Personal Finance - Standard Chartered Bank Market Matters
Foreign Exchange Market Report
FX Snapshot 20 Aug 2004
 
Personal Finance - Standard Chartered Bank USD
Rangebound before USD weakness resumes
  • The news on the US economy remains relatively poor, although there are still signs of underlying strength. The best evidence of this was the Philly Fed survey on Thursday, which showed a strengthening of expectations regarding the business outlook over the next 6 month while price indices also rose significantly. This week is fairly quiet on the data front with only durable goods orders on Wednesday, expected to show a rebound, and revisions to GDP and Michigan consumer confidence on Friday, of any note. In this environment, expect the USD to be rangebound.
    Personal Finance - Standard Chartered Bank EUR
    Economic weakness will likely halt significant n/t gains
  • Economic weakness in the US is clouding underlying strength. In Europe, there is littleunderlying strength to talk of. This was reinforced in Germany last week with the ZEW survey of business sentiment factory orders falling sharply. The IFO survey is unlikely toalter this picture in the coming week. Although Germany appears to be the weakest link, the general trends are likely to be similar. Therefore, this weakness should hamper significant EUR gains in the near-term.
    Personal Finance - Standard Chartered Bank JPY
    JPY repatriation flows may resume
  • After disappointing Q2 GDP data, recent data has reaffirmed our belief in the sustainability of the economic recovery. Early in the week, the leading economic indicator held steady, firmly in expansion territory. And on Friday, the all industry activity index showed strong gains, pointing to the fact that the economy should continue to expand. As we head into the seasonal repatriation period, this should help to support the JPY into the end of Q3.
    Personal Finance - Standard Chartered Bank GBP
    Housing market cools
  • Four sets of data all painted a similar picture of a cooling housing market last week. Given the heavy indebtedness of the consumer and rising interest rates, the housing market is seen as crucial to the health of the UK economy. A decline in retail sales data reaffirmed that the Bank of England is likely to take a pause in the rate hiking cycle. Technically, Sterling is rangebound with downside risks. It is these risks that the fundamentals hint at. Mortgage lending and industrial trends data on Thursday will be key.
    Personal Finance - Standard Chartered Bank AUD
    AUD rangebound near term
  • Recent data and Reserve Bank of Australia comments continue to reaffirm the outlook for higher interest rates later this year. However, uncertainty surrounding the global environment means the RBA will be in no hurry. Therefore, expect the AUD to remain rangebound in the near-term with downside risks given the AUD’s overbought nature.
    Personal Finance - Standard Chartered Bank SGD
    Data still firm, awaiting impact of high base effects
  • Retail sales were strong at +17.6% y/y and while non-oil domestic exports were weaker than expected, they posted a similar gain. Of course, it would be foolhardy to expect growth rates to remain this rapid as high base effects and the temporary lull in the US hit. However, growth is still expected to register healthy growth of around 8% this year. But the currency implications are limited with the MAS already haven tightened policy.

    Key Levels
    Currency Support Resistance
    EUR/USD 1.2200*** 1.1945**** 1.2465*** 1.2645**
    USD/JPY 107.50**** 105.00*** 112.50**** 115.00***
    GBP/USD 1.8000**** 1.7720*** 1.8500*** 1.8700****
    AUD/USD 0.7130*** 0.6930**** 0.7380**** 0.7520***
    USD/SGD 1.6945*** 1.6750** 1.7305**** 1.7520**

    Key: (*)-Minor; (*****)-Major

    Key Events
    Event Day Implication
    Singapore CPI Monday Moderate rise seen, limited market implications
    Germany Q2 GDP/Aug CPI Tuesday Economy to remain weak
    US July durable goods orders Wednesday Strong gains still expected
    US July new home sales Wednesday Housing starts last week strong
    Singapore July industrial prod’n Thursday Likely to remain firm before slowing later in the year
    UK BBA mortgage lending Thursday Further signs of a slowdown expected
    Germany Aug IFO survey Thursday Unlikely to show an improvement
    UK quarterly CBI Industrial survey Thursday  
    Japan July labour market/spending Friday Trend for improvement continues
    Japan July CPI Friday Unlikely to show clear move into +ve territory just yet
    UK Q2 GDP Friday Expected to confirm recent strength of economy
    UK Aug GfK consumer confidence Friday Weak housing mkt could undermine confidence
    US Q2 GDP Friday Trade to detract from flash estimate for Q2
    US Final Aug Univ Of Mich CSI Friday High oil prices may undermine confidence n/t

    Recent FX Performance (%, +ve = USD decline)
    Currency Past 1 Week 1 Month 3 Months 1 Year
    EUR/USD 0.02 2.35 3.44 13.79
    USD/JPY 1.49 1.03 3.02 6.76
    GBP/USD -0.53 0.09 2.58 16.41
    AUD/USD 1.14 2.24 3.93 11.15
    USD/SGD 0.35 1.00 0.76 2.14

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