XE Market Analysis: Asia - Mar 18, 2014

The dollar was firmer versus the European majors in N.Y. trade on
Tuesday, though lost modest ground to the yen. Equities rallied as Putin
said he did not want to tangle with the West, and had no ambitions to
invade the remainder of the Ukraine. Wall Street appeared to take him at
his word, though oil rallied over $1/bbl, even as gold slipped back for the
second day.

U.S. economic data revealed in-line CPI, and slightly softer housing
starts numbers. [relative economic stability in the US may prove to top
stagnating Philippine data, however Crimean crisis and sanctions from the
West may eventually affect US economy]

EUR-USD peaked at 1.3943 at the open, later slipping to 1.3880 lows.
USD-JPY bounced to 101.77 on the Putin news, though spend the
remainder of the session inching lower, eventually touching 101.28.

[EUR, USD] EUR-USD maintained a fairly narrow trading band through
the session, peaking at 1.3943 at the open, before making its way to
1.3880 lows. Uncertainty in the Ukraine could keep the euro fairly tethered
for now, and ahead of the FOMC on Wednesday, we suspect few new
speculative positions will be entered into. As a result, we look for 1.3880 to
1.3950 to hold overnight.

[USD, JPY] USD-JPY again ran out of steam into the 101.80 level in early
trade, with Japanese backed offers noted from 80 up to 102.00. Despite
the risk-on conditions today, the pairing's upside remained hampered by
China slowdown concerns, and ongoing Ukraine worries. Later, USD-JPY
made intra day lows of 101.28. The modest move came as stocks eased
off their best levels. Talk of some sort of military skirmish in Crimea may
have had some impact, but overall, the markets didn't seem overly
concerned with the Ukraine. Gold was down $11 at $1362, posting losses
for the second day running, though oil prices rallied over $1/bbl, reportedly
on Russia concerns.

[GBP, USD] Sterling is consolidating into the BoE minutes to the March
MPC meeting. There are some bank analyst notes in circulation that are
recommending a long sterling position into the minutes (due tomorrow), as
there is a chance we will see some of the members displaying
comparatively upbeat remarks about recovery prospects. We anticipate,
however, that these would be offset by concerns about the strength of
sterling, an issue touched upon during a press interview by BoE Deputy
Governor Bean last week.

[USD, CHF] EUR-CHF has re-established itself under 1.2200 in recent
weeks as geopolitical risk remains over the Ukraine and Crimea has
returned support to the safe haven franc. China slowdown concerns are
another factor. The recent cycle low of 1.2104 and 1.2100 are key support
levels. SNB's Jordan said last week that the central bank would defend the
1.2000 limit if concerns about Ukraine drove the franc higher.

[USD, CAD] USD-CAD dipped to intra day lows near 1.1040 following
Putin's Duma speech, where he said he did not want to split up Ukraine,
and would not seek confrontation with the West. Risk taking immediately
turned higher on the comments, taking equities, and the CAD higher. The
pairing rallied to intra day highs of 1.1070 following headlines from BoC's
Poloz, who said February inflation will be tepid, Q1 growth will be on the
"soft side", adding the output gap won't close for "a couple of years". Later,
USD-CAD ramped up to 1.1132 highs, taking out stops at 1.1100-10 on
the way up. Buyers stepped in in earnest on the move above the prior intra
day high of 1.1093. Standing offers are now noted at 1.1140-50.

PHL building foundation for
growth

[Government building measures to ensure that natural crises do not adversely
affect economy in the coming years]
The government bared plans on Tuesday to build foundations for sustained
growth in the final years of President Aquino as Cabinet members laid down
plans, mostly focusing on boosting the resilience of the economy and shield it
from the adverse impact of severe natural calamities.
This developed as the economic managers, led by Bangko Sentral ng Pilipinas
(BSP) Governor Amando M. Tetangco Jr., met at the 2014 Philippine Economic
Briefing held at the Philippine International Convention Center on Tuesday, with
the theme Enhancing Resilience to Sustain Inclusive Growth.
Among the topics discussed at the biannual forum included building cushions for
the economy after Supertyphoon Yolanda (international code name Haiyan)
struck central Philippines and posed a threat to the countrys strong growth trend
last year.

Ukraine crisis no impact on local
flour pricesNeda

[PH still relatively insulated from the Crimean crisis for now, according
to NEDA goods from Ukraine may be in short supply, and may affect
trading between Ukraine and Philippines.]
THE unrest in Ukraine, one of the major suppliers of wheat in Asia, will not
adversely impact on local flour prices, according to the National Economic and
Development Authority (Neda).
Socioeconomic Planning Secretary and Neda Director General Arsenio M.
Balisacan told the BusinessMirror that the Philippines can easily source wheat from
other countries.
Its not really as problematic as rice. Rice is very thin in the global market, thats
harder to handle. I dont think it can [affect us]. Besides, you have little trade with
Ukraine and it will not rattle the global market, Balisacan said.
The Philippines imports a mixture of wheat and feed wheat from Ukraine. In recent
years the country has been steadily relying on Ukraine for feed wheat, which is used
to manufacture animal feeds.
Bloomberg reports recently said global wheat prices are poised to register the
biggest quarterly growth since 2012 as tensions in Ukraine could delay wheat
shipments from the Black Sea.
Data showed that wheat futures for the May delivery already increased 2 percent to
$6.8725 at the Chicago Board of Trade on March 15.
A Bloomberg report noted that the price grew 5.1 percent last week and 14
percent since December, which could be the biggest increase since September
2012.
Local flour millers import an average of 2 million metric tons of wheat, which they
process into soft or hard flour. Hard flour is used for making bread products such as
pan de sal, while soft flour is used for baking cakes and pastries.
According to the March 2014 United States Department of Agriculture (USDA)
Global Agricultural Information Network report, the Philippiness major food- and
beverage-processing industry included flour and bakery products. The USDA said
the bulk of the USs agriculture exports to the Philippines includes wheat.

Manila has edge over neighbors in
cloud space when Asean
integrates

[IT development in Philippines may provide advantages for Philippines
once Asean integration happens competence of Philippines may
increase due to technology, alongside more robust trading in between
Asean members]
THE Philippines is seen to benefit more in the cloud space when the 10 member-
countries of the Association of Southeast Asian Nations (Asean) integrate as a
single community next year, according to a top executive of a multinational provider
of security software.
Trend Micro Inc. Technical Services Senior Manager Khongsak Kortrakul told
the BusinessMirror that the high competency of the information-technology (IT)
people in the country will be their edge over their counterparts in the region to
support either the infrastructure or security needs of other Asean nations
moving into the cloud space.
Once we become a community and the other countries are moving forward to the
cloud, they need human resource to support [operations] either at the infrastructure
or security level. So I think the Philippines IT people can support it, he said.
Since English is widely used in the IT world, he added that the fluency of Filipinos in
this language will also work to their advantage compared to their Asean peers.
Being a software security solutions company, Trend Micro provides protection to
consumer and enterprise-level clients from the latest digital threats as they shift
from storing information in hardware to the cloud.
With the country hosting the largest Trend Micros research and technical
support hub in Southeast Asia called the Trend Lab, Kortrakul expects that they
can provide datacenter security solutions support not only in the region but also
worldwide from their local operations.
Located in Ortigas, Pasig, Trend Lab Manila employs 1,100 engineers and
technical staff, including support engineers and malware analysts.
So for Trend Micro, the Philippines is the only country that our sales team does not
have a dedicated technical support person. Unlike in other countries, for example,
Thailand, Malaysia, Singapore and Indonesia, we have at least one individual
technical person to do support [services], he said.
While cloud penetration in the local market is not as high as in other parts of the
region, Kortrakul said the readiness and capability of the Filipino IT professionals to
embrace it will eventually encourage the end-userswho are still hesitant at
presentto move into the cloud storage as well in the coming years.