unchanged from June, and services sentiment decreased from 36 in June to 24. Furthermore, the demand for Japanese Yen as a safe haven asset declined since investors worries about Greece were relieved and the strong U.S. economic data were reported. During the week, the Yen moved within the range of JPY/USD, and closed on Friday (24/7) at /98. Graph: JPY Daily QJPY= Cndl, QJPY=, Bid 27/07/2015, , , , , -0.59, (-0.48%) 16/07/ /07/2015 (GMT) Price /USD July Source: Reuters Comments: This week, market will focus on Fed s meeting (28-29/7), Japan s retail sales (29/7), and National consumer price index (31/7). We expect that the Yen will move within the range JPY/USD

8 THB Thai baht opened on last Monday (20/7) at 34.23/34.26 THB/USD, depreciated from the closing level from previous week at 34.15/34.17 after the upbeat U.S. data including CPI and Housing starts released on Friday (17/7) which indicated more possibility for Fed to hike the interest rate this september. The Baht continued depreciated throughout the week due to heavy slump in gold price and the capital outflow from the stock market. The gold price fell almost 2.5% to fresh five-year low on Monday(20/7) at 1,086 USD/ounce after China updated its bullion reserves on Friday (17/7) which the increase was smaller than previously estimated. On the other hand, the capital outflow of the stock market has also be seen this month(until 24/7) from net selling by foreign investors by more than 25,000 million Baht. The currency dropped up more than 2 % this week and hit the lowest level of the week on Friday (24/7) at 34.95/97 THB/USD which is the new low level since Because of the rapid fall of the currency, the assistant Bank of Thailand Governor, Chantavarn Sucharitakul, told reporters that there was no sign of unusual speculative activity during baht's sudden drop this week, but the central bank would monitor the currency market closely. Graph: THB Source: Reuters Comments: This week, Thai baht tends to test the level of THB/USD again if there are any signals from FOMC meeting on Wednesday (29/7) to hike the interest rate sooner than expected. Moreover, the data on Monday (27/7) showed that the country s export, which accounts more than 60 percent of the economy, dropped 7.87 percent in June from a year earlier. This data indicated that the country continues to struggle to raise the growth this year and it may lead to more capital outflows in the rest of the year. We expected the baht will move in the range of THB/USD this week

9 FX Forecast Currency Support Resistance THB/USD JPY/USD USD/EUR USD/GBP USD/AUD USD/NZD Economic Calendar Last Week Date Event Survey Actual Prior 20-Jul-15 GE PPI MoM Jun -0.10% -0.10% 0.00% 20-Jul-15 GE PPI YoY Jun -1.40% -1.40% -1.30% 22-Jul-15 JN Machine Tool Orders YoY Jun F % 6.60% 22-Jul-15 FR Business Confidence Jul Jul-15 FR Manufacturing Confidence Jul Jul-15 IT Industrial Orders MoM May % 5.40% 22-Jul-15 IT Industrial Sales MoM May % -0.60% 22-Jul-15 IT Retail Sales MoM May 0.00% -0.10% 0.70% 22-Jul-15 IT Retail Sales YoY May 0.20% 0.30% 0.00% 22-Jul-15 US MBA Mortgage Applications Jul % -1.90% 22-Jul-15 US Existing Home Sales Jun 5.40M 5.49M 5.35M 22-Jul-15 US Existing Home Sales MoM Jun 0.90% 3.20% 5.10% 23-Jul-15 JN Trade Balance Jun 45.8B B B 23-Jul-15 JN Exports YoY Jun Jul-15 JN Imports YoY Jun Jul-15 CA Retail Sales MoM May 0.60% 1.00% -0.10% 23-Jul-15 US Initial Jobless Claims Jul K 255K 281K 23-Jul-15 US Continuing Claims Jul K 2207K 2215K 23-Jul-15 US Bloomberg Consumer Comfort Jul Jul-15 EC Consumer Confidence Jul A Jul-15 US Leading Index Jun 0.30% 0.60% 0.70% 24-Jul-15 JN Nikkei Japan PMI Mfg Jul P

10 24-Jul-15 FR Markit France Manufacturing PMI Jul P Jul-15 FR Markit France Services PMI Jul P Jul-15 FR Markit France Composite PMI Jul P Jul-15 GE Markit Germany Services PMI Jul P Jul-15 GE Markit/BME Germany Composite PMI Jul P Jul-15 EC Markit Eurozone Manufacturing PMI Jul P Jul-15 EC Markit Eurozone Services PMI Jul P Jul-15 EC Markit Eurozone Composite PMI Jul P Jul-15 US Markit US Manufacturing PMI Jul P Jul-15 US New Home Sales Jun 548K 482K 546K 24-Jul-15 US New Home Sales MoM Jun 0.30% -6.80% 2.20% This Week Date Event Survey Actual Prior 27-Jul-15 JN PPI Services YoY Jun 0.60% 0.40% 0.60% 27-Jul-15 GE IFO Business Climate Jul Jul-15 US Durable Goods Orders Jun 3.20% % 28-Jul-15 IT Consumer Confidence Index Jul Jul-15 IT Economic Sentiment Jul Jul-15 UK GDP QoQ 2Q A 0.70% % 28-Jul-15 UK GDP YoY 2Q A 2.60% % 28-Jul-15 US Markit US Composite PMI Jul P Jul-15 US Markit US Services PMI Jul P Jul-15 US Consumer Confidence Index Jul Jul-15 JN Retail Sales MoM Jun -0.90% % 29-Jul-15 GE GfK Consumer Confidence Aug Jul-15 FR Consumer Confidence Jul Jul-15 US Pending Home Sales MoM Jun 1.00% % 30-Jul-15 US FOMC Rate Decision Jul % % 30-Jul-15 JN Industrial Production MoM Jun P 0.30% % 30-Jul-15 JN Industrial Production YoY Jun P 1.30% % 30-Jul-15 EC Economic Confidence Jul Jul-15 EC Business Climate Indicator Jul Jul-15 EC Consumer Confidence Jul F Jul-15 GE CPI MoM Jul P 0.20% % 30-Jul-15 GE CPI YoY Jul P 0.30% % 30-Jul-15 US GDP Annualized QoQ 2Q A 2.50% % 30-Jul-15 US GDP Price Index 2Q A 1.50% % 30-Jul-15 US Core PCE QoQ 2Q A 1.60% % 30-Jul-15 US Initial Jobless Claims Jul K K 30-Jul-15 US Continuing Claims Jul K K

11 31-Jul-15 JN Jobless Rate Jun 3.30% % 31-Jul-15 JN Housing Starts YoY Jun 3.00% % 31-Jul-15 GE Retail Sales MoM Jun 0.30% % 31-Jul-15 GE Retail Sales YoY Jun 4.00% % 31-Jul-15 FR Consumer Spending MoM Jun 0.50% % 31-Jul-15 FR Consumer Spending YoY Jun 1.60% % 31-Jul-15 IT Unemployment Rate Jun P 12.30% % 31-Jul-15 EC Unemployment Rate Jun 11.00% % 31-Jul-15 EC CPI Core YoY Jul A 0.80% % 31-Jul-15 IT PPI MoM Jun % 31-Jul-15 IT PPI YoY Jun % 31-Jul-15 CA GDP MoM May 0.00% % 31-Jul-15 CA GDP YoY May 0.80% % 31-Jul-15 US U. of Mich. Sentiment Jul F