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Stanley Fischer Indicates 2016 Rate Increase as U.S. Economy Nears Fed Goal

Stanley Fischer, the Federal Reserve's Vice Chairman has indicated that a 2016 increase in interest rates is under consideration, further stating that the U.S. economy is near in reaching the central bank's goal with further growth. GDP is expected to grow in the upcoming quarters, with investment regaining its momentum and the dollar appreciation predicted to lessen.

Investors are currently looking for indicators from central bankers regarding the time of the potential rate hike amidst stable economic growth, firm job gains and the steady increase in inflation. Fischer claims that the central bank's approved price benchmark, minus energy and food costs is at 1.6 percent, as most Federal Reserve officials predict that inflation would rise to a two percent target rate. During his speech, he noted the slowdown in worker output or productivity and that it had increased to 1.25 percent per year on average from 2006 to 2015 in comparison to 1949 to 2005's 2.5 percent.

Fed officials have increased the benchmark lending rate to in between 0.25 to 0.5 percent by December. As stated in the prices of federal funds futures contracts, investors predict a 50-50 probability of a rate hike by the latter part of the year.

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Fitch: Indonesia's 2016 Car Sales to rise As Outlook Brightens

Fitch Ratings believes Indonesia's car sales will increase between 3% and 5% in 2016, buoyed by new product launches, a more positive macroeconomic environment, increased liquidity and more relaxed financing terms.

Fitch believes the country's domestic car sales will reach about 1.05 million units this year. Car sales in the first seven months of 2016 rose 2% yoy to 594,514 units, according to the Indonesian Automotive Industry Association (Gaikindo). PT Toyota Astra Motor (TAM) continues to lead with a 52% market share through leading brands Toyota and Daihatsu; the low-cost-green-car (LCGC) segment is also gaining momentum, and contributed 18% to total car sales in 7M16. Gaikindo forecasts car sales will rise by at least 5% this year.

This year, TAM has introduced the new version of its SUV product - Toyota Fortuner - and launched a new product - Toyota Sienta, which is a seven-seater multi-purpose vehicle (MPV) that will compete with the Honda Freed. Recently, TAM and PT Astra Daihatsu Motor also introduced the Toyota Calya and Daihatsu Sigra, respectively. The Toyota Calya and Daihatsu Sigra are both seven-seater LCGCs that target the low-cost segment; both are in the price range of IDR110m-150m.

Fitch believes Indonesia will maintain GDP growth of 5.1% yoy in 2016, supported by monetary policy easing, government programmes to accelerate infrastructure spending, and a tax amnesty plan. The government expects GDP to grow by 5.3% in 2016, compared with 2015 GDP growth of 4.8%.

The tax amnesty programme should bolster government revenue and allow for increased public capex, in Fitch's view, while the repatriated funds should boost liquidity in Indonesia. Bank Indonesia (BI) has cut its reference rate by a total of 100bp since the end of last year to 6.50% in July 2016 (along with cuts in the reserve requirement ration). BI is also in discussions to further relax the loan-to-value ratios for auto financing. This, along with lower interest rates, would support auto-loans financing; about two-thirds of car purchases in Indonesia are made using car loans.

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Baltic Exchange Board and SGX Agrees on Bid for London Firm

Singapore Exchange and the Baltic Exchange announced on Monday that they have agreed on SGX's bid of 160.41 pounds per share and 19.30 pounds per share as a final dividend, higher than the initial 18.80 pounds per share dividend extended two weeks prior. The deal puts the market value of the London exchange firm at around 87 million pounds.

SGX looks to grow its presence in Europe through its acquisition of the Baltic Exchange. The takeover is part of SGX's ambition to further delve into the market for shipping finance with the Baltic's membership that is dominated by European shipowners.

The deal is seen to be completed by November if a vote of shareholders backs the takeover.

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New Zealand Has NZ$433 Million Trade Deficit In July

New Zealand posted a merchandise trade deficit of NZ$433 million in July, Statistics New Zealand said on Wednesday - or 11 percent of exports.

The headline figure missed forecasts for a shortfall of NZ$325 million following the downwardly revised surplus of NZ$110 million in June (originally NZ$127 million).

Exports were worth NZ$3.96 billion, shy of expectations for NZ$4.07 billion and down from NZ$4.26 billion in the previous month.

Meat and edible offal led the fall in exports, down NZ$97 million (19 percent).

Milk powder fell NZ$118 million (23 percent) while the quantity rose 0.9 percent.

Fruit fell NZ$17 million (5.7 percent) while the quantity rose 3.9 percent.

Australia was the only top export destination to rise in value, up NZ$37 million.

"The meat export falls this month are partly due to record meat exports this time last year," international statistics senior manager Jason Attewell said. "Meat values in July 2015, off the back of a record high meat season, were 31 percent higher than the average value for the previous five July months."

Imports came in at NZ$4.40 billion versus forecasts for NZ$4.45 billion and up from NZ$4.13 billion a month earlier.

Intermediate goods led the fall in imports, down NZ$296 million (15 percent) due to crude oil.

Consumption goods fell in value for the first time in 23 months, down NZ$114 million (9.6 percent).

The only top import partner to rise in value was the United States, up NZ$83 million.

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Qantas Profit Soars to A$1.53 billion and Pays First Dividend

Qantas Airways Ltd.'s Chief Executive Officer Alan Joyce's turnaround program has produced a record annual profit as the airline has announced its first dividend since 2009 and has given bonuses to its 25,000 employees. According to a Wednesday filing, Australia's flag carrier airline is going to pay a final dividend of seven Australian cents per share and buy back almost A$366 million ($279 million) worth of stocks. During the 12 months that ended on June 30, earnings before tax and one-time items soared by 57 percent into A$1.53 billion.

The A$2 billion transformation program includes thousands of jobs that were cut, aircraft orders that were delayed and unprofitable routes which were pulled out. According to Joyce, the three-year plan is on the track to exceeding the initial target. Qantas has been doing well as shares have increased by 4.1 percent to A$3.54 with the stock nearly tripling ever since Joyce has announced the program. In the past year, Qantas has delivered two one-off capital returns which produces an overall of beyond A$1 billion.

The airline's domestic business underlying operating profit has jumped by 20 percent to A$578 million and has significantly surged by 92 percent with A$512 million on its international unit.

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Japan Producer Prices Jump 0.4% In July

Producer prices in Japan were up 0.4 percent on year in July, the Bank of Japan said on Thursday.

That beat expectations for an increase of 0.1 percent following the 0.2 percent gain in June.

On a monthly basis, process also jumped 0.4 percent following the flat reading in the previous month.

Among the individual components, prices increased for advertising, communications and leasing - while they were down for transportation and postal activities.

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Brazil Senate approves amendment of revenue appropriation

Brazil's Senate approved a constitutional amendment in which the government can readily use up to 30% of tax revenues which would have been allocated for other expenditures.

Called the DRU, this will help the Brazilian government ensure that their expenses is in check as it aims to curb its fiscal deficit in the future.

The legislation, which was passed faster than estimated, had voided in 2015 and will not be prolonged until 2023. President Michel Temer pledged to resolve the fiscal deficit in the country.

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Overall Japan Inflation Slides 0.4% In July

Consumer prices in Japan slipped 0.4 percent on year in July, the Ministry of Internal Affairs and Communications said on Friday - matching expectations and unchanged from June's annual reading.

Core CPI, which excludes volatile food costs, slid 0.5 percent on year - missing forecasts for -0.4 percent, which would have been unchanged.

Among the individual components, fuel costs were down 7.7 percent on year, followed by communications (-2.6 percent), furniture (-0.8 percent) and housing (-0.1 percent).

Clothing prices jumped an annual 2.4 percent, followed by education (1.6 percent), food (1.1 percent), medical care (0.9 percent) and recreation (0.8 percent).

On a monthly basis, overall inflation and core CPI both dipped 0.2 percent.

Among the individual components, clothing prices skidded 2.6 percent on month, followed by fuel and furniture (both -0.8 percent), and food and recreation (both -0.1 percent).

Communications and recreation costs gained 0.1 percent, while housing, education and medical care all were flat.

Overall inflation in Tokyo, considered a leading indicator for the nationwide trend, slipped 0.5 percent on year in August. That missed expectations for 0.4 percent, which would have been unchanged.

Core CPI in August was down an annual 0.4 percent - matching expectations and the same as in the previous month.

Among the individual components, fuel costs were down 9.7 percent on year, followed by communications (-1.4 percent), furniture (-1.9 percent) and housing (-0.5 percent).

Clothing prices jumped an annual 2.4 percent, followed by recreation (0.9 percent), education and medical care (both 0.8 percent) and food (0.4 percent).

On a monthly basis, both overall and core inflation advanced 0.1 percent.

Individually, recreation costs gained 1.7 percent on month, followed by communications (0.5 percent).

Fuel prices slid 1.5 percent, while clothing prices fell 1.2 percent and food dipped 0.2 percent.

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Italy Declares State of Emergency as Earthquake Death Toll Hits 250

Italy's government declared a state of emergency in the areas hit hardest by the massive earthquake on Wednesday. The 6.2 magnitude quake struck in the early hours of Wednesday in central Italy, severely damaging several towns.

At the minimum, 250 people have died from the disaster while 365 other people were injured. Rescue teams have continued to work through the rubble of destroyed buildings for a second night, but hopes of finding more survivors are dimming.

Prime Minister Matteo Renzi has pledged 42 million pounds in funds for rehabilitation of the affected areas. Aside from the funds, the Italian premier has scrapped taxes for locals in the disaster zones. He also announced a new measure called “Italian Homes” to address the criticism of the Italian media over poor-quality home construction, but he also stated that it was ridiculous to think that the nation could establish full quake-proof establishments.

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Australia Building Permits Surge 11.3% In July

The total number of building permits issued in Australia was up a seasonally adjusted 11.3 percent on month in July, the Australian Bureau of Statistics said on Tuesday - coming in at 20,987.

That beat forecasts for an increase of 1.1 percent following the 2.9 percent contraction in June.

On a yearly basis, building approvals climbed 3.1 percent versus expectations for a decline of 8.3 percent after slipping 5.9 percent in the previous month.

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U.S. Dollar Increases as Traders Expect Interest Rate Hike

The U.S. dollar has reached its highest level in three weeks which follows expectations regarding the Federal Reserve interest rate hike which could happen as soon as September. Traders are looking for indicators which show that the dollar may rise even further against the yen, euro and other emerging-market currencies.

The Wall Street Journal Dollar Index decreased by four percent in the year to date. According to U.S. Commodity Futures Trading Commission and Scotiabank data, bets regarding a stronger dollar was at $7.18 billion. Federal Reserve Chair Janet Yellen and Vice Chairman Stanley Fischer have both stated that the current economy was strong enough for an increase in the federal-funds in 2016. The comments drove the largest one-day rally in two months in the WSJ Dollar index.

According to CME Group data, most traders expect an increase of rates done only once in the following year while Fed-funds futures have shown that they only see a 30% chance of an increase twice by next July.

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Japan Industrial Production Unchanged In July

Industrial output in Japan was flat on month in July, the Ministry of Economy, Trade and Industry said on Wednesday.

That missed forecasts for an increase of 0.7 percent following the 2.3 percent jump in June.

On a yearly basis, industrial production fell 3.8 percent - also missing forecasts for a decline of 3.0 percent following the 1.5 percent drop in the previous month.

Upon the release of the data, the METI maintained its assessment of industrial production, saying that it continues to fluctuate indecisively but shows signs of increasing in parts.

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Dollar Climbs to One-Month High while Investors Weigh on Fed Rate Hike

The U.S. dollar increased to a one-month high against a basket of currencies while investors carry on by assessing the next increase in interest rates. The WSJ Dollar Index increased by 0.6 percent to 87.06 bound to its highest closing level since July 28.

The dollar increased by 1.1 percent against the Japanese yen to ¥103.05. The euro slipped by 0.4 percent to $1.1143. According to CME Group data, investors currently see a 27 percent likelihood of a Federal Reserve rate increase in September as well as a 55 percent likelihood in December. A gauge of U.S. consumer confidence during August increased to its highest level in almost a year as a different report has shown that consumer spending was also up for the fourth consecutive month in July.

The dollar was higher against emerging market-currencies. The dollar climbed against the Mexican peso by 0.8 percent and also increased against the South African rand by 0.6 percent.

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Indonesia Manufacturing Sector Moves To Expansion - Nikkei

The manufacturing sector in Indonesia turned to expansion in August, the latest survey from Nikkei showed on Thursday with a manufacturing PMI score of 50.4.

That's up from 48.4 in July, and it moves above the boom-or-bust line of 50 that separates expansion from contraction.

Individually, there was a rebound in order book, which fueled the mild increase in output.

Manufacturers lowered their selling prices, in spite of rising costs. Buying levels increase, although employment fell.

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British Government to Proceed with Brexit

U.K.'s government will reportedly “push ahead” to set off Brexit despite the absence of Parliamentary approval, according to Downing Street.

Following a meeting of Prime Minister Theresa May's cabinet at Chequers, a statement released said ministers reach an agreement regarding the need for a distinct deal for the United Kingdom. This involved controls on European Union migration and a “positive outcome” on trading, Downing Street reported. May told cabinet members Britain would not remain in the EU in an unofficial way.

May reiterated that official negotiations with the rest of the European Union members regarding the Brexit will not start this year.

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Fxwirepro: South Korean Won Almost Flat Against Usd Despite Higher Than expected Gdp Data

USD/KRW is currently trading around 1,118 levels. It made intraday high at 1,119.30 and low at 1,118.40 marks. Intraday bias remains neutral till the time pair holds key support at 1,107 levels.
A sustained close below 1,107 will test key supports at 1,092/1,078/1,063/1044 levels respectively.
Alternatively, a daily close above 1,128 will drag the parity higher towards key resistances at 1,128, 1,138, 1,142, 1,152, 1,162, 1,176, 1,182, 1,196, 1,201, 1,209 (20D EMA) and 1,220 (March 03, 2016 high) marks respectively.
In addition, South Korea’s Kospi was trading around 0.05 percent lower at 2,032.32 points.
South Korea’s Q2 GDP growth increases to 0.8 % vs previous 0.7 %. South Korea’s Q2 GDP growth y/y increases to 3.3 % vs previous 3.2 %.
Positioning is inconclusive at this point, with prices offering no clear cut signal to initiate a long or short trade. We will continue to remain on sidelines for the time being.

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Stocks Ended Slightly Changed Ahead of Job’s Report

Major U.S. stock indexes rose and then closed slightly changed prior to the job's report. The August job's data will be a significant indicator for the Federal Reserve official's decision regarding the interest-rate hike.

The decline of oil prices have pulled down energy shares, however stocks increased near the closing of the session.The S&P 500's energy sector slipped by 0.3 percent and shares of Chevron dropped to 37 cents or 0.3 percent to $100.21. The S&P 500's financial shares was down by 0.4 percent. The broader S&P 500 slightly changed by declining 0.004 percent to 2170.86. The Nasdaq Composite increased by 0.3 percent to 5227.21 while shares of technology jumped. The Dow Jones Industrial Average climbed by 0.1 percent to 18419.30. In the blue-chip index, Wal-Mart Stores drove gains surging by two percent to 72.84.

The Institute for Supply Management has announced that the manufacturing activity index was down to 49.4 in August.

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Fxwirepro: Usd/krw Remains Well supported Below Key Resistance at 1,122, Consistent Break Above Targets 1,142

USD/KRW is currently trading around 1,117 levels.

It made intraday high at 1,119 and low at 1,115 marks.

Intraday bias remains neutral till the time pair holds key resistance at 1,122 levels.

A daily close above 1,122 will drag the parity higher towards key resistances at 1,138, 1,142, 1,152, 1,162, 1,176, 1,182, 1,196, 1,201, 1,209 (20D EMA) and 1,220 (March 03, 2016 high) marks respectively.

On the other side, a sustained close below 1,107 will test key supports at 1,092/1,078/1,063/1044 levels respectively.
In addition, South Korea’s Kospi was trading around 0.84 percent higher at 2,055.32 points.

Positioning is inconclusive at this point, with prices offering no clear cut signal to initiate a long or short trade. We will continue to remain on sidelines for the time being.

News are provided by InstaForex
 
Dollar Strengthens after U.S. Payroll Data

The U.S. dollar strengthens following the disappointing U.S. employment growth figures for August which only slightly affected the perception of investors regarding the Federal Reserve's likelihood of increasing the interest rates in the following months. Nonfarm payrolls increased by 151,000 jobs in August, according to the U.S. Labor Department.

Average hourly wage earnings increased by 0.1 percent, which falls behind the 0.2 percent growth of market expectations. As the increase of the average payroll during the last three months tops 200,000, investors have then concluded that the jobs report would not be a severe impact to the Fed's plan to lift interest rates. U.S. fed funds futures price is at a 20 percent likelihood of a rate hike this September and a 60 percent odds by the end of the year.

The dollar's index against a basket of six major currencies .DXY=USD was buoyed as it immediately gained from its one-week low of 95.189 following the payroll data.

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