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20 May 2014
Asia EM Express: China and Russia expected to sign crucial gas deal; martial law declared in Thailand
FXStreet (Łódź) - Russian President Vladimir Putin traveled to China on Tuesday to attend a summit in Shanghai and hold talks with President Xi Jinping on the tightening of ties between the two countries, including the ratifying of an agreement on the provision of natural gas.
If the Russian and Chinese leaders manage to successfully finalize the talks, Gazprom would sign a 30-year contract with China National Petroleum Corp. for supplying 38 billion cubic meters of gas annually, starting from 2018.
Such an energy alliance would be of great economic and political importance to Russia in the light of the recent crisis in its relations with the West. China, which is also currently involved in territorial disputes, would benefit as well in having gas delivered through pipelines instead of the not so reliable sea routes.
Meanwhile in Thailand martial law had been declared on Monday. The army claims that it's not a coup, just a move aimed at restoring law and order in the country, shaken by annti-government protests. The Thai Baht and equities fell on the news. USD/THB was up 0.10% at 32.52.
"Given Thai GDP already shrank 2.1% QoQ (that’s not seasonally-adjusted by the way!) and 0.6% YoY in Q1, the last thing the economy needs is further political instability – though martial law will almost certainly hit near-term tourism arrivals," Michael Every from Rabobank points out.
Economic data
As expected, the Hong Kong Unemployment Rate remained unchanged in April at 3.1% for the third running month, the Census and Statistics Department informed on Monday.
South Korean Producer Price Index on a monthly basis dropped 0.2% in April, after remaining flat in March. Year-on-year PPI declined 0.3%, up from -0.5%.
On a quarterly basis Singapore's GDP surprised to the upside, growing 2.3% in Q1, following a 0.1% rise on Q4 and above forecasts of +1%. Year-on-year GDP climbed 4.9%, down from the 5.1% increase and below consensus of a 5.5% rise.
Tim Condon from ING commens: „The expenditure-side data revealed showed net exports to be the biggest growth driver for a second consecutive quarter (see figure). The government retained its 2-4% growth forecast for 2014.”
“We expect the MAS to retain the “modest and gradual” S$-NEER appreciation policy thisyear. Our yearend forecast for USDSGD is 1.239.”
Technicals
The Chinese yuan rose against the greenback on Tuesday following the PBOC's midpoint fixing at 6.1626, 0.02% stronger than Monday. USD/CNY was up 0.02% at 6.2386 at the moment of writing.
On Monday the USD/CNY daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI was at 55 at the last close, and has climbed to 57 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 118 pips, with ATR (14) shrinking at 95 pips. The 1D 200 SMA was at 6.1235, while the 1D 20 EMA was at 6.2336.
As for the Indian rupee, Irene Cheung and Tim Riddell from the ANZ Research team believe that the Bharatiya Janata Party's decisive victory in the elections held over the weekend should “help sustain the down-move in USD/INR in the near term.”
“We now expect USD/INR to trade to a low of 56.0 in the coming months before a firmer USD takes the pair back up to end the year at 59.5,” the analysts suggest.
The USD/INR was up 0.47% at 58.6530 at the moment of writing.
Meanwhile, USD/THB was up 0.10% at 32.52, after rising as high as 32.65 earlier Tuesday.
If the Russian and Chinese leaders manage to successfully finalize the talks, Gazprom would sign a 30-year contract with China National Petroleum Corp. for supplying 38 billion cubic meters of gas annually, starting from 2018.
Such an energy alliance would be of great economic and political importance to Russia in the light of the recent crisis in its relations with the West. China, which is also currently involved in territorial disputes, would benefit as well in having gas delivered through pipelines instead of the not so reliable sea routes.
Meanwhile in Thailand martial law had been declared on Monday. The army claims that it's not a coup, just a move aimed at restoring law and order in the country, shaken by annti-government protests. The Thai Baht and equities fell on the news. USD/THB was up 0.10% at 32.52.
"Given Thai GDP already shrank 2.1% QoQ (that’s not seasonally-adjusted by the way!) and 0.6% YoY in Q1, the last thing the economy needs is further political instability – though martial law will almost certainly hit near-term tourism arrivals," Michael Every from Rabobank points out.
Economic data
As expected, the Hong Kong Unemployment Rate remained unchanged in April at 3.1% for the third running month, the Census and Statistics Department informed on Monday.
South Korean Producer Price Index on a monthly basis dropped 0.2% in April, after remaining flat in March. Year-on-year PPI declined 0.3%, up from -0.5%.
On a quarterly basis Singapore's GDP surprised to the upside, growing 2.3% in Q1, following a 0.1% rise on Q4 and above forecasts of +1%. Year-on-year GDP climbed 4.9%, down from the 5.1% increase and below consensus of a 5.5% rise.
Tim Condon from ING commens: „The expenditure-side data revealed showed net exports to be the biggest growth driver for a second consecutive quarter (see figure). The government retained its 2-4% growth forecast for 2014.”
“We expect the MAS to retain the “modest and gradual” S$-NEER appreciation policy thisyear. Our yearend forecast for USDSGD is 1.239.”
Technicals
The Chinese yuan rose against the greenback on Tuesday following the PBOC's midpoint fixing at 6.1626, 0.02% stronger than Monday. USD/CNY was up 0.02% at 6.2386 at the moment of writing.
On Monday the USD/CNY daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI was at 55 at the last close, and has climbed to 57 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 118 pips, with ATR (14) shrinking at 95 pips. The 1D 200 SMA was at 6.1235, while the 1D 20 EMA was at 6.2336.
As for the Indian rupee, Irene Cheung and Tim Riddell from the ANZ Research team believe that the Bharatiya Janata Party's decisive victory in the elections held over the weekend should “help sustain the down-move in USD/INR in the near term.”
“We now expect USD/INR to trade to a low of 56.0 in the coming months before a firmer USD takes the pair back up to end the year at 59.5,” the analysts suggest.
The USD/INR was up 0.47% at 58.6530 at the moment of writing.
Meanwhile, USD/THB was up 0.10% at 32.52, after rising as high as 32.65 earlier Tuesday.