Market Update - 28 November 2012

• Durable goods orders was better than expected and consumer confidence was stronger at 73.7 versus 73.0. Equities attempted a late day rally but the S&P failed to break back above 1,404.

• Gold and Crude fell 0.40% each to 1742 and 87.40 respectively. Euro traded steadily lower throughout the day just below 1.3000 while AUDUSD is trading in the 1.0400-1.0500 range.

• USDMYR had a mini move yesterday dipping towards 3.0400 before opening higher again today at 3.0500. As we enter the last month of 2012, volumes that are already low will likely be even lower.

• I think the only event that could move USDMYR is the Dollar fiscal cliff decision, if US doesn’t come up with some concrete solution market might have priced in some of it, but if the decision they make will result in a recession then maybe USDMYR might rally. Anyway my 2 cents is no decision form them come year end and postponed to 2013…..
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  The US Treasury’s semi-annual FX report has NOT labeled China a currency manipulator, albeit stating that the CNY remains ‘significantly’ undervalued, although this had limited impact on mkts. Note the yuan “has appreciated by 9.3 percent in nominal terms and 12.6 percent in real terms against the dollar since June 2010,” the Treasury said.

• The funny thing is US calls China a currency manipulator but what is the US doing printing so much money all these while, remember QE? They are devaluing the US Dollars also, talk about the kettle calling the pot black….. never fails to amuse me, and if PBoC starts to print money, I wonder what will US say??

• My view is that PBoC will continue with a relative "hand-off" stance to advocate a market driven currency, with its late behavior shift could well presage further FX reforms in the coming months. It is also interesting to see US treasury takes pressure off other major trading partners as well, which potentially include other big Asia surplus economies including Japan and Korea.