Latest news with #RichardFranulovich
Straits Times
22-05-2025
- Business
- Straits Times
South Korean won touches seven-month high on report of currency talks with US
SEOUL – The South Korean won climbed to a seven-month high late on May 21 after local media reported the direction of the currency was discussed during trade talks with the US. The currency rallied after newspaper Korea Economic Daily cited an unnamed government official as saying the US believes a relatively weak won is a fundamental cause of the Asian nation's trade surplus. The talks are ongoing and nothing has been decided yet, Korea's finance ministry said in a statement. The won advanced as much as almost 2 per cent to 1,368.50 per dollar on May 21, the strongest level since October 2024. The currency unwound some of those gains on May 22, weakening 0.6 per cent. 'The idea of currency accords was always mostly the cherry on top for what was already a compelling medium bullish case for Asia FX,' said Mr Richard Franulovich, head of foreign-exchange strategy at Westpac Banking in Sydney. The won's volatility comes amid concern the US is using the threat of higher tariffs to convince its trading partners to allow their currencies to strengthen. US President Donald Trump and other officials in his administration have long argued weakness in Asian currencies is handing exporters in the countries an unfair advantage. The won sunk to the weakest level in a decade in April as rising trade tensions following Mr Trump's 'liberation day' tariff threats sapped demand for emerging-market assets. While strengthening in recent weeks, the won is still one of the world's most undervalued currencies, based on its real effective exchange rate. The yen briefly weakened earlier on May 22 after US Treasury Secretary Scott Bessent and Japanese Finance Minister Katsunobu Kato reaffirmed that markets should dictate currency levels. Korea's currency has strengthened almost 7 per cent against the greenback this quarter, the best performer in Asia after the Taiwan dollar, according to data compiled by Bloomberg. The won closed 0.9 per cent higher on May 14 after a media report said officials from Korea and the US discussed currency policy at a meeting in Milan. 'I foresee challenges with putting exchange-rate clauses that target certain levels in any trade agreement, so would not necessarily think a trade-related catalyst is pending,' said Mr Brendan McKenna, a strategist at Wells Fargo in New York. Still, 'the won could certainly strengthen more if local officials agree to certain FX sticking points,' he said. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
Yahoo
16-02-2025
- Business
- Yahoo
Hedge-Fund Bears Risk Being Burned by Resilient Aussie Dollar
(Bloomberg) -- Hedge funds are in danger of losing money on their bearish Australian dollar positions as a lot of the negative news may already be in the currency's price. Progressive Portland Plots a Comeback Why American Mobility Ground to a Halt A Filmmaker's Surreal Journey Into His Own Private Winnipeg How to Build a Neurodiverse City SpaceX Bid to Turn Texas Starbase Into City Is Set for Vote in May The Aussie is benefiting from an easing of worst-case fears of US tariffs and may climb to as high as 64.50 US cents if the central bank surprises by keeping interest rates on hold this week, according to RBC Capital Markets. Westpac Banking Corp. is leaning toward further gains in the Aussie in the near-term. 'AUD/USD has been unexpectedly resilient in the face of repeated tariff shocks, a big change from the fourth quarter,' said Richard Franulovich, head of foreign-exchange strategy at Westpac Banking Corp. in Sydney. The Australian dollar has strengthened 2.7% against the greenback this year, the third-best performing Group-of-10 currency, as easing fears over a global trade war have boosted risk assets. The Aussie climbed to the highest since December on Friday, before ending last week at 63.52 US cents. The currency's rebound is bad news for most hedge funds, which held a combined net short position of 44,643 contracts on the AUD/USD pair as of last Tuesday, based on data from the Commodity Futures Trading Commission. While the Reserve Bank of Australia is forecast to lower its benchmark rate for the first time since November 2020 on Tuesday, there's no guarantee that would spur any further Aussie weakness. Swap markets are already pricing in more than three 25-basis-point cuts this year, with a 87% probability of one this week. The near-term risk for hedge funds is that the RBA pushes back against these dovish expectations at the gathering, citing a robust labor market or the potential for higher US tariffs to add to inflation. Topside Risks 'Since a 25-basis-point cut is almost fully priced in, risks are to the topside in the AUD/USD in case of any disappointment,' said Mayank Navalakha, head of foreign-exchange options trading at Australia & New Zealand Banking Group Ltd. in Singapore. If the RBA errs on the hawkish side and delays a rate cut, the Aussie may power ahead to as high as 64.50 cents, according to RBC. 'The worst-case fears of US tariffs appear to be receding — US economic surprises appear to have peaked in November/December, and US interest rates have retreated significantly in the past month, undercutting fundamental support for the US dollar,' said Alvin Tan, head of Asia foreign-exchange strategy at RBC in Singapore. 'AUD/USD will likely break lower only if USD/CNY breaks through 7.35, and/or EUR/USD falls to parity and below,' he said. This week's main economic events: Monday, Feb. 17: Japan 4Q GDP and industrial production, Indonesia trade balance, Philippines overseas cash remittances, Singapore non-oil domestic exports, Thailand 4Q GDP Tuesday, Feb. 18: RBA rate decision and statement on monetary policy Wednesday, Feb. 19: RBNZ rate decision, Bank Indonesia rate decision, Australia 4Q wage price index, BOJ's Takata speaks and Japan trade balance Thursday, Feb. 20: Australia employment, China 1- and 5-year loan prime rates, South Korea consumer confidence, Taiwan exports orders and 4Q BoP current account balance, Indonesia 4Q BoP current account balance, Malaysia trade balance Friday, Feb. 21: Japan CPI and PMIs, RBA parliamentary testimony, South Korea 20-day exports/imports, New Zealand trade balance, Malaysia CPI The Undocumented Workers Who Helped Build Elon Musk's Texas Gigafactory The Unicorn Boom Is Over, and Startups Are Getting Desperate Japan Perfected 7-Eleven. Why Can't the US Get It Right? The NBA Has Fallen Into an Efficiency Trap How Silicon Valley Swung From Obama to Trump ©2025 Bloomberg L.P. Sign in to access your portfolio
