Clouded by controversy even before it began, the recently concluded 49th ASEAN Foreign Ministers’ Meeting (AMM) in Vientiane, Laos was conspicuous for two things: who was and was not present; and, perhaps more importantly, what was and was not discussed.
The US dollar is enjoying a mid-week bounce against all the major currencies. It appears that participants in Asia and Europe are giving more credence to NY Fed Dudley’s comments yesterday. Although many in the market have given up on a rate hike this year, Dudley reaffirmed his belief that the economy was accelerating in H2 and that the market was being too complacent.
On September 18 2016, Glenn Stevens will end his ten-year mandate as governor of the Reserve Bank of Australia (RBA). His experience in the top job provides a wealth of lessons for the next generation of policymakers; that’s arguably his most important legacy.
A graduate from the University of Sydney and the University of Western Ontario in Canada, Stevens worked in the RBA research department between 1980 and 1992. He then held positions as department head, assistant governor (economic) and deputy governor. In 2006, he was appointed governor.
The US dollar is being sold across the board today. The US Dollar Index is off 0.65% late in the European morning, which, if sustained, would make it the largest drop in two weeks. The proximate cause being cited by participants and the media is weak US data that is prompting a Fed re-think.
However, we are a bit skeptical. It is not that the US data has been strong, or that Fed officials have been touting the need to hike like many regional Fed Presidents did earlier this year. Rather our skepticism is based in the prices themselves.
The China–Pakistan Economic Corridor (CPEC) is widely considered a game changer not only for Pakistan, but also for the Asian region. CPEC is a major stimulus for Pakistan, ensuring rapid economic growth with massive infrastructure development and flows of foreign direct investment (FDI).
CPEC aims to connect Gwadar Port in Pakistan to China’s northwestern region of Xinjiang via a network of highways, railways and pipelines. Connectivity with Central Asia, the Middle East and Africa under CPEC will shape the entire region’s economic agenda.
Australia and China, though they are two vastly different nations, already have a huge and joint political, economic and social investment in the success of their bilateral relationship.
On 12 July 2016, the Permanent Court of Arbitration rendered its decision on the Philippines v. China case over disputes in the South China Sea. Capturing worldwide attention, the ruling was made largely in Manila’s favour.
Yet overshadowed by this event was another milestone in Manila’s foreign relations: the 40th anniversary of the establishment of diplomatic relations between the Philippines and Vietnam.
Japan’s Q2 GDP: The week begins off with the first estimate of Japan’s Q2 GDP. Growth is expected to slow from 0.6% in Q1 to 0.2%-0.3% in Q2. Consumption likely slowed more than investment increased. The GDP deflator, another measure of prices, is expected to have eased to 0.7% from 0.9% (year-over-year).
The dollar’s push lower that we anticipate until later in the month gained momentum following the disappointing US retail sales report before the weekend. The dollar’s technical tone has deteriorated, while the economic data is unlikely to be sufficient to reverse sentiment.
South Africa has toppled Nigeria and reclaimed its status as the largest economy in Africa. This comes two years after Nigeria rebased its GDP calculation and advanced to the top spot. South Africa was also temporarily relegated to the third position early this year after Egypt climbed to claim the second spot.
