FOREIGN EXCHANGE MARKET - MCB

[Pages:2]Treasury Market Update......... 14th December 2017.........

FOREIGN EXCHANGE MARKET

News

> The Federal Reserve raised interest rates by 25 basis points to 1.25-1.5 percent and maintained its monetary policy outlook for the coming years.

> The US dollar extended losses, having already fallen pre-FOMC as the hike was widely expected by market participants. The Euro took advantage of this weakness to trade back above USD 1.1800. Focus now moves to US tax reform after Senate and House Republicans reached a tentative agreement.

> The GBP/USD hit a high of 1.3426 on better-than-expected UK wage growth and broad-based USD weakness. The Bank of England is having its monetary policy meeting this Thursday, mostly expected to be a non-event.

> The Aussie climbed to a five-week high of 0.7675 against the greenback after the release of better-than-expected jobs figures for November and upbeat China data.

> Hong Kong central bank, the Hong Kong Monetary Authority, raised the base rate by 25 basis points this morning to 1.75 percent, after the Fed hiked rates by 25 bps overnight. Hong Kong tracks the US rate moves because its currency is pegged to the US dollar.

> South African rand rose on Wednesday, helped by a dip in the dollar after disappointing US inflation data, with local market focus still on the ruling African National Congress conference starting this weekend to pick a new party leader.

> The US Dollar drops by 15 cents on the offer, this morning against the local currency, on the back of poor CPI Data out of the US.

> The USD/JPY pair dropped to 112.46, hitting the lowest since December 7 on the back of poor US inflation data and Federal Reserve announcement.

Daily Technical View

EUR/USD - The US Federal Reserve delivered the expected 25 bps rise in interest rates and maintained its projection of three rate hikes in 2018 but the USD came under pressure after Treasury yields tumbled following a disappointing US CPI data. The market has traded near the key levels we highlighted at the beginning of the week 1.1715 - 1.1850 (Low 1.1718/High 1.1843), no change in view if we clear the 1.1850/80 area in the run-up to the year's last big event risk, today's ECB meeting, then we will open up new upside target at 1.1960 whereas a rejection of those levels will see us back at the 1.1715/30 area.

Market Highlights

Indicative Spot Rates

Indicative Forward Rates

AUDMUR CNYMUR EURMUR JPYMUR ZARMUR USDMUR GBPMUR

Today 25.60 5.04 39.53 29.51 2.44 33.39 44.87

Bid

Change (Rs.) 0.23 0.12 0.08 0.01 (0.14) 0.19

Today 26.81 5.30 41.07 30.82 2.56 34.69 46.62

Offer

Change (Rs.) 0.24 (0.01) 0.12 0.08 0.02 (0.15) 0.20

AUDMUR EURMUR ZARMUR USDMUR GBPMUR

1m 25.59 39.60 2.43 33.40 44.92

Bid

3m 25.57 39.76 2.41 33.43 45.03

6m 25.55 39.99 2.37 33.45 45.19

1m 26.84 41.17 2.55 34.72 46.70

Offer

3m 26.88 41.40 2.54 34.81 46.88

6m 26.96 41.74 2.51 34.92 47.17

EURMUR GBPMUR USDMUR

USD INDEX GBPUSD EURUSD

41.20

EURMUR

EURUSD

1.1950

41.10

1.1905

41.00

1.1860

40.90

1.1815

40.80

1.1770

40.70 19-Nov

24-Nov

29-Nov

4-Dec

9-Dec

1.1725 14-Dec

47.00

GBPMUR

GBPUSD

1.3535

46.70

1.3460

46.40

1.3385

46.10

1.3310

45.80

1.3235

45.50 19-Nov

24-Nov

29-Nov

4-Dec

9-Dec

1.3160 14-Dec

35.00

USDMUR

USD INDEX

94.50

34.90

94.10

34.80

93.70

34.70

93.30

34.60

92.90

34.50 19-Nov

24-Nov

29-Nov

4-Dec

9-Dec

92.50 14-Dec

AUDUSD EURUSD GBPUSD USDJPY USDCHF USDCNH

Previous Day Trading Levels

Opening

High

0.7635

0.7674

1.1825

1.1843

1.3417

1.3448

112.52

112.79

0.9852

0.9864

6.61

6.61

Low 0.7628 1.1822 1.3393 112.54 0.9840

6.60

Today

Latest 0.7663 1.1829 1.3434 112.62 0.9851

6.61

Major Indices

DOW JONES S&P 500 FTSE 100 DAX CAC 40 NIKKEI 225

HANGSENG

Value at Close

24,504.80 2,662.85 7,496.51 13,125.64 5,399.45 22,709.24 29,146.19

Day Change %

0.33 (0.05) (0.05) 0.43 (0.51) (0.21) (0.26)

Major Economic Releases (at GMT)

Date

Time

Country

14-Dec

08 30

CH

14-Dec

12 00

UK

14-Dec

12 45

EU

14-Dec

13 30

US

Event

SNB Interest Rate decision BoE Interest Rate decision ECB Interest Rate decision

Retail Sales (MoM)

Period

Nov

Actual

-

Expected

-0.75% 0.5% 0.0% 0.3%

Prior

-0.75% 0.5% 0.0% 0.2%

This commentary is for information only, and the comments and forecasts are intended to be of a general nature, and are current at the date of issue. This document is not intended as an offer, solicitation, or recommendation to buy or sell financial instruments or for any individual investment. Source: MCB Treasury, Reuters, Bloomberg, Bank of Mauritius

Treasury Market Update......... 14th December 2017.........

FIXED INCOME

News

> Treasury prices rose yesterday, pushing yields lower after a report on inflation came in line with expectations, but the Federal Reserve willingness to hike rates aggressively next year came into question, with a lack of change to its muted inflation outlook.

> The US Fed policy-setting Federal Open Market Committee raised short-term interest rates by a quarter percentage point to a range of 1.25 percent and 1.5 percent, the fifth such increase since Chairwoman Janet Yellen's central bank began raising rates from near zero at the end of 2015.

> The US 2-year note yield, the most sensitive to interest-rate policy, fell 4.3 basis points to 1.786 percent, the biggest one-day drop since November 22.

> Results of the 3.94 percent Five-Year Government of Mauritius Bonds for a nominal value of MUR 2,000 Mio were as follows: out of 15 bids received, 7 were successful, with a weighted yield of 4.07 percent.

> Tomorrow, the Bank of Mauritius will issue the 364-Day Government of Mauritius Treasury Bills for a nominal amount of Mur 600 Mio as well as the 91Day and 182-Day Bank of Mauritius Treasury Bills for a nominal amount of Mur 1,000 Mio.

> The Bank of Mauritius published the Minutes of the 45th Monetary Policy Committee Meeting held on the 29 November 2017.

Market Highlights

Local Secondary Market T-Bills

Bid (%)

Offer (%)

Local Secondary Market T-Bonds

Bid (%)

Offer (%)

Key Central Bank Rates

Current Level (%)

Previous (%)

Up to 30 days

2.28

2.13

2 year

2.90

2.70

BOM Repo Rate

3.50

3.50

31 to 60

2.33

2.18

3 year

3.10

2.90

Feds Fund Rate

1.25 - 1.50 1.00 - 1.25

61 to 90

2.38

2.23

4 Year

3.35

3.15

BoE Bank Rate

0.50

0.25

91 to 135

2.43

2.28

5 Year

4.00

3.80

ECB Ref. Rate

0.0

0.0

136 to 180

2.48

2.33

10 Year

4.60

4.35

RBA Cash Rate

1.50

1.50

181 to 240

2.54

2.39

241 to 300

2.60

2.45

301 to 364

2.66

2.51

15 year 20 Year

5.00

4.75

5.50

5.25

Government Benchmark Yields (%)

2 Year

5 Year

Click here to access our Mauritian Bond Market page

Local Treasury Bills Market

US Bonds UK Bonds

1.7946 0.473

2.128 0.733

German Bonds

-0.738

-0.358

2.60

Money Market Rates

2.40

LIBOR (%)

1 Week

1 Month

3 Months

6 Months

364

EUR

-0.421

-0.417

-0.386

-0.316

2.20

USD

1.435

1.477

1.588

1.756

182

GBP

0.484

0.490

0.520

0.579

2.00

EURIBOR

-0.377

-0.369

-0.327

-0.271

Weighted Average Yield

91 1.80

1.60 13-Oct 20-Oct 27-Oct 03-Nov 10-Nov 17-Nov 24-Nov 01-Dec 08-Dec

COMMODITIES

Rolling Gold & Oil Prices

1295

Gold Price

Oil Price

66.00

1284

65.00

1273

64.00

Indicative Generic Swap Rates* (%)

Tenor EURIBOR - 3m

2yr -0.245

5yr 0.127

7yr 0.376

10yr 0.715

USD LIBOR - 3m

1.999

2.192

2.263

2.366

*Pay fixed and receive floating swap

News

> Gold prices bounced off earlier lows, boosted by the weaker US dollar.

> Oil prices had a volatile session, supported by inventory data from the EIA but dragged down by soaring US production.

> The Energy Information Administration reported that US crude stockpiles fell by 5.1m barrels last week while gasoline inventories increased by 5.7m barrels.

Gold Price (USD)

Oil Price (USD)

1262

63.00

Spot Market

Futures Market

1251

62.00

Today

Change ($)

Today

Change ($)

1240 19-Nov

24-Nov

29-Nov

4-Dec

9-Dec

61.00 14-Dec

Brent Crude Oil ($) Gold ($)

64.42 1,257.83

(1.25) 12.95

62.81 1257.70

(1.18) 15.20

This commentary is for information only, and the comments and forecasts are intended to be of a general nature, and are current at the date of issue. This document is not intended as an offer, solicitation, or recommendation to buy or

sell financial instruments or for any individual investment.

Source: MCB Treasury, Reuters, Bloomberg, Bank of Mauritius

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