US Dollar Index retraced to the 94.9 area from an intraday high of 95.4 following President Trump’s comments in a TV interview, in which he expressed concerns about rising interest rates, saying that the strong US dollar is harming the US economy.

His criticism on Fed policy came after Powell’s upbeat Congressional testimony two days ago. In the testimony he hinted two more rate hikes by year end, as a robust job market, strong economic growth and inflation are approaching their target.

Mr Trump also complained about strong dollar against weakening Euro and Chinese yuan, saying that their currency is ‘dropping like a rock’ and it puts US trade at a disadvantage.

The ‘dropping like a rock’ offshore renminbi CNH tumbled to 12-month low and even touched the critical  6.80 level last night. The Yuan has entered into a fast depreciating trajectory since early June, alongside with a selloff in A-share’s and Hong Kong shares due to growth concerns and trade risks. Should the weakening currency continue its decline it will encourage further capital outflows and thus form a negative feedback loop to the equity market.

US equity markets responded negatively to Trump’s comments, with all three major indices falling from their recent highs. Microsoft’s 2Q earnings smashed analyst’s forecast and its share price advanced 3% last night.

In Asia, Hang Seng Index is consolidating at just above 28,000 points due to negative sentiment from US and weakening CNH. Breaking down this level would likely open room for additional downside momentum towards the next support level at the 27,300 area. Technically, strong bearish trending lines – SuperTrend (10. 2), 50-Day SMA -are weighing down the index.

In Singapore, property developer WheelockProperties received a privatisation offer from its parent company at an offer price of S$2.10. Its share price soared more than 25% and closed at S$2.18 yesterday, as investors believe there may be more room to go comparing to the company’s NAV of S$2.60.

Wheelock Properties (Singapore)

By Margaret Yang in Singapore

 

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