The main highlights of last week trading session were undoubtedly the lower-than-expected US employment data and rising speculation that China might be allowing its currency to appreciate against the US dollar. In the event the Chinese yuan is allowed to trade in a wider band, then other Asian currencies might be triggered to follow the pace as the other Asian economies do share some close ties. Besides, the greenback was also put under additional pressures by bearish US employment data. In September the US economy created only 96k jobs compared to 148k employment the market was expecting.

This raised worries that the Federal Government would pause future interest rate hikes. In fact, the greenback had already been pressured by the remarks of Fed governor Ben Bernanke who said on Thursday that US central bank could halt the interest rate hikes cycle temporarily if the US economy slow down. After the release of the employment report, the dollar dropped to a session low against the yen of 109.33.

Against the MUR, the dollar remained flat, ending the week at 28.8372 just as the past two weeks.

Sterling

The pound was unruffled by the decision of the Bank of England to hold interest rate unchanged on Thursday. This made analysts to ponder whether additional rate hikes will come in the current monetary tightening cycle. Consequently, the pound will feel the heat in the event the UK’s economic data come out lower than expected. The Sterling hit its lowest level since late January on Wednesday as a result of dovish manufacturing data. However, on Monday, the pound recovered some of its losses after UK inflation data hit an eight-year high in September, caused by sky-high oil prices. In addition, producer input prices rose by 1.3 percent to reach 7.4 percent for the year. In addition, the PPI data was better than expected causing the market to speculate that the UK interest rates could go up by another 25 basis point in November.

Yesterday, the pound was trading at MUR 51.78 against MUR 51.50 last Tuesday.

The yen went through a roller-coaster ride throughout the week. The yen rose last Friday against the dollar as the latter was pressured by weaker-than expected US job growth. However, the yen eased up on its gains as record high oil prices and falling Japanese share prices raised worries that the Japanese economy might slow down.

Yesterday, the Japanese currency was offered at MUR 26.37 compared to MUR 26.10 last Tuesday.

■13 Oct

US – Fed Budget

US Mortgage indx

■ 14 Oct

US int’l Trade

US Jobless Claims

■ 15 Oct

Us Michigan Prelim

Retail Sls

PPI

■ 19 Oct

EZ Ind Prod

US CPI, Redbook

Contribution by HSBC</B>