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Bloomberg
a day ago
- Business
- Bloomberg
Fed to Leave Rates Unchanged: Ayub
Horizons Middle East and Africa Mehvish Ayub, Head of Managed Solutions Advisory Dubai at Bank of Singapore, looks ahead to the Fed rate decision with Bloomberg's Joumanna Bercetche on 'Horizons Middle East and Africa.' (Source: Bloomberg)
Reuters
4 days ago
- Business
- Reuters
Stocks surge, euro steady after US-EU trade agreement
SINGAPORE, July 28 (Reuters) - Global stocks rose and the euro appreciated on Monday after a tradeagreement between the United States and the EU lifted sentiment and provided some clarity in a week of key policy meetings by the Federal Reserve and the Bank of Japan. The U.S. struck a framework trade agreement with the European Union, imposing a 15% import tariff on most EU goods - half the threatened rate, a week after agreeing to a similar trade deal with Japan. Countries are scrambling to finalise trade deals ahead of an August 1 deadline set by U.S. President Donald Trump, with talks between the U.S. and China set for Monday in Stockholm amid expectations of another 90-day extension to the truce between the world's top two economies. "A 15% tariff on European goods, forced purchases of U.S. energy and military equipment and zero tariff retaliation by Europe, that's not negotiation, that's the art of the deal," said Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities. "A big win for the U.S." European futures surged more than 1%, while S&P 500 futures rose 0.5% and Nasdaq futures advanced 0.6%. The euro strengthened across the board, rising against the dollar, sterling and yen. "We have to be a bit cautious from here," said Sim Moh Siong, currency strategist at Bank of Singapore, of the broader risk-on rally. "A lot of good news is already in the price." MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab was up 0.32%, just shy of the almost four-year high it touched last week. Japan's Nikkei fell 1% after hitting a one-year high last week. While the baseline 15% tariff will still be seen by many in Europe as too high, compared with Europe's initial hopes to secure a zero-for-zero tariff deal, it is better than the threatened 30% rate. The U.S.-EU deal provides clarity to companies and averts a bigger trade war between the two allies that account for almost a third of global trade. "A major tail-risk has now been defused," said Marc Velan, head of investments at Lucerne Asset Management in Singapore. "Markets are interpreting this as a sign of stability and predictability returning to trade policy," he added. "The China delay fits the same pattern: the administration is opting for controlled diplomacy over confrontation." Gains for China's blue-chip stocks (.CSI300), opens new tab petered out towards the midday break, while Hong Kong's Hang Seng index (.HSI), opens new tab gained 0.5%. The Australian dollar , often seen as a proxy for risk appetite, was at $0.657, hovering around the near eight-month peak scaled last week. In an action-packed week, investors will watch out for the monetary policy meetings from the Fed and the BOJ as well as the monthly U.S. employment report and earnings from megacap companies Apple (AAPL.O), opens new tab, Microsoft (MSFT.O), opens new tab and Amazon (AMZN.O), opens new tab. While the Fed and the BOJ are expected to maintain rates, comments from the officials will be crucial for investors to gauge the interest rate path. The trade deal with Japan has opened the door for the BOJ to raise rates again this year. Meanwhile, the Fed is likely to be cautious on any rate cuts as officials seek more data to determine tariffs' impact on inflation before they ease rates further. But tensions between the White House and the central bank over monetary policy have increased, with Trump repeatedly lashing out at Fed Chair Jerome Powell for not cutting rates. Two of the Fed Board's Trump appointees have articulated reasons for supporting a rate cut this month. In commodities, oil prices rose after the U.S.-EU trade agreement. Brent crude futures and U.S. West Texas Intermediate crude both rose 0.5%. Gold prices fell on Monday to their lowest in nearly two weeks on reduced appetite for safe havens.
Independent Singapore
23-07-2025
- Business
- Independent Singapore
CNBC report says Singdollar may reach safe-haven status, like Swiss franc, yen, and US dollar
SINGAPORE: A CNBC report from earlier this week quotes industry experts as saying that the Singapore dollar may become a 'safe haven' currency — an asset that retains its value or even appreciates during times of market turbulence. The Singdollar may end up as 'the next safe haven on a par with the Swiss franc,' the report says, noting that though the US dollar is still the top reserve currency around the globe, the dollar index has decreased by more than 9 per cent this year. Meanwhile, trade concerns cast a shadow over the Japanese yen's outlook. The CNBC report quoted an FX strategist at OCBC, Christopher Wong, as noting that the Singdollar is not considered in the same way as the US dollar, the yen, and the Swiss franc. It 'tends to exhibit defensive characteristics during episodes of financial stress — especially those centred in Asia.' Mr Wong pointed out that Singapore's currency already works as a 'quasi safe-haven' in the region and for emerging markets. The Singapore dollar has gained strength against the US dollar this year, rising around 6 per cent so far. In May, an article in CNA said that the two currencies, then at $1 to S$1.29, could reach parity . Mansoor Mohi-uddin, chief economist at Bank of Singapore, said at the time that parity between the two currencies could be achieved 'in our lifetimes' and cited the example of the Swiss franc, which did so in the wake of the financial crisis of 2008. On July 11, Jefferies Financial said the same. Its group strategist, Christopher Wood, noted that since March 22, when the US Federal Reserve started increasing interest rates, the Singdollar 'has appreciated against almost all major currencies, confirming its status as the 'Swiss franc of Asia.'' 'Wood stated that Singapore's bond yields remain attractive to conservative funds focused on wealth preservation. From a five-year perspective, it is reasonable to expect the exchange rates of the Singapore dollar to reach parity with the US dollar, implying an appreciation of 28 per cent,' Jefferies added. What has contributed to the strength of the Singdollar is the city-state's economics, institutions, and policies regarding fiscal prudence, which are routinely described as solid. Moreover, Singapore has political stability and a deep well of reserves. CNBC quotes VP Bank chief investment officer Felix Brill as saying that Singapore's monetary policy framework has given 'exceptional stability' to the currency, 'which is exactly what safe haven flows seek.' Obstacles to the Singdollar reaching safe haven status, however, remain. The first is the size of the market for the Singapore dollar, compared to the US dollar, the yen, and the Swiss franc. The second is the fact that the city-state's economy is heavily reliant on exports. /TISG Read also: SAFE HAVEN: So much cash has been deposited in Singapore that DBS lent MAS $30 billion
Straits Times
10-07-2025
- Business
- Straits Times
Stable Sing$ a strong option for Asian investors amid heightened uncertainties: Bank of Singapore
Sign up now: Get ST's newsletters delivered to your inbox According to an analyst, the Singdollar is stable and being managed against a basket of currencies of Singapore's major trading partners SINGAPORE - The Singdollar could play a significant role in currency diversification amid heightened global uncertainties, particularly for Asian investors, a Bank of Singapore senior executive said. Ms Jean Chia, global chief investment officer at the bank, said at a mid-year outlook briefing on July 9 that Asia clients with home currencies such as Thai baht, Malaysian ringgit or Indonesian rupiah would have most of their offshore or overseas assets denominated in US dollars. 'That means that you are also very vulnerable on both ends to either the home currency or US dollar,' she said. Noting that the Singdollar is stable and being managed against a basket of currencies of Singapore's major trading partners, she added: 'The Singdollar could be the third currency in many of your currency diversification discussions.' She also named gold and alternatives as asset classes investors could diversify to in the face of market volatilities from US tariffs and global slowdown fears. The price of gold is up over 20 per cent so far in 2025, she noted. In alternative investments, Ms Chia noted that a steady stream of exits through initial public offerings and merger and acquisition activities in major markets could drive increased deal flow in the private equity secondaries market – which involves buying and selling existing investor commitments. 'In private equity, we see a resurgence of IPOs, both in the US as well as Hong Kong and Asia. That does bode well for secondaries for private equity,' she said. Dr Owi Ruivivar, chief portfolio strategist at the Bank of Singapore, the private banking arm of OCBC Bank, said investors often overlook uncertainty in pursuit of expected returns when managing their portfolios. 'Uncertainty has never really been episodic. It's part and parcel of what we have to deal with as investors,' she said. In a systemically uncertain environment, she advises against building portfolios around one particular theme. Instead, build a portfolio with very unrelated or slightly related types of factors and types of asset classes and securities, Dr Ruivivar said . The bank launched a new asset allocation framework on July 4 targeted at helping investors build more resilient portfolios amid heightened market volatility. The framework adopts a 'robust optimisation' technique – typically used by quantitative hedge funds and institutional investors – that aims to create investment portfolios adapted to withstand uncertainties in market conditions and key inputs, such as expected returns and risks, thereby delivering more stable returns. The framework was developed after a year-long study and stress testing of 120,000 portfolios. This marks a departure from more conventional approaches like mean-variance optimisation (MVO) and market cap-weighted benchmarks. MVO – which requires accurate forecasts – typically underperforms when actual market conditions diverge from forecasts. Meanwhile, portfolios constructed using the market cap-weighted benchmarks approach tend to be heavily concentrated in the US market, which can be less than ideal in today's environment. Dr Ruivivar said portfolios that adopt the 'robust optimisation' technique can deliver an average return that is sensible and attractive across different environments. 'And one where the worst outcome is actually a bit more constrained relative to other portfolios, and that's where the robust optimisation comes in,' she said. She also said that the bank is neutral on bond duration, which means that it is not betting on interest rates going up or down significantly. Bank of Singapore expects only one 25-basis-point rate cut in 2025 as the US Federal Reserve keeps its federal funds rate above 4 per cent to continue curbing inflation. A longer-duration bond is more sensitive to interest rates, as there is more time for interest rates to change and impact the bond's price, while a shorter duration bond is less sensitive to rates. 'Although we expect the Fed to cut rates later this year, there are other risks – such as heavy US government borrowing – that could keep long-term bond yields elevated and reduce the appeal of longer-duration bonds,' said Dr Ruivivar.
CNBC
01-07-2025
- Business
- CNBC
Dollar drops versus yen, Swiss franc as Trump's tax bill and tariffs weigh
The U.S. dollar weakened on Tuesday, falling the most against the Japanese yen and the Swiss franc, as President Donald Trump's massive tax-cut and spending bill stoked fiscal worries and uncertainty around trade deals weighed on sentiment. Investors have also started wagering on a quicker pace of monetary policy easing by the Federal Reserve this year ahead of a slew of U.S. economic data this week, headlined by Thursday's nonfarm payrolls report. That spurred dollar-selling, which slipped 0.33% to a new 10-year low and fetched 0.790 Swiss francs, while the greenback dropped 0.64% to 143.08 Japanese yen. The yen capped the first half of the year with a 9% gain - its strongest performance since 2016. The euro was perched at a near four-year high of $1.1781. The single currency surged 13.8% in the January-June period, its strongest-ever first half performance, LSEG data showed. Sterling inched up 0.2% to $1.3757, not far from the three-and-a-half-year high it touched last week, while the dollar index, which measures the U.S. currency against six others, slipped to 96.698, its lowest since February 2022. "There are many reasons not to like the USD. Some are structural, like the erratic trade policies and fiscal risks," said Moh Siong Sim, a currency strategist at Bank of Singapore. "They have earlier caused the USD to weaken despite its relative yield advantage. But the risk of a more dovish Federal Reserve eroding USD's yield advantage is the latest source of USD weakness." Goldman Sachs now expects Fed to deliver three quarter-point interest rate cuts this year compared with its earlier forecast of a single reduction in December, citing muted tariff effects and labor market weakness. Investors are also grappling with uncertainty over the U.S. Senate's efforts to pass Trump's budget bill, which faces internal party divisions over its projected $3.3 trillion addition to the national debt. The fiscal concerns have dampened sentiment and prompted some investors to diversify. The world's reserve currency is down more than 10% this year, its biggest first-half dive since the era of free-floating currencies began in the early 1970s. Meanwhile, Trump has continued hammering the Fed to ease monetary policy, sending Fed Chair Jerome Powell a list of central bank interest rates around the world adorned with handwritten commentary saying the U.S. rate should be between Japan's 0.5% and Denmark's 1.75%. Trump's constant tirade against the Fed and Powell has fueled investor worries about the central bank's independence and its credibility. Trump cannot fire Powell over a policy dispute, but last week urged him to resign. Investor focus will be on comments from Powell, who joins several other central bank chiefs at the European Central Bank forum in Sintra, Portugal, on Tuesday. Traders are now pricing in 67 basis points of easing from the Fed this year. A survey on manufacturing activity along with a report on job openings is due later in the day in the U.S., ahead of Thursday's pivotal nonfarm payrolls figures. Analysts say that any signs of labor market weakness could bolster bets for more interest rate cuts by the Fed and spark a new wave of dollar weakness. With the July 9 deadline for Trump's tariffs fast approaching, investors are also keeping an eye on trade deals between the U.S. and its partners although there have not been many agreements so far.
