Ahead Today

G3: Spain Unemployment Change

Asia: 

Market Highlights

US Non-Farm Payrolls were stronger than expected at 187k, but this was accompanied by downward revisions to previous months’ estimates. The details signaled a US labour market which continues to rebalance, with improving labour supply driving both higher participation and unemployment rates, coupled with gradually slowing wage growth. Meanwhile, US ISM Manufacturing and Prices Paid were stronger than expected although both remained in contractionary territory, at 47.6 and 48.4 respectively. Brent Oil prices rose to US$88.7/bbl, as Russia said they will extend production cuts, with more details to be released in coming days. Saudi Arabia is also expected to extend its supply cuts into October.

The Dollar strengthened meaningfully by 0.6% with a combination of stronger headline payrolls, ISM Manufacturing numbers, and higher oil prices.

China announced further support to the property market and to stabilize the currency. These include cuts to mortgage rates to existing mortgage loans, coupled with a 2pp cut to the FX Reserve Ratio Requirement which boosts Dollar liquidity. Overall, CNH strengthened against the Dollar before settling closer to 7.27.

BRENT OIL ROSE FURTHER AS RUSSIA ANNOUNCED FURTHER EXTENSION OF SUPPLY CUTS, BUT WITH DETAILS YET TO COME

Source: Bloomberg

Regional FX

Overall, Asian currencies were slightly weaker against the Dollar, given the tug of war between CNH and the broader Dollar. Oil importing currencies such as INR and PHP were somewhat weaker by around 0.2%, while SGD was also weaker by 0.2%. These also came on the back of the Caixin China Manufacturing PMI which came in stronger than expected at 51.0 from 49.2 the previous month. Meanwhile inflation in Indonesia remained moderate at 3.3%yoy, with core inflation coming off further to 2.2%yoy from 2.4%yoy previously.