Currency markets have been quite stable, even after France and Spain reported a surprising rise in y/y inflation for Feb. While EUR/USD was initially lifted a tad alongside a 6bps rise in the 2Y bund yield post CPI, it eventually eased back to the 1.05 handle. High inflation is certainly not a European-specific phenomenon, being evident in most advanced economies. Meanwhile, Fed’s Goolsbee, who is in the running to be the next Fed Vice-Chair, spoke on the need to avoid relying too much on market reactions instead of observing the real economy. This may hint at an inclination to put less weight on financial markets, which had been volatile, as compared to the robust real economy.
USD/CNH has held firmly below the psychological 7 level. This is perhaps not too surprising, as RMB stability should be prized ahead of the start of the National People’s Congress this Sunday, when leaders are to be formally appointed. Media reports are suggesting that Zhu Hexin could be named PBOC Governor, while current NDRC chief He Lifeng could be appointed as PBOC party secretary. Monetary policy is not likely to see a significant change, and supporting growth is likely to remain a key priority for officials.
USD/KRW still hovers above 1320, with the won being weighed by a manufacturing slowdown. Trade data today show that Korean exports contracted by a sizeable 7.5% for Feb (Jan: -16.6% y/y), though the trade deficit has narrowed to USD5.3bn (Jan: $12.7bn deficit) as Lunar New Year seasonal softness drop out. On a combined Jan-Feb basis, Korean exports have fallen by 12.1% compared to the same period last year, marking the worst start to the year since 2016. The average Jan-Feb trade deficit is also at a rather wide USD9.0bn, which implies that downward pressures on the KRW may persist.
Australia’s Q4 GDP growth this morning came in slightly softer than expected at 0.5% q/q (Q4: 0.7% q/q). At the same time, Australia’s Jan CPI showed inflation slowing a tad to 7.4% y/y (Dec:8.4%), but still well above the RBA’s target range of 2-3% inflation. AUD/USD softened a touch to trade close to 0.67 given the small GDP miss, while ACGB 2y yield slipped by around 6bps after the release.
Quote of the day
“But it is a danger and a mistake for policymakers to rely heavily on market reactions. Our job is ultimately judged by what happens in the real economy.”
Chicago Fed President Austan Goolsbee
1 March in history
Yellowstone became the world’s first national park in 1872.
Topic
The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). This report is intended for “Accredited Investors” and “Institutional Investors” (defined under the Financial Advisers Act and Securities and Futures Act of Singapore, and their subsidiary legislation), as well as “Professional Investors” (defined under the Securities and Futures Ordinance of Hong Kong) only. It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Singapore recipients should contact DBS Bank Ltd at 65-6878-8888 for matters arising from, or in connection with the report.
DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 13th Floor One Island East, 18 Westlands Road, Quarry Bay, Hong Kong SAR
Virtual currencies are highly speculative digital "virtual commodities", and are not currencies. It is not a financial product approved by the Taiwan Financial Supervisory Commission, and the safeguards of the existing investor protection regime does not apply. The prices of virtual currencies may fluctuate greatly, and the investment risk is high. Before engaging in such transactions, the investor should carefully assess the risks, and seek its own independent advice.