US Dollar, Singapore Dollar, Indonesian Rupiah, Malaysian Ringgit, Philippine Peso – Talking Points

  • US Dollar extended decline against its ASEAN counterparts
  • Volatility risk may boost USD: Fed, US GDP and earnings
  • China PMI, Malaysian trade, Singapore unemployment eyed

US Dollar ASEAN Weekly Recap

The anti-risk US Dollar extended its slide against ASEAN currencies such as the Singapore Dollar, Indonesian Rupiah, Malaysian Ringgit and the Philippine Peso last week. In Southeast Asia, the Indian Rupee also managed to gain ground against the USD – see chart below. It was a relatively light week for economic event risk, both in the ASEAN region and externally.

As such, the focus for the Greenback against currencies from developing markets remained on risk trends. A deterioration in market mood into the end of last week likely trimmed weakness in the US Dollar. External factors, such as worse-than-expected US initial jobless claims and escalating US-China tensions, may have played a role here. The latter two nations exchanged threats to close consulates in Houston and Chengdu.

Despite these developments, the MSCI Emerging Markets Index (excluding China) ended last week higher – see chart at end of the article. Lately, my ASEAN-based US Dollar index seems to have been paying more attention to this gauge of sentiment in developing economies. From here however, the focus may shift to developments from the world’s largest economy ahead.

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Last Week’s US Dollar Performance

USD, SGD, IDR, MYR, PHP Brace for Tech Earnings, Eyeing Nasdaq 100

*ASEAN-Based US Dollar Index averages USD/SGD, USD/IDR, USD/MYR and USD/PHP

External Event Risk – Fed, US GDP, Earnings Season, Fiscal Stimulus

The week ahead is filled with event risk from the world’s largest economy. Traders often look to developments from the US to gauge the outlook for global growth, thus impacting overall market sentiment. The Federal Reserve is expected to leave benchmark lending rates unchanged at near-zero levels. The focus will likely be on Chair Jerome Powell for the central bank’s assessment on growth and plan for accommodation.

The latter has been somewhat fading as of late, with growth in the balance sheet notably slowing and market volatility ebbing. All eyes then turn to second-quarter US GDP data on Thursday as the economy is expected to enter a technical recession for the first time in about 13 years. That may already be priced in however. As such, absent a material miss/overshoot in expectations, ASEAN currencies may be focused elsewhere.

That may be on the ongoing earnings season, specifically on results from tech companies. So far key players, such as Netflix and Microsoft, have disappointed which resulted in their stocks falling. What has arguably been driving a lot of the euphoria in financial markets is this sector, making it increasingly harder for these businesses to defend their relatively elevated stock valuations.

Similar disappointing data from Alphabet, Amazon, Apple and Facebook this week could shift the tone in market sentiment, perhaps boosting the US Dollar if the Nasdaq Composite falls. This could be counterbalanced by what is expected to be further fiscal stimulus from the US. The extra $600/week unemployment benefit is going to expire at the end of this month. It seems like this will be trimmed going forward, but the question is by how much?

ASEAN Event Risk – China PMI, Malaysia Trade and Singapore Unemployment Data

Focusing on the ASEAN economic docket, it is still fairly light with certain exceptions. Official Chinese manufacturing and non-manufacturing PMI readings are due on Friday. China’s performance can often imply knock-on impacts for its ASEAN neighbors, thus driving SGD, IDR, MYR and PHP. US-China tensions have also been heating up and further spats could amplify risk aversion. Malaysia will update its latest trade statistics on Tuesday as Singapore updates its unemployment rate the next day.

At the end of last week, the 20-day rolling correlation coefficient between my ASEAN-based US Dollar index and the MSCI Emerging Markets Index, excluding China, (EMXC) stood at -0.86. Values closer to -1 indicate an increasingly inverse relationship, though it is important to recognize that correlation does not imply causation.

ASEAN-Based USD Index Versus MSCI Emerging Markets Index (Ex China) – Daily Chart

USD, SGD, IDR, MYR, PHP Brace for Tech Earnings, Eyeing Nasdaq 100

Chart Created Using TradingView

*ASEAN-Based US Dollar Index averages USD/SGD, USD/IDR, USD/MYR and USD/PHP

— Written by Daniel Dubrovsky, Currency Analyst for

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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