The Australian dollar yesterday got off to a rocky start on heightened political uncertainty at home while diminishing global anxiety over Brexit put sterling and the other major currencies on a steadier footing.
The pound edged up to US$1.3302, stabilizing after an 11 percent plunge to a 31-year trough of US$1.3122 a week ago in the wake of Britain’s June 23 vote to leave the EU.
While far less dramatic, Australia’s general election on Saturday produced no clear winner after more than two-thirds of the votes were counted. Headlines such as “Chaos Reigns” were splashed across front pages of some Australian tabloids.
That gave investors an easy excuse to sell the Australian dollar, which slid as far as US$0.7410 in thin early trade, from US$0.7495 late in New York on Friday.
It has since rebounded to US$0.7499.
“A hung parliament in Australia has not been historically conducive to good governance and policy reform, and the risk of losing the ‘AAA/stable’ credit rating is not insignificant,” TDSecurities chief Asia-Pacific macro strategist Annette Beacher said. “While the AUD could sag on the uncertainty, fiscal policy tends to be a slow burn issue and the RBA [Reserve Bank of Australia] on Tuesday is more of a marquee event for the markets.”
Almost all 37 economists polled by Reuters last week expect the RBA to keep the cash rate unchanged at a record low 1.75 percent.
Yet, there are some expectations the central bank might reinstate a clear easing bias, an outcome that should keep the Australian dollar under the pump.
For the other major currencies, Brexit is starting to fade as a driver with nerves soothed by promises of more stimulus from the Bank of England and talk of UK corporate tax cuts to offset the shock of leaving the EU.
The clear fallout from Brexit is that investors no longer expect the US Federal Reserve to hike interest rates this year, while other major central banks are seen poised to ease policy further.
Highlighting the theme of lower rates for longer, US Treasury yields on Friday plunged with the benchmark 10-year briefly reaching a four-year trough of 1.382 percent, before closing at 1.461 percent.
The euro stood at US$1.1130, versus US$1.1139 on Friday, and it was little changed at ¥114.31. The US dollar was steady at ¥102.62.
However, some traders say the impact of Brexit could take longer to emerge given nothing concrete has been set after the referendum, including when and how that will happen.
“Clearly, funds will flow out of the UK. The question is where that would money will go. The recovery in risk sentiment over the past week seems a bit risky. I would expect more safe-haven buying in the yen,” said Koichi Takamatsu, head of forex at Nomura Securities in Tokyo.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last