Dollar dips, stocks slip on Trump remarks

SYDNEY - The dollar declined on Monday against major currencies to its lowest in more than two weeks after US President Donald Trump criticized the Federal Reserve's tightening policy, while stocks slipped on fears of further trade protectionist measures.

Trump, on Friday, lamented the recent strength of the US dollar and accused the European Union and China of manipulating their currencies.

The remarks, coupled with Trump's threats to impose tariffs on all US imports from China, triggered a bout of sell-offs in Wall Street and European stocks on Friday, despite good corporate earnings.

Asian stocks followed that lead on Monday with Japan's Nikkei stumbling 0.9 percent. Australian shares were off 0.1 percent while the New Zealand market was down 0.4 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan was up a touch waiting for other markets to open.

Trump's comments also hit the greenback, which was last down 0.2 percent at 94.25 against a basket of six major peers, and steepened long-term Treasury yields.

"The President's remarks also make it very clear he has a distaste for a stronger dollar, effectively limiting the greenback's ability to perform, at least near term," said Rodrigo Catril, senior forex strategist at National Australia Bank.

The dollar index is so far up 2.4 percent this year.

A Reuters report on Friday that the Bank of Japan was in unusually active discussions to modify its massive easing also played a role in the tick-up in yields globally.

Benchmark 10-year Japanese Government Bond futures opened weaker on Monday, sending yields to six-month highs. The Reuters report also added to the yen's strength, which was last up 0.3 percent at 111.07 per dollar.

"The market took the news as a possible sign the anchor at the long end may allow for some natural drift higher," ANZ said in a note to clients.

Investors are now looking ahead to an important meeting on trade between Trump and European Commission President Jean-Claude Juncker at the White House. A breakdown in talks could hit risk sentiment, hurting global equities, analysts said.

The euro climbed for a third straight day to a two-week top of $1.1746.

In commodities, oil prices were caught between a weakening dollar which supported the market and concerns about US-China trade tensions and supply increases which undermined sentiment.

US crude was last off 3 cents at $68.24 a barrel after posting its third straight weekly loss. Brent settled at $73.18, up 11 cents.

source: news.abs-cbn.com

Dollar at 2018 peak as benchmark Treasury yield hits 7-year high

NEW YORK - The US dollar rose against a basket of major currencies on Tuesday to its highest since December, as data showing a pickup in US consumer spending exerted fresh selling pressure on US government bonds and sent the yield on the 10-year Treasury note to its highest level since July 2011.

The dollar index, which measures the greenback against a basket of 6 other currencies, was up 0.63 percent at 93.173, after rising as high as 93.457. Against the yen, the dollar was up 0.58 percent at 110.29 yen, its strongest since early February.

"The resurgent tone for the US dollar is largely due to, number one, the move higher in Treasury bond yields across the curve and number two, the relatively solid data we saw on retail sales," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange Inc in Washington DC.

The benchmark government yield reached a high of 3.095 percent, blowing through the key psychological level of 3 percent it hit in late April.

"The rise in the benchmark 10-year Treasury bond yield back above 3 percent this morning once again added to the dollar's relative yield appeal, particularly against higher risk and higher yielding rivals," said Esiner.

Softer-than-expected economic news from the euro zone and Britain also helped the dollar against the euro and sterling, he said.

"All that plays into the narrative, which is largely behind the dollar's rally since mid-April, that the US economy is outpacing growth in most of the rest of the industrialized world and that the Fed will likely far outpace most of the major central banks in policy normalization," he said.

Data on Tuesday showed US retail sales increased marginally in April as rising gasoline prices cut into discretionary spending, but consumer spending appeared on track to accelerate after slowing sharply in the first quarter.

"After a nerve-jangling reversal, consumer sentiment seems to be on the mend - suggesting that economic growth will improve in the second quarter, while providing the impetus for gradual rate hikes from the Federal Reserve," Karl Schamotta, director of global product and market strategy at Cambridge Global Payments, said in a note.

The euro fell to a fresh 2018 low of $1.1821, after weaker-than-expected economic growth in Germany.

The Turkish lira fell to a fresh record low against the dollar, bringing its losses this year to more than 13 percent after President Tayyip Erdogan said he plans to take greater control of the economy.

Argentina's peso plunged to a new record low despite hefty central bank interventions in the past few days.

Sterling, which has been hurt in recent weeks by weak economic data and a decision by the Bank of England to hold interest rates, slipped to a new 2018 low of $1.3452 before paring losses to trade down 0.3 percent at $1.3513.

source: news.abs-cbn.com

Asia shares hit historic high, dollar on defensive

SYDNEY - Asian shares hit historic highs on Monday as Wall Street extended its record-breaking run, while the US dollar remained on the defensive as investors priced in the risk of tighter policies elsewhere in the rich world.

Activity was restrained somewhat as a US holiday on Monday curbed trade in cash Treasuries, though E-Mini futures for the S&P500 made early gains of 0.2 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent to 591.66, finally clearing the former all-time top of 591.50 from late 2007.

Australia's main index firmed 0.5 percent, while futures for Japan's Nikkei pointed to opening gains.

Investors were optimistic that Chinese gross domestic product data due on Thursday would show growth of at least 6.7 percent for the world's second biggest economy.

Wall Street was on a roll as the fourth-quarter earnings season kicked off with solid results from banks and robust retail sales, driving investor optimism about economic growth.

The Dow amassed gains of 2 percent last week, while the Nasdaq gained 1.8 percent and the S&P 500 1.6 percent. The S&P 500 and Nasdaq scored eight record closing highs out of the first nine trading days of 2018, while the Dow boasted its sixth closing high of the year.

Earnings for S&P 500 companies are expected to increase on average by 12.1 percent in the quarter, with profit for financial services companies likely to increase 13.2 percent, according to Thomson Reuters.

"The big consensus trade of being short US dollars into 2018 and long European and US financials continues to work in earnest and this remains the key focal point in the week ahead," said Chris Weston, chief market strategist at broker IG.

"The decline in the USD index was actually the biggest sell-off since 27 June, with prices closing below the Sept. 8 low. It just shows how much sway the USD bears have right now."

DOLLAR IN DECLINE 

The dollar index showed no sign of bouncing early on Monday, instead edging down to a fresh trough at 90.896.

The euro was up at a three-year peak of $1.2203 and holding all of Friday's 1.3 percent surge.

The single currency has been bolstered by speculation European Central Bank policymakers are preparing to temper their vast monetary stimulus campaign.

Also helping was news German Chancellor Angela Merkel's CDU party and the Social Democrats (SD) were moving toward formal coalition talks.

Leading members of the Social Democrats said on Sunday they would press for improvements to the coalition blueprint, seeking to win over skeptical party members who can torpedo the deal.

The dollar was near a six-week low on the yen at 111.08 yen, while the pound was at its highest since mid-2016 at $1.3737.

The Canadian dollar also held firm on wagers the country's central bank would hike interest rates at a policy meeting on Wednesday.

A softening US dollar combined with resilient Chinese demand has been positive for most commodity prices.

Gold stood at $1,338.34 an ounce after reaching a four-month top of $1,339.34 on Friday.

Oil prices were a shade lower in early trade, but that followed six straight sessions of gains.

Brent crude futures eased 16 cents to $69.71 a barrel, while US crude dipped 9 cents to $64.21.

source: news.abs-cbn.com

Wall Street rebounds from Trump-induced sell-off; dollar rises

NEW YORK - Wall Street rebounded on Thursday from its biggest sell-off in more than eight months, helped by strong US economic data, but uncertainty over US President Donald Trump's agenda kept an index of global equity markets near a three-week low.

The US dollar reversed early losses against a basket of major currencies after stronger-than-expected US economic data put the focus back on a widely anticipated increase in interest rates by the Federal Reserve.

Still, reports that US President Donald Trump had tried to intervene in an investigation of alleged Russian meddling in last year's US presidential election, and that his aides had numerous undisclosed contacts with Russian officials, kept markets concerned over his ability to implement his economic agenda.

Adding to market jitters across the Americas, Brazilian stocks triggered a 30-minute halt to trading after the benchmark Bovespa index fell 10 percent following a report that President Michel Temer gave his blessing to an attempt to pay to silence a potential witness in the country's biggest-ever graft probe.

The iShares MSCI Brazil ETF tumbled 16 percent.

MSCI's all-country world equity index was down 0.31 percent after dipping to its lowest since April 25 earlier in the day.

The index found some support on Wall Street. US stocks recovered ground after a near 2 percent sell-off on Wednesday for the S&P 500, as upbeat economic data emboldened investors to return to the market.

"We could be just shaking off the jitters here. Yesterday, investors were really worried," said Janna Sampson, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

Investors were likely relieved, she said, by Wednesday night's appointment of former FBI chief Robert Mueller to investigate alleged Russian interference in the election and possible collusion between Trump's campaign and Moscow.

"Whatever the (investigation) result, people feel they might have confidence it's an accurate, unbiased result," she said.

Earlier in the day, the Philadelphia Federal Reserve said its business activity index rose in May after declining for two months. Weekly unemployment data also pointed to strength in the labor market.

The Dow Jones Industrial Average rose 56.09 points, or 0.27 percent, to end at 20,663.02, the S&P 500 gained 8.69 points, or 0.37 percent, to finish at 2,365.72 and the Nasdaq Composite added 43.89 points, or 0.73 percent, to close at 6,055.13.

The pan-European FTSEurofirst 300 index closed down 0.89 percent at 7,436.42, ending off lows.

US Treasury yields rose from one-month lows as stocks recovered from Wednesday's drop, reducing demand for safe-haven bonds.

The 10-year note was down 4/32 in price to yield 2.229 percent, up from 2.216 percent late on Wednesday.

Spot gold dropped 1 percent to $1,247.78 an ounce.

The US dollar reversed early losses against a basket of major currencies, getting a boost from the better-than-expected US data.

"The readings on jobless claims and the Philly Fed index back expectations for faster (second-quarter) growth and a Fed rate hike next month," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

The dollar index was up 0.27 percent, with the euro down 0.45 percent to $1.1108.

Oil prices settled higher as key producing countries suggested they would extend supply cuts to reduce an ongoing global crude glut.

Benchmark Brent crude futures ended the session 30 cents higher at $52.51 a barrel while US crude futures settled up 28 cents at $49.35.

source: news.abs-cbn.com

Prized 1804 US dollar sells for $3.3-M at auction

An 1804 US silver dollar sold for $3.3 million in one of a series of auctions that brought in a record total of more than $100 million for a renowned private coin collection, organizers said on Saturday.

The silver dollar, one of only eight of its kind, was snapped up at auction on Friday in Baltimore. It was one of more than 200 coins sold at the event.

The auction series, beginning in 2015, generated a total of nearly $107 million in sales, according to Stack's Bowers Galleries, which conducted the auctions along with Sotheby's.

The collection belonged to Dallas real estate developer Mack Pogue and his son Brent, who had collected coins since the 1970s. Coin dealers Kevin Lipton of California and John Albanese of New Jersey jointly bought the prized silver dollar, Donn Pearlman, a spokesman for the two men, said in an email.

"In coins, everybody's heard of the 1804 dollar, it's what I call the ultimate trophy coin," said Q. David Bowers, co-founder of Stack's Bowers Galleries.

The coin is emblazoned with the bust of a woman with flowing hair who represents liberty. Minted by the US government, it was intended as a gift for foreign heads of state.

Brent Pogue began collecting coins in 1974 when he was a teenager and later brought his father into the enterprise.

The first coin the younger Pogue bought was at an auction of the trove that belonged to railroad scion T. Harrison Garrett. In a fitting finale of the Pogue Collection auctions, the last sale was held at the Garrett family's former mansion at Johns Hopkins University, Bowers said by phone.

Mack and Brent Pogue's collection consisted of more than 650 pieces. The father and son sold them because "the thrill of the chase" of being collectors had passed and they wanted to move on, Bowers said.

Even before Friday's sale, the Pogue auctions had already surpassed the value of what had been the record-setting sale of the collection amassed by late dealer and collector John J. Ford.

(Reporting by Alex Dobuzinskis in Los Angeles; Editing by Tom Brown)

source: news.abs-cbn.com

Dollar resumes ascent, Asia keeps wary eye on yuan

SYDNEY - The US dollar held on to broad gains on Tuesday, resuming its ascent after last week's brief wobble as the prospect of rising US interest rates this year kept sentiment bullish on the long-run.

A holiday in Japan made for quiet early trade, leaving the dollar steady at 117.36 yen but well up on Friday's trough of 116.05.

Against a basket of currencies, the dollar was firm at 102.800 having climbed 0.6 percent overnight.

The euro was sulking at $1.0461 despite strong manufacturing data for the currency bloc, having surrendered all of Friday's brief spike to $1.0700.

A dearth of liquidity was largely behind the wild swings, though the market is now so long dollars that it is vulnerable to sudden corrections.

Data released on Friday showed speculators increasing their bets on the dollar in the week up to last Tuesday after cutting positions for the first time since October in the previous week.

The greenback had soared to 14-year highs in December on speculation the US Federal Reserve will hike rates as many as three times this year, and that President-elect Donald Trump will stoke growth and inflation with debt-funded tax cuts.

Treasury yields have jumped in anticipation while central banks in the euro zone and Japan are still working to keep their short-term yields deep in negative territory.

As a result, US two-year debt pays 200 basis points more than German debt and 138 basis points more than Japanese paper.

"Following a period of consolidation between now and late January, we believe the USD will put on another 10 percent of gains over the next eighteen months," said Richard Grace, chief currency strategist at CBA.

Grace argued Trump's proposed plans for a US company tax cut could be particularly bullish for the dollar since it would likely encourage a wave of repatriation by domestic firms and demand for US equities by foreign investors.

"We anticipate some twelve-to-eighteen months of USD strength, beginning when the Trump Administration gets its tax cuts through the Congress," he added, citing late March as likely timing for passage.

Dealers are also keeping a wary eye on the yuan as annual quotas covering how much foreign currency Chinese individuals can buy are reset this week.


China's foreign exchange regulator said on Saturday that the $50,000 annual individual quota will remain unchanged, but some banks have told customers that purchases of foreign currency for buying property, securities and life insurance were not allowed.

The new rules on overseas currency transfers are not capital controls, the official Xinhua news agency reported,

There has been talk investors could rush to sell the yuan fearing further depreciation in the currency, forcing the country's central bank to run down its reserves to head off a self-fulfilling spiral.

Some in the market have hedged that risk by shorting the Australian dollar, typically used as a liquid proxy for the yuan. The Aussie was stuck at $0.7179 on Tuesday, just above the recent seven-month trough of $0.7160.

source: news.abs-cbn.com

Most Asia FX set for 2016 losses; yuan depreciates most since 1994

SINGAPORE - Asian currencies rose on the last trading day of 2016 on Friday, but most were set to post annual losses as the U.S. dollar climbed on expectations of higher interest rates next year.

Emerging Asian currencies were generally higher on the day, with the dollar losing some steam after the euro briefly soared on stop-loss buying in thin year-end trading.

"This is more a position adjustment rather than something fundamentally changing in the background," said Sim Moh Siong, FX strategist for Bank of Singapore.

"Our view is still for Asian currencies to weaken over the course of next year," he said.

While Asian currencies could rebound early in 2017 if the dollar retreats, such a pull-back could provide an opportunity to buy the greenback on dips, Sim added.

Investors are waiting to see if U.S. President-elect Donald Trump will quickly push expansionary fiscal policies once he is sworn in on Jan. 20, which would boost expectations for higher inflation and interest rates.

The Chinese yuan was the worst performer among major Asian currencies in 2016, and market watchers expect it to recoil further next year if the dollar continues to climb.

The yuan is down nearly 6.6 percent against the dollar in 2016, putting it on track for its biggest annual fall since China established its foreign exchange market in 1994.

Concerns about capital outflows and a slowdown in China's economy have weighed on the yuan along with the stronger dollar, and investors are also worried about a potential increase in U.S.-China trade tensions under the incoming Trump administration.

The Taiwan dollar is on track for an yearly gain of 2.7 percent, making it the best performing emerging Asian currency in 2016.
The Taiwan dollar had gained a boost earlier this year, helped by large foreign investor inflows into Taiwanese equities.

Overseas investors, however, have pulled money out of Taiwanese equities in the fourth quarter, and that has weighed on the Taiwan dollar as of late.

Emerging Asian currencies have declined broadly since early November as U.S. bond yields jumped on expectations that Trump's proposals for infrastructure spending and tax cuts will boost economic growth and inflation.

Worries about Trump's stance on trade have also weighed on the currencies of export-dependent countries in Asia.

source: news.abs-cbn.com

Dollar on high as US yields rise, Asia shares divided

SYDNEY - The US dollar touched a nine-month peak in Asia on Monday as the risk of faster inflation at home and greater bond issuance kept Treasury yields elevated, a painful mix for assets in many emerging market countries.

The dollar neared a four-month top on the yen at 106.90 , while the euro touched its lowest since January around $1.0810. It was also at a nine-month high against a basket of currencies.

The dollar has been on a tear since the victory of Republican Donald Trump in the US presidential election on Nov. 8 triggered a massive sell off in Treasuries.

Futures for the 10-year note were at their lowest in 10 months on Monday while the cash yield was at 2.18 percent.

Just two days of selling wiped out more than $1 trillion across global bond markets, the worst rout in nearly 1-1/2 years, according to Bank of America Merrill Lynch.

The jump in yields on safe-haven US debt threatened to suck funds out of emerging markets, while the risk of a trade war between the United States and China soured the mood in Asia.

"There are signs that higher bond yields and the knock of a stronger US dollar are having a domino impact, taking down the weakest risky assets first, before moving on to the next," said Alan Ruskin, global co-head of forex at Deutsche.

"There is only so much financial conditions tightening that risky assets can take when fiscal stimulus is still 'a promise' that lies some way in the future."

MSCI's broadest index of Asia-Pacific shares outside Japan was off 0.3 percent having suffered its lowest close since mid-July on Friday.

In contrast, Japan's Nikkei firmed 0.9 percent on the weakening yen to reach its highest in nine months.

It got an added fillip from data showing Japan's economy grew at an annualized rate of 2.2 percent in the third quarter, handily beating forecasts.

E-mini futures for the S&P 500 added another 0.3 percent early on Monday.

The Dow romped up 5.4 percent last week in its best performance since 2011. The S&P 500's 3.8 percent gain for the week was its strongest in two years.

Investors have favored drug and bank stock to reflect Trump's campaign promises to simplify regulation in the health and financial sectors.

INFLATION ON HORIZON
The stampede from bonds propelled longer-dated US yields to their highest levels since January, with the 30-year yield posting its biggest weekly increase since January 2009.

With the Republicans controlling Congress, there was a real prospect Trump could enact deficit-financed tax cuts and infrastructure spending, ending years of policy deadlock.

The resulting boost to inflation would only be heightened should Trump go through with plans for slapping tariffs on imports and deporting migrants.

The result was a surge in inflation expectations.

One market rate, measuring expected inflation over the five-year period that begins five years from today, shot up 30 basis points to 2.46 percent last week, the highest since late 2014. It had been as low as 1.84 percent in June.

Fed fund futures in turn imply a better-than-70 percent probability the Fed will hike rates in December.

Yet rising bond yields are tightening financial conditions at a pace that might appear premature to policymakers.

This was a point underlined by Fed Vice Chair Stanley Fischer on Friday, saying the central bank was monitoring long-term US government borrowing costs even as the economy appeared strong enough to proceed with gradual rate rises.

Mexico's peso did gain over 1 percent on Monday to around 20.64 pesos per dollar after Trump appeared to soften some of his more incendiary campaign pledges that were seen hurting the Mexican economy.

The New Zealand dollar initially eased after a powerful earthquake rocked the island nation early on Monday, killing at least two people and prompting a tsunami warning that sent thousands fleeing to higher ground.

Yet the currency soon steadied around $0.7115 as rebuilding work promised to support an already strong economy and lessen the need for further interest rate cuts.

In the oil market, Brent crude added 6 cents to $44.81 a barrel, while U.S. crude was flat at $43.41.

source: www.abs-cbnnews.com

Asia shares seen to join global rally after Trump shock

SYDNEY - Asian shares were set to rally hard on Thursday after global markets made a truly remarkable comeback from the shock of Republican Donald Trump's presidential victory, dumping safe-havens for the tempting returns of risk assets.

The US dollar carved out a staggering range, rebounding from as low as 101.19 yen all the way to 105.83, a move that will come as a huge relief to Japanese exporters.

Nikkei futures were trading at 17,250, no less than 1,000 points above the cash index close, implying stocks would recoup all of Wednesday's 5 percent loss and more.

Yields on US Treasury 10-year notes reversed an initial plunge to 1.716 percent to reach 2.09 percent, the highest since January. The net rise of 21 basis points was also the largest daily increase since July 2013.

Analysts were more than a little puzzled by the moves.

"An astonishing turnaround in risk appetite pushed equities and Treasury yields higher," said Imre Speizer, an economist at Westpac. "Markets appeared to reassess the economic outlook under Trump, towards one of higher growth and higher inflation."

He noted that a key market barometer of 10-year inflation expectations had jumped to a 16-month peak of 1.87 percent.

This in turn led investors to completely revise the outlook for US interest rates, with the probability of a December rate hike by the Federal Reserve going from as low as 30 percent to as high as 80 percent.

The dollar responded by rising across the board. Against a basket of currencies, the dollar recovered from its Wednesday trough of 95.885 to reach 98.602, a gain of 0.8 percent on the day.

Having stretched as high as $1.1299 in the initial panic over Trump's win, the euro then slumped all the way to $1.0913 - a move of almost four cents.

The action was no less noteworthy on Wall Street, where S&P 500 futures had shed 5 percent at one stage in Asia on Wednesday only to stand 1.1 percent higher late in the day.

The Dow jumped 1.4 percent, while the cash S&P 500 and the Nasdaq both added 1.11 percent. Trading volume was the highest since June, when Britain also shocked traders by voting to abandon the European Union.

The CBOE Volatility index, a gauge of investor anxiety, fell 23 percent and was on track for its biggest daily drop since late June.

ASIA WARY ON TRADE, ALLIANCES

Traders said investors piled into financial and healthcare stocks on speculation a Trump administration would greatly ease regulations on the sectors.

Trump has also promised generous tax cuts, particularly for the higher paid, and more infrastructure and defence spending, though analysts were unsure how much of this would actually come to fruition.

There were also concerns about whether Trump would follow through with threatened punitive tariffs on Chinese and Mexican exports, potentially triggering a global trade war.

Mexico's peso was still down 8.7 percent after touching a life-time low overnight.

"Further out, Trump's protectionist policies may prove another big step back in the gradual unwinding of goods globalisation that has defined the past 30 years," wrote analysts at Nomura in a note to clients.

"Another important factor is that a Trump presidency would bring with it uncertainty that could undermine the Pax Americana, with all the benefits this has brought to the world in general and, perhaps, Asia in particular since 1945."

For now, investors seemed willing to give the president-elect the benefit of the doubt, as witnessed by a broad advance in bulk commodity prices.

Copper alone added 3.4 percent while iron ore surged 4.7 percent to its highest since January 2015.

Oil prices recovered along with US equities, with Brent crude up 53 cents at $46.57 a barrel and US crude rising 36 cents to $45.34.

Safe-haven gold, however, pulled back sharply to $1,277 an ounce having been as high as $1,337.40 at one stage.

source: www.abs-cbnnews.com

Asia stocks, dollar wrestle with US political risk

SYDNEY - Asia shares eased on Thursday while the US dollar stayed on the defensive as a tightening US presidential race saw the S&P 500 suffer its longest losing streak in five years as investors fled to safer harbors.

Sovereign bonds, gold, the yen and Swiss franc were all in favor, and even the prospect of a December rate increase from the Federal Reserve could not save the dollar.

Oil prices took a beating of their own after a record weekly build in US crude inventories stoked concerns about a global supply glut.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.1 percent in early trade, while Australia's market lost 0.5 percent.

Tokyo markets were closed for a holiday, which was likely just as well as the Nikkei would have been hard pressed by the rising yen.

Narrowing polls have led markets to price in more risk Republican Donald Trump might defeat his Democratic rival Hillary Clinton, perhaps remembering the turmoil that followed the surprise Brexit vote.

An average of polls compiled by the RealClearPolitics website showed Clinton just 1.7 percent ahead of Trump nationally on Wednesday, with 47 percent support to his 45.3 percent. But a Reuters/Ipsos daily tracking poll released on the same day showed Clinton ahead by 6 percentage points among likely voters.

Investors generally view Clinton as a known quantity, but there is deep uncertainty about what a Trump win might mean for US economic policy, free trade and geopolitics.

"We are not quite at the point where we need to think about canned food and underground wood bunkers, but we are being schooled in understanding the dynamics politics plays on financial markets," said Chris Weston, chief market strategist at broker IG Research.

"Despite all the thoughts about central bank policy changes, improving inflation trends and ever-changing economics, politics dominates markets above all else."

The baleful effect was all too apparent on Wall Street where the Dow ended Wednesday down 0.43 percent. The S&P 500 lost 0.65 percent and the Nasdaq 0.93 percent.

Another session of losses for the S&P would match the record for consecutive down days set in 2008.

SLOW MOTION FED

Politics also overshadowed the Fed's November policy meeting where it kept rates steady as expected and opened the door a little wider to a rate rise next month.

"Barring a shock to the global economy and/or upheaval in financial markets, we continue to anticipate a 25 basis point rate hike at the 14 December meeting," said Peter Dragicevich, a senior currency and rates strategist at CBA.

"We, and the FOMC, are looking for the tightening cycle to continue to be slow and limited," he added, predicting just two more rate increases over 2017.

The prospect of such a glacial tightening did little to aid the US dollar which hit its lowest level in more than three weeks against the euro, yen, Swiss franc and sterling.

The euro firmed to $1.1097, while the dollar faded to 103.32 yen. Against a basket of currencies, the dollar index was pinned at 97.365 well down on last week's peak of 99.119.

The Mexican peso slid to a more than one-month low at 19.4667 pesos per dollar, on fears a Trump victory would hurt the local economy.

In commodity markets, spot gold was firm at $1,298.00 an ounce, having hit its highest since Oct. 4.

Oil sank after US crude inventories rose 14.4 million barrels for the week ended Oct. 28, far more than the 1.0 million barrels analysts had expected.

West Texas crude bounced 37 cents to $45.72 in early Asian trade, but that followed a near 3 percent drop overnight. Brent had fallen $1.06 to $47.08 on Wednesday.

source: www.abs-cbnnews.com

Global markets: Asia shares track Wall St higher, US dollar firm

SYDNEY - Asian shares edged higher on Tuesday while the dollar stood firm as upbeat US earnings boosted Wall Street and factory surveys in the United States and Europe boasted their best readings so far this year.

MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.1 percent with most components yet to trade.

Australian stocks added 0.5 percent and futures pointed to an opening gain of around 0.8 percent for Japan's Nikkei helped by a softening yen.

Wall Street took encouragement from upbeat corporate results and the Dow rose 0.46 percent, while the S&P 500 gained 0.47 percent and the Nasdaq or 0.91 percent.

Over one third of US companies have now reported and 80 percent have beaten market expectations. Another third of the S&P 500 components are scheduled to report earnings this week, including heavyweights Apple, Alphabet, Amazon and Boeing.

Merger and acquisition activity added an extra fizz in the wake of AT&T Inc.'s $85.4 billion bid for Time Warner Inc., though the deal seemed destined to face stringent scrutiny from regulators.

Aiding risk sentiment was the Markit survey of US manufacturing which climbed to a one-year top of 53.2. Business activity in the euro zone also expanded at the fastest pace this year so far in October and firms raised prices at the sharpest rate in more than five years.

The better news led investors to nudge up the probability of a December rate hike from the Federal Reserve to around 74 percent and pressured Treasury prices.

It also lifted the US dollar to a nine-month high against a basket of major currencies at 98.846. The dollar remained firm on the yen at 104.28 while the euro struggled at $1.0870.

One mover was the Canadian dollar which rebounded from a seven-month low after Bank of Canada Governor Stephen Poloz said the decision on whether to cut interest rates again was not one to take lightly.

The comments countered recent speculation about an imminent easing and nudged the US dollar down to C$1.3352 from a peak at C$1.3398.

In commodities, oil prices dipped on news of the impending restart of Britain's Buzzard oilfield and Iraq's wish to be exempted from OPEC production cuts.

Brent was down 30 cents at $51.48 a barrel while US crude lost 9 cents to $50.43.

source: www.abs-cbnnews.com

Global markets: Dollar firms, US stocks steady before jobs data

NEW YORK - The US dollar gained on Thursday against a basket of currencies, hitting its highest level in more than two months and pressuring gold prices, as strong labor market data gave support to a possible US interest rate hike later this year.

The benchmark S&P 500 stock index ended barely higher while Treasury yields rose to three-week highs as investors positioned ahead of the closely watched US employment report due out on Friday.

In an encouraging sign for the labor market, data on Thursday showed the number of Americans filing for unemployment benefits unexpectedly fell last week to near a 43-year low.

Oil prices continued to climb, with US crude breaking through $50, spurred by an informal meeting among the world's biggest producers on output cuts and plunging US crude inventories.

The dollar rose to its highest against the yen in a month, and pinned sterling firmly to a three-decade low on worries about Britain's exit from the European Union. Against a basket of currencies, the greenback gained 0.6 percent.

Strong US jobs numbers could cement expectations of a Federal Reserve rate increase later this year and ripple through markets. Economists polled by Reuters forecast non-farm payrolls to increase by 175,000.

Traders were betting on a 64-percent chance the Fed will hike rates in December, up slightly from a day earlier, according to the CME FedWatch website.

"If you look at the economic data for the past month, pretty much across the board it's better and in some cases materially better than expectations," said Walter Todd, chief investment officer at Greenwood Capital Associates in Greenwood, South Carolina. "All of that would seem to push the Fed to move."

In the US equity market, the Dow Jones industrial average fell 12.53 points, or 0.07 percent, to 18,268.5, the S&P 500 gained 1.04 points, or 0.05 percent, to 2,160.77 and the Nasdaq Composite dropped 9.17 points, or 0.17 percent, to 5,306.85.

Gains in Apple, bolstered by optimism about the iPhone, countered a drag from Wal-Mart Stores, which tempered its profit expectations.

The pan-European STOXX index fell 0.4 percent. Shares of British budget airline easyJet tumbled after a weak profit report.

MSCI's gauge of stocks across the globe dipped 0.12 percent.

Europe's benchmark German bond yield edged briefly back above zero, reversing earlier falls, as a selloff in the British government bond market spilled over into the euro area.

Britain's 10-year gilt yield jumped nearly 10 basis points to a three-week high.

Benchmark 10-year US notes were last down 7/32 in price to yield 1.74 percent, up from nearly 1.72 percent late on Wednesday.

Oil rallied to fresh four-month highs.

Brent crude futures settled up 1.3 percent at $52.51 a barrel. US crude settled up 1.2 percent at $50.44 a barrel, eclipsing $50 for the first time since June.

"The fact that you've got crude look like it's willing to hold around that $50 level I think is a positive for the (stock) market," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. "That's maybe another confirmation giving a positive tone to future economic activity."

Spot gold dropped 1.1 percent and touched a four-month low, falling for an eighth straight session.

source: www.abs-cbnnews.com

So You Want to Trade Forex Online?

One of the largest complaints American tourists have when visiting Europe is the high costs of everyday items from bottles of Coke to hotel rooms.

However, Americans visiting Europe this summer will find items a little bit cheaper because of the drastic shift in the exchange rates, and not businesses lowering their prices.

During the summer 2014 months American tourists were able to exchange one American dollar for 0.75 Euros.  By summer 2015, American tourists could exchange the same American dollar but receive 0.88 Euros in exchange.

What happened?

All major currencies trade on the foreign exchange market.  The exchange market assists international trade, investments and tourisms by enabling the conversion of one currency to the other.  Fluctuations in the foreign exchange market result in changes in exchange rates.

The top eight most widely traded currencies in the world include the U.S. Dollar, Euro, Japanese Yen, Great British Pound, Swiss Franc, Canadian Dollar, Australian / New Zealand Dollar and the South African Rand.

Returning to our discussion of an American tourist visiting Europe for a vacation.  Suppose the tourist began planning his 2015 trip in 2014 and acquired 1,000 Euros it would have cost him around $1,250.  If the tourist would have waited until summer 2015, the same 1,000 Euros would have cost $1,100.

Many economists and foreign exchange experts are now predicting the Euro will reach parity with the U.S. Dollar.

How Did That Happen?

In simple terms, demand for a currency determines its values.  As we have seen in the news headlines throughout the year, various European nations (most of which use the same centralized currency, the Euro) were facing difficult economic periods.

Greece’s economic future remains a large concern as the country is stepping up efforts to reach an accord with its creditors in time to avoid a default.  Productivity and labor concerns out of Germany and France also remain a concern.

With that said, investors, banks and financial institutions (such as hedge funds) realize there is a higher degree of uncertainty within Europe than there was a year ago.  As such, demand for the Euro has fallen while demand for the U.S. Dollar has risen as it is viewed as a safer currency to hold.

Naturally, other factors that determine a foreign exchange rate include the country’s GDP outlook, pricing changes in a major commodity export (such as oil, gold, or even coffee), political stability, among others.

You Don’t Need To Be A Tourist To Exchange Money

Converting one currency to another is most certainly not limited to travelers.  In fact, millions of individuals make a living by taking advantage of fluctuations in exchange markets through online trading.

Most financial intuitions offer their clients access to trade in the foreign exchange market.  If your bank does not offer access, there are many online brokers that offer online forex trading.

Setting up a foreign exchange account is straightforward and many companies offer sign-up bonuses or other incentives.

Once a foreign exchange account is set up and properly funded, the user now has access to buy and sell virtually every global currency.

Investors could make use of the foreign exchange market to supplement their already existing investments in the stock market.  On the other hand, a basket of multiple currencies offers investors a diversified investment tool.
As an example, investors who want to bet on the price of oil rising could consider buying a combination of oil-related currencies such as the Canadian Dollar or Mexican Peso.

Approximately $3 trillion worth of currencies change hands on a daily basis, making it the largest trading market in the world.  As such, the exchange is considered to be very liquid (that is every buyer is likely to find a seller and vice versa) and lucrative for day traders that seek to repeat small gains over and over again.  Naturally, investing in foreign exchange isn’t without risks that need to be fully understood before investing and trading.

source: everybodylovesyourmoney.com

Falling yen raises specter of 'currency war' in Asia

SINGAPORE - From South Korea to Indonesia and India, monetary authorities are preparing to let their currencies weaken as a falling Japanese yen makes their economies uncompetitive, and drags them into what some policymakers are calling a "currency war".

The Indonesian rupiah, Malaysian ringgit, Thai baht and other currencies had been sliding gradually against a broadly strong U.S. dollar this year.

They hit fresh lows this week, their sudden declines coming after the yen dropped to a 13-year low on Friday. The region's normally interventionist authorities, however, kept their feet off the brakes.

An adviser to India's finance minister said the country's export growth was flailing not just because of weak global demand but also as a result of the currency-weakening monetary stimulus policies pursued in major economies such as Japan and the euro zone.

"Call it competitive devaluation, currency war or something else, the fact is such policies are having and will have implications for trading partners," the adviser said. "We cannot afford to let our currency become less competitive."

India's rupee has been an outperformer as most other currencies ceded ground to a dollar that has been pushed up by expectations that U.S. interest rates will rise at some point this year.

Indonesia's rupiah is down nearly 8 percent against the dollar so far in 2015, eclipsing a 7 percent decline in Malaysia's ringgit.

While the yen has lost 16 percent in 9 months and the euro has fallen 18 percent since early May 2014, Asian currencies have depreciated far less, making their exports less cheap in international markets.

Theoretically Asian currencies ought to be weaker as, in general, inflation levels in the region are higher than those of major trading partners, most of which are dicing with deflation.

Yet, data from the Bank for International Settlements (BIS) shows China's yuan was 30 percent higher in April in trade and inflation-adjusted terms than in 2010. Korea's won was 15 percent more expensive than in 2010, while the yen was 28 percent weaker.

Korea's exports have fallen every month this year while Chinese exporters have seen both their sales and profits fall.

"There is a risk of currency war where the dollar tends to strengthen, so other countries will be affected," Indonesian central bank Governor Agus Martowardojo told reporters on Monday.

NOT AS BRUTAL AS 1997

There are parallels with 1997 when an extremely weak yen, highly uncompetitive exchange rates and current account deficits culminated in the Asian currency crisis.

"I don't think it is going to get as brutal as that," said Gaurav Saroliya, a macro strategist at London-based Lombard Street Research, listing crucial differences.

Inflation is less of a problem than it was then, making it easier for Asia to cope with weaker currencies. Asian central banks possess far bigger currency reserves. Moreover, the regions' markets are more flexible and foreign investment flows are less volatile than they were in 1997.

Without going anywhere near as far as the massive quantitative easing policies employed in Japan and Europe, authorities in Asia have been subtly nudging their currencies lower.

India's central bank effectively capped the rupee by mopping up investment inflows and building currency reserves.

Thailand eased controls on domestic investors moving cash abroad, while Indonesia loosened its tight grip on rupiah trading.

South Korea is particularly sensitive to the yen's faster depreciation as its exporters compete with Japanese firms in the same markets for cars and electronic goods.

Officials in Seoul told Reuters, however, that they lack the tools to push the won down to the same extent as the yen.

Whereas Asian currencies have undergone a creeping depreciation since 2014, the yen's fall last week could prove to be a trigger for Asia's currencies to weaken further.

"A lot of these countries are facing a double whammy of poor exports because of a very uncompetitive exchange rate, thanks to Japan and years of portfolio inflows during the QE environment, and also poor household demand," said Saroliya.

"It is overall a major headwind. So they will be forced into choosing a weaker exchange rate through monetary easing or non standard measures."

source: www.abs-cbnnews.com

IMF cuts US growth outlook, urges Fed to delay rate hike

WASHINGTON - The International Monetary Fund on Thursday cut its 2015 growth forecast for the United States and called on the Federal Reserve to put off a rate hike until conditions are stronger.

In an annual report of the world's largest economy, the Fund said growth would reach only 2.5 percent this year due to the unexpected first quarter contraction, compared to the previous forecast of 3.1 percent in April.

It said growth is already rebounding from the stall. But it nevertheless strongly recommended that the Fed hold off on its planned interest rate hike until more resilience is shown, likely only in early 2016.

It said growth momentum this year had been sapped by "a series of negative shocks", pointing to extremely harsh winter weather in parts of the country, the three-month West Coast ports slowdown that locked up trade, the sharp rise of the dollar and the downturn in the oil industry.

Still, the IMF said, "These developments represent a temporary drag but not a long-lasting brake on growth."

"A solid labor market, accommodative financial conditions, and cheaper oil should support a more dynamic path for the remainder of the year."

IMF chief Christine Lagarde said at a press conference on the report that the Fund sees US growth resuming a 3.0 percent pace over the rest of the year, and achieving that for the whole of 2016.

"We still believe that the underpinnings for continued expansion are in place."

But she pushed for the Fed to hold off on a rate hike, which has been anticipated for as early as July, saying growth conditions are not yet firm enough for it.

The Fed has locked its benchmark federal funds rate at zero since 2008, and has been waiting for proof from a tightening jobs market and rising inflation that the economy is locked into higher gear to make its first increase toward a more "normal" monetary policy.

Without those signs, the IMF report warned, raising rates too soon could result in tighter financial conditions and even financial instability, that could then force the Fed to cut rates again.

That could both stir damaging volatility in world markets, and undermine the Fed's credibility.

The Fed "should remain data-dependent and defer its first increase in policy rates until there are greater signs of wage or price inflation than are currently evident," it said.

"Barring upside surprises to growth and inflation, this would put lift-off into the first half of 2016."

Dollar overvalued

While the IMF picture for the US economy was generally positive, it noted a few weaknesses or danger points that raise risks that would have impacts far beyond US borders.

The US dollar is "moderately overvalued", the IMF said, impacting economic growth and job creation, and holding down inflation.

"There is a risk that a further marked appreciation of the dollar -- particularly one that takes place in an environment where policies to address growth deficiencies languish both in the US and abroad -- would be harmful."

The IMF review also included a new analysis of financial system stability which warned that the US needs to put more effort into monitoring and regulating non-bank financial institutions.

Investors' search for yield in the current easy-money environment has increased the position in financial markets of lightly-regulated non-banks like insurance companies, investment funds and others, which are leveraging more and taking more risks, it noted.

This is pushing up asset valuations to what could be excessive levels, the IMF suggests, and yet for non-banks, "there is less visibility on the size and nature of the embedded risks and fewer regulatory and supervisory levers to manage those risks."

source: www.abs-cbnnews.com

What a strong dollar means for US economy

WASHINGTON - US exporters and multinational companies are beginning to feel the pain from a dollar that has hit its highest level in 12 years.

But analysts say the greenback's sharp climb will only slightly slow the overall US economy.

From farm exporters to the chemicals industry, the moaning is growing more audible about losing competitiveness to competitors in Europe, Brazil and elsewhere.

On Wall Street, companies like IBM, Kimberly-Clark, Microsoft, Procter & Gamble, and Caterpillar have all blamed slower earnings on the currency.

Earlier this week software giant Oracle said revenues in its most recent quarter, at $9.3 billion, were 6 percent lower than they would have been if the dollar had held steady.

In the past year, the dollar has soared 32 percent against the euro, 39 percent against Brazil's real, 18 percent on the yen, 16 percent on the Canadian dollar, and 13 percent against the pound.

Overall, against a trade-weighted basket of currencies, the rise has been 20 percent. For US export rivals, that is a strong gain in their competitiveness.

It gives, for instance, farmers in Brazil and Canada big advantages.

"It has an especially large impact on the wheat and cotton sectors, where we export half of the crops or pretty close to it," said Richard Pottorff of farm industry specialists Doane Advisory Services.

Steve Meyer of Iowa-based consultant Paragon Economics says US pork and chicken exporters are beginning to feel the pain.

"Any time the value of the dollar goes up it makes our products more expensive."

"It's not as if you can't grow, but it certainly makes it more difficult. You've got to find some more creative ways to market your products."

'King Dollar' hits Wall Street

The problem is mounting as well on Wall Street, said Nicholas Colas, chief market strategist at the brokerage Convergex.

"If you run a US multinational company, or own its shares, 'King Dollar' is proving to be a bit of a tyrant."

Colas pointed out that analysts are slicing their earnings forecasts for listed companies.

They now predict an average 1.9 percent fall in revenue for the third quarter this year, compared to predictions of a 1.7 percent rise just two months ago.

"No company hedges for revenues so the impact on sales growth will be fully visible," Colas said.

Overall impact muted

Yet so far the strong greenback has only had a modest impact on the overall economy, in part because of the very strengths that underpin its surge.

"The US economy looks pretty good ... That's driving a lot of investment in the US as a bit of a safe haven," noted Chad Moutray, the chief economist for the National Association of Manufacturers.

Economists say that the economy's low dependence on exports also works to its benefit, in this case.

Exports make up around 10 percent of gross domestic product, whereas in a country like Germany, they are 50 percent, noted Nariman Behravesh, chief economist at IHS.

And with domestic consumption the primary driver of growth, the stronger dollar means lower import prices and so, potentially, more spending power for American families.

"If you look at the economy as a whole, the damage is fairly limited," Behravesh said.

Dollar's rise to continue

But if the dollar continues to climb, the pain could mount. A surprisingly dovish Federal Reserve cited the strong dollar's impact on exports for its downgrade of growth forecasts on Wednesday.

That send the dollar sinking four cents to $1.101 against the euro, for example.

But by Thursday it was back to $1.0665 and experts expect more strengthening in the coming weeks, heading toward euro parity.

"This headwind is going to be with us for a while, this is not temporary," said Moutray. "Manufacturers are going to need to find ways to compete."

Behravesh, though, notes that the dollar has swung much more sharply in the past, and the economy survived just fine.

"Our experience in the US is that, periods of dollar strength are typically followed by periods of dollar weakness," said Behravesh.

"Foreign exchange markets tend to overreact, overcorrect... Certainly by next year we'll see some firming up by the euro."

source: www.abs-cbnnews.com

PSEi ends 3-day winning streak; shares of Manila Water slump

MANILA, Philippines - Philippine shares snapped a three-day winning streak, succumbing to a regional downturn after China cut its 2015 growth target.

China on Thursday said it is aiming to grow its economy by 7 percent this year, below 2014's 7.5 percent goal. This is the country's lowest target in 15 years.

The PSE index fell nearly 0.4 percent to close at 7,819.04.

One of the day's biggest losers was Manila Water, whose shares plunged to as much as 13.3 percent. Manila Water shares closed 10 percent lower at P26.80.

Analysts say Manila Water, partly owned by Ayala Corp., was hit by market speculation that it lost an arbitration case for a rate hike petition.

Manila Water spokesperson Jeric Sevilla said no decision has been issued on the arbitration case.

The news also caused worries for Maynilad's own rate hike. Maynilad's owners Metro Pacific Investments and DMCI Holdings also traded lower.

At the foreign exchange market, the peso weakened to P44.12 against the US dollar.

HK, Shanghai down on China target

Meanwhile, Hong Kong and Shanghai markets sank in Asian trade Thursday after China set tepid 2015 economic and trade growth targets, while the euro fell to 11-year lows ahead of a key European Central Bank meeting.

Wall Street provided a negative lead again despite an upbeat report on the state of the US economy and another round of healthy private-sector jobs growth.

Hong Kong sank 1.11 percent, or 272.43 points to 24,193.04 and Shanghai lost 0.95 percent, or 31.05 points, to 3,248.48.

Sydney ended flat, edging up 2.57 points to 5,904.16 and Seoul was also virtually unchanged, nudging up 0.09 points to 1,998.38. Tokyo added 0.26 percent, or 48.24 points, to close at 18,751.84.

China's National People's Congress, the rubber-stamp legislature, opened with Premier Li Keqiang setting a growth target for this year of "approximately seven percent", which would be the slowest in 25 years.

The goal, which comes after a 7.4 percent rise in 2014, also comes as authorities look to set the world's number two economy on a more sustainable path after decades of breakneck growth.

Authorities also cut their trade growth target for this year to "around six percent" after missing its 7.5 percent goal in 2014 for the third consecutive year.

Over the past several months a slew of data has indicated a slowdown in the economy, including on manufacturing, inflation and trade.

In a work report, Li said China had been hit as the global economy faced headwinds, adding: "Downward pressure on China's economy has continued to mount, and we have faced an array of interwoven difficulties and challenges."

Traders seemed to be unimpressed with news that China will link up the Shenzhen and Hong Kong stock exchanges on a trial basis as part of its financial sector reform. However, Shenzhen's composite index rose 0.27 percent, or 4.53 points, to 1,677.77.

The move follows a similar scheme between Hong Kong and Shanghai that started in November. However, while officials trumpeted that as opening up China's closeted stock markets to the outside world, it has met with tepid demand in both cities.

Dollar-euro parity tipped

Regional investors are also keeping an eye on Europe, where the ECB will outline details of its bond-buying programme -- known as quantitative easing (QE) -- which is aimed at kickstarting the eurozone economy and fending off deflation.

The euro has suffered heavy selling as bank president Mario Draghi prepares to unveil the plan for the 60-billion-euros-a-month scheme.

The single currency fell at one point to $1.1028 Thursday, its lowest level since September 2003, before recovering marginally to $1.1058. That compared with $1.1080 late Wednesday in New York.

It was also at 132.44 yen compared with 132.63 yen in New York and much lower than 133.68 yen earlier Wednesday in Asia.

"The combination of deposit rates negative and QE is a very potent one, so it's very euro negative," Robin Brooks, chief currency strategist at Goldman Sachs, told Bloomberg news in Sydney.

"We have in our forecasts a very pronounced euro downswing, which is probably the most dollar-bullish forecast in all of our forecasts."

He added that the bank saw the dollar-euro reaching parity by the end of next year before the single currency falls further to 90 US cents by the end of 2017.

The dollar fetched 119.83 yen against 119.70 yen in US trade.

US markets ended lower for a second-straight session as dealers brushed off the Federal Reserve report showing the economy expanding moderately while payrolls company ADP said private firms hired more than 200,000 in February.

The Dow fell 0.58 percent, the S&P 500 lost 0.44 percent and the Nasdaq eased 0.26 percent.

On oil markets US benchmark West Texas Intermediate for April delivery was up 12 cents to $51.65 and Brent crude for April down 21 cents at $60.34.

Gold fetched $1,201.68 against $1,204.12 late Wednesday. - With reports from ANC, Reuters and Agence France-Presse

source: www.abs-cbnnews.com

Philippines' end-Jan forex reserves at 5-month high

MANILA – Foreign exchange reserves amounted to $80.182 billion in end-January, the highest in five months or since August when the reserves were at $80.87 billion, the Bangko Sentral ng Pilipinas (BSP) said.

January’s reserves can cover 10.3 months worth of imports and equal to 5.7 times short-term foreign debt based on residual maturity.

The rise in reserves was mainly due to the net foreign currency deposits of the national government, adjustments in the value of the central bank's gold holdings and foreign currency-denominated reserves and its income from overseas investments.

December’s reserves, meanwhile, were revised to $79.541 billion from the earlier reported figure of $79.805 billion.

The Philippines was the second fastest-growing economy in Asia after China in 2014, having gathered momentum in the final quarter of the year.

BSP Governor Amando Tetangco said last month the central bank was prepared to act to manage volatility in financial markets, even as he reiterated that authorities will let market forces determine the exchange rate.

The peso has gained 1.26 percent against the US dollar so far this year, making it Asia's third best performing currency after the rupee and yen. -- With Reuters

source: www.abs-cbnnews.com

PSEi hits 8th record close for the year

MANILA, Philippines - Philippine shares on Wednesday closed to its 8th all-time high this year, joining a region-wide cheer on the three-day rally in oil prices and as concerns of a Greek exit from the eurozone eased.

The Philippine Stock Exchange index (PSEi) closed at 7,716.06, up by 1.4 percent. It was the first time the main index closed at the 7,700 level.

The previous record close was 7,689.91 on January 30, 2015.

"While the PSEi trekked higher mostly in-step with Wall Street and other Asian markets, the Philippine story remains attractive to investors. The positive expectations continue to support the market’s uptrend," said PSE President and CEO Hans B. Sicat.

The PSEi also climbed to a new all-time intraday high at 7,738.12.

The Lucio Tan Group was the biggest gainer, as it surged over 8 percent to a three-month high.

Reuters said tobacco sales of PMFTC Inc, the joint venture of LT Group and Philip Morris International Inc, are seen improving this year on higher disposable income resulting from lower oil prices, says Luis Limlingan, analyst at Regina Capital Development Corp in Manila.

Petron also continued its rally for a fourth day, still on the recent rise in global oil prices.

Other big gainers include Semirara Mining and PLDT.

At the foreign exchange market, the peso strengthened to P44.11 against the US dollar. - With Reuters and ANC

source: www.abs-cbnnews.com

Why oil-driven Asian bond rally could boomerang

SINGAPORE - Plunging oil prices have sparked a big rally in Asian government bond markets as lower fuel costs cut inflation expectations, but the rally could be built on shallow foundations as monetary policymakers remain out of step with tumbling bond yields.

The price of oil CLc1, of which Asia is a net importer, has halved in less than six months, driving bond yields down across the region, from India to South Korea, as markets anticipate looser monetary policy to accommodate the resulting disinflation.

The imminence of further monetary easing in Europe and Japan builds a strong case for bond yields to drop further.

But there is little sign yet of official rate cuts, particularly in markets such as Indonesia, Malaysia and the Philippines, where central banks were sounding hawkish or even raising rates into the final months of 2014.

"The oil price has caught central banks by surprise," said ING's chief Asian economist Tim Condon.

"The panic of 2013 is right now foremost in their minds, and they are looking at a Fed rate hike, and so I think they will remain pretty dug in," he said.

The fear of a repeat of 2013's "taper tantrum", when talk of the Federal Reserve withdrawing monetary stimulus prompted vast sums of foreign capital to bail out of the region, helps explain why Asian central banks might err on the side of tighter monetary policy.

But there are other factors that also suggest official policy will stay tighter than the bond markets imply.

For one, a rising U.S. dollar is pushing down all emerging market currencies, which already indirectly eases monetary conditions for Asian policymakers and creates pressure on them to keep interest rates up to prevent the flight of foreign cash.

The market mismatch is evident in Indonesia, where the rupiah currency has fallen 9 percent against the dollar in the past six months.

Ten-year Indonesian government bond yields, which are normally significantly higher than overnight policy rates to reflect the risk of holding bonds to term, are just 5 basis points above the 7.75 percent policy rate, having fallen 60 bps since mid-December.

One plausible scenario that could trigger a bond market tumble is if lower oil costs dramatically improve U.S. growth numbers in the next couple of months, leading to renewed optimism about global growth and a rise in Treasury yields.

Far from cutting rates, policymakers might then have to raise rates.

PARADOX

The odds of this high-growth scenario playing out are perhaps reflected in how well equity markets have held up despite worries about disinflation, patchy economic growth and the possibility that Greece could return to the emergency room.

Despite a wobbly start to 2015, Asian shares are up 6 percent in the past three months.

"We are apparently on the edge of deflation, and yet equity markets aren't collapsing," said BofA Merrill Lynch strategist Claudio Piron. "And there are certain elements to what is going on which are reminiscent of the Asian financial crisis -- oil prices falling, dollar strengthening, bonds rallying strongly -- which all seems very ominous."

With the exception of Thailand, none of Asia's central banks has explicitly spoken of the need for easier policy.

Inflation has slowed sharply, except in Indonesia and Malaysia, where fuel subsidies were cut late last year.

While consumer price inflation in the Philippines is well below the central bank's expected 3 percent average for the year, the rhetoric from policymakers suggests markets may at best hope for rates to be on hold.

On the other hand, Indonesia's inflation is running at nearly double the official forecast range for this year, thanks to a jump in domestic oil prices.

ING's Condon doesn't expect any of Asia's central banks to react in a hurry to either oil or slowing inflation, and instead says they might be prepared to tolerate disinflation just as the European Central Bank and Fed do.

"There is some sort of asymmetry there. It's okay to undershoot inflation, it's prohibitive to overshoot. That, I think, will be the story in Asia as well."

Some market participants recognise that bias, which is possibly why short-end yields in Asian bond markets haven't moved much. But it is in longer-term yields that investors might read a warning that 2015 will hold more pain than gain.

source: www.abs-cbnnews.com