US Dollar, Singapore Dollar, Thai Baht, Indonesian Rupiah, Philippine Peso, ASEAN, Basic Analysis – Voice Points
- US dollar gains against ASEAN currencies amid the rise in the Delta Covid variant
- Extended closures can increase USD / THB, USD / IDR, USD / PHP in front
- Take a look at the US Consumer Price Index – larger printing could increase the volatility of the ASEAN market
USD ASEAN Weekly Summary
The US dollar boosted profits against ASEAN currencies last week, making significant progress against the Thai Baht and Philippine pesos. Thus, the Singapore dollar and the Indonesian rupiah were relatively subdued. Greenback’s performance has been closely aligned with the weakness of ASEAN equities among local coronavir virus cases – see chart below. In fact, countries such as Thailand, the Philippines and Malaysia saw the largest share outflows since the third quarter of 2020, according to Bloomberg.
Covid cases in Singapore, Thailand, Indonesia, Philippines – on average
Main risks of ASEAN events – Delta Covid case growth, closures, US inflation report
With that in mind USD / SGD, USD/ THB, USD / PHP and USD / IDR may continue to be a major impact of ASEAN coronavirus cases. The emerging Delta option is proving to be a difficult headwind for most of these countries. According to Reuters, sufficient doses have been administered in Indonesia, the Philippines and Malaysia to inoculate 9.1%, 5.8% and 16.3% of their populations, respectively.
This assumes that each person needs two doses. As such, continued foreclosures and the blurring of increased risks may continue the outlook for currencies such as the Indonesian rupiah, Philippine peso and Thai baht. The former country recently extended nationwide restrictions on Covid, with the Thai government considering a partial closure.
These foreclosures are likely to continue the growth outlook, possibly forcing investors to withdraw their capital from equities and increase capital outflows. This could be beneficial for the asylum-related US dollar. In the meantime, there is another risk around the corner for ASEAN currencies. That would be the next US consumer price index report on Tuesday.
In June, basic and basic consumer prices are expected to rise by 4.9% and 4.0% year-on-year, respectively, by 5.0% and 3.8%. The Fed sees rising price pressures in the near term as temporary. However, a higher-than-expected outcome could lead to tighter fiscal expectations. This is the main risk for SGD, THB, PHP and IDR. On the other hand, a softer outcome could help alleviate the weakness of ASEAN currencies.
ASEAN, South Asian economic data – China’s trade and GDP, Singapore’s GDP, India’s consumer price index
Focusing on the risk of economic events in ASEAN and South Asia, the week begins with inflation data from India. Increased price increases may limit the RBI’s ability to ease pro-economic policies as the Covid cases rise. USD / SGD will reduce Singapore’s GDP on Thursday, with second quarter growth forecast at 14.3% per year. However, the couple may remain sensitive to the general mood of the market. China, ASEAN’s main trading partnerpublishes trade and GDP data. As a major regional economic power, signs of weakness there can boost market sentiment.
Check it out DailyFX economic calendar For ASEAN and global data updates!
July 9th, the 20-day current correlation coefficient of my ASEAN-based US dollar index and my ASEAN ETF index changed to -0.93 a week ago. Values closer –1 show more and more upside down although it is important to recognize that correlation does not imply a causal relationship.
ASEAN-based USD index versus ASEAN ETF index – daily chart
* ASEAN-based US dollar index averages USD / SGD, USD / IDR, USD / THB and USD / PHP
– Written by Daniel Dubrovsky Strategist to DailyFX.com
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