USD jumps to 9-month excessive, Asian currencies and shares plunge

The greenback index – towards the US greenback towards 6 key companion currencies – at midday on August 19, Vietnam time elevated to 93,502, the very best degree since November 5, 2020.

The euro fell to its lowest degree since November 4, 2020, to $1.16655, whereas the Australian greenback (AUD) fell to $0.7198, a degree not seen since November 5, 2020, and The New Zealand greenback (NZD) fell to $0.68465, the bottom since 11/13/2020.

Towards the Japanese yen, the dollar additionally rose to 110.225 JPY.

Australian greenback (AUD) continues its strongest downtrend in Four months. Westpac Strategists see AUD presumably falling to $0.70, whereas NZD might drop to $0.68, though there’s a probability these currencies will rebound later this yr.

The NZD fell into a robust bearish zone on August 18 after the Reserve Financial institution of New Zealand (RBNZ) delayed turning into the primary G10 central financial institution to boost rates of interest in the course of the pandemic, a day after A brand new outbreak of Covid-19 has pushed the nation into lockdown. Even so, RBNZ Governor Adrian Orr at this time (August 19) when talking to the Nationwide Meeting, stays optimistic that the official home foreign money fee will regularly improve over the following 18 months.

The variety of new Covid-19 infections in New Zealand on the morning of August 19 elevated to 21, however the nation’s authorities stated that they had remoted the infections from the group after tracing the preliminary unfold. from somebody who just lately returned from Sydney.

The Australian state of New South Wales – the capital is Sydney – introduced a document excessive variety of new Covid-19 infections on August 19, regardless of the strict blockade. Australia’s unemployment fee unexpectedly fell to a 12-year low in July of 4.6%, bringing short-term pleasure to the folks of this nation, as a result of the info was rapidly combined when the variety of infections The sharp improve of Covid-19 brought about part of the workforce to lose their jobs.

The British pound on the morning of August 19 fell to a 4-week low of $ 1.3712, whereas the Canadian greenback was additionally a 4-week low, at 1.2699 CAD/USD.

Within the minutes of the July 27-28 assembly of the Fed’s Open Market Committee (FOMC) launched on August 18, Fed officers agreed to contemplate decreasing the dimensions of the large stimulus packages. – purchase bonds – this yr if the financial system continues to enhance as anticipated, though the situation of “additional substantial progress” is excessive, the job market continues to be underwhelming there.

“Wanting forward, most attendees famous that, within the occasion the financial system continues to increase as anticipated, they suppose the tempo of asset purchases might start to sluggish this yr.” The minutes said, including that the financial system had met its inflation goal and that they have been “nearly happy” with the tempo of job development. Nevertheless, the minutes additionally indicated that central financial institution members insisted {that a} discount or contraction in asset purchases weren’t a precursor to an impending fee hike, noting that ” Some” members wish to wait till early 2022 to start phasing out the asset buy program. FOMC members concurred that the roles market had but to fulfill the “additional substantial progress” goal the Fed had made as a situation for beginning consideration of fee hikes.

Joseph Capurso, chief strategist at Commonwealth Financial institution of Australia, stated: “It must be remembered that the FOMC’s July assembly comes forward of a ‘bump’ July nonfarm payrolls report. Due to this fact, in response to Mr. Capurso: “We preserve our view that the FOMC will announce the stimulus minimize in September, then do it in October or possibly November.”

The discount in debt purchases normally has constructive implications for the greenback as a result of the Fed is not going to use a lot money within the monetary system.

  USD jumped to a 9-month high, Asian currencies and stocks plunged - Photo 1.

USD rose sharply towards key companion currencies

Foreign money and inventory markets of rising Asian economies all fell on August 19 after the Fed launched the minutes of the assembly, making the greenback enticing whereas danger property have been beneath stress. decreased drive.

The South Korean gained led the decline amongst regional currencies.

Taiwan’s (China) shares fell probably the most amongst rising markets, shedding greater than 2%, adopted by Indonesian shares down 1.5% within the context of this nation’s central financial institution. will announce a call on rates of interest later at this time – anticipated by traders to be stored at a document low degree to assist the financial system amid the implementation of anti-Covid-19 restrictions.

Singapore shares fell to a six-week low at this time, whereas the Singapore greenback fell to an almost one-month low.

Malaysian shares fell 0.Four p.c amid studies that the nation’s former deputy prime minister, Ismail Sabri Yaakob, is more likely to win the race for prime minister after a coalition authorities crashed earlier within the week.

Significantly, the shares of Thailand and the Philippines continued a sequence of three consecutive gaining periods. Nevertheless, the Philippines has lowered its financial development goal for 2021, reflecting the impression of a two-week lockdown of the capital area to stop the unfold of the Delta variant virus.

Markets in India are closed for a vacation.

China’s yuan fell to a three-week low in worldwide markets. The home spot market traded CNY at 6.4928 at midday on August 19, down 87 pips from the earlier session. The Folks’s Financial institution of China (PBOC) set the central fee on August 19 at 6,4853 yuan/USD, up 62 pips or 0.1% from the earlier session.

  USD jumped to a 9-month high, Asian currencies and stocks plunged - Photo 2.

Asian currencies and shares fell concurrently

Concerning the monetary market outlook, the main target of the market proper now’s the annual Jackson Gap symposium, which can happen from August 26 to 28, the place central bankers will meet.

Westpac strategists in a observe to their shoppers wrote: “We see that Fed officers will proceed to sign new steps in the direction of coverage normalization, offering the USD sustainable assist”.

Sophia Ng, analyst at MUFG Financial institution, additionally wrote in an announcement: “We see the chance that Fed Chair Powell, at subsequent week’s Jackson Gap Symposium, will announce ‘progress’ that has already been made. met the Fed’s goal however will cease there, earlier than giving a robust sign subsequent September that stimulus might be tapered off”, including that even “The announcement in September additionally It could be untimely due to uncertainties associated to the Delta variant virus and its impression on the financial system.”

Reference: Reuters

Vu Ngoc Diep