Dollar rally takes a pause

By Margaret Yang, CMC Markets

Thai baht and Korean won lead EM currency rebound

The Thai baht and Korean won strengthened against USD by 0.13% and 0.20% respectively, signaling that the emerging market currencies may embrace a rebound as dollar’s upward momentum slowed down.

The US dollar index slid from its multi-year highs for a second day last night, signaling the dollar rally is probably running out of steam as the market seems to have fully priced in the “Trump effect” and an impending Dec rate hike.

Trump scraps TPP deal, as expected

US president-elect Donald Trump unveiled his plan for his first 100 days yesterday, reiterating his immigration, trade and defense policies. There was no surprise with his decision to officially withdraw from negotiations on the TPP (Trans-Pacific Partnership) negotiation, which was described as a “disaster” by Trump in his election campaign. A TPP without the participation of United States will be less influential in the trans-pacific region and thus become a less significant deal.

Thanks to the peaceful transition in power in the White House, US stocks reached all-time highs last night with the  Dow Jones index rising 0.4% and passing the psychological mark of 19,000 for the first time.

An unrevealed question is Trump’s China policy following his decision to withdraw from the TPP deal, which was believed to be part of the US’s strategy to balance China in the Pacific region. Probably, he hasn’t really figured out what to do next except for labeling China as a big “currency manipulator” in his campaign.

Hong Kong 50 – Cash

Margaret Yang Yan, CFA, is a market analyst for CMC Markets Singapore