Market Highlight 24.05.2024

The USD Index recovered for the fourth consecutive day, rising above the 105-point mark, supported by data showing that U.S. economic activity in May accelerated to its highest level in over two years that boosting optimism for Q2 GDP growth. Specifically, the preliminary composite PMI index, which tracks both manufacturing and services sectors, increased to 54,4 in May from 51,3 the previous month. Yesterday’s data also showed that the number of Americans filing new claims for unemployment benefits fell last week, indicating the inherent strength of the labor market, which will continue to strongly support the economy. The growth in business activity for service providers in May was the fastest in a year, while manufacturing sector growth also expanded at a quicker pace. This increases inflationary pressure, explaining why the FED intends to maintain higher interest rates for a longer period. The market participants currently expects the FED to implement two rate cuts by the end of this year. However, if U.S. inflation trends unfavorably, the number of rate cuts will be fewer, and this scenario will further support the strength of the USD.

The USD/VND interbank exchange rate yesterday was traded below the effective ceiling rate of 25.471 (up 4 VND from the previous day) with observed USD demand remaining high amid a lack of foreign currency inflows. The most important source of USD supply at this time comes from the State Bank of Vietnam which supplied over 400 Million USD to meet market needs yesterday. Thus, from the second half of April to date, the SBV has intervened by selling nearly 3,5 Billion USD at the rate of 25.450. This figure is expected to increase in the coming days, and additional monitoring of new regulatory measures from the SBV to support the market is necessary.

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Directly contact us to receive market news and consultancy on foreign exchange products and derivatives:

- Financial Markets Division – Email: ktttc@acb.com.vn ; or

- Ms. Hong Anh (Financial Markets Researcher) – Email: anhkh@acb.com.vn