FX
Global
·
Asia
is in for a quieter start to the week as Australia and New Zealand celebrates Easter Monday.
Equity gains in NY was modest on Fri, albeit still likely to provide a buoyant
tone to Asia this morning. Sterling
was the outperformer last week and market players would be looking towards the
BOE Minutes, wary of any dovish tone to bring the exchange down from its recent
highs. Dollar could remained depressed as investors continue to digest the
dovish slant of Fed Chair Janet Yellen’s speech and this could be a moment for
risk currencies to shine, barring no risk-averse events. EUR and AUD stand a
chance for bullish extension should Europe’s PMI-mfg, Germany’s IFO and
Australia’s CPI surprise to the upside. We are not excluding the sterling
but we are wary of BOE Minutes at mid-week which could give some excuse for
investors to take profit from its current 4year 5-month high.
·
Elsewhere,
the NZD could see potential weakness ahead of the RBNZ policy announcement on
24 Apr (Thurs), particularly so following jawboning by the NZ Finance Minister
and lower than expected CPI numbers for 1Q, which had led to lower probability
of a rate hike next week (consensus expecting a 25bp hike to 3.00%).
·
Meanwhile,
BOJ seems unwilling to offer more easing policy, leaving the JPY crosses at the
whims of risk appetite. Nearer to home, China’s Apr flash HSBC PMI-mfg will be
watched amid a quieter week. Any deterioration on that front could sour
sentiments. In ASEAN, Philippines releases its BoP and trade balance numbers,
which should have limited impact on the PHP unless the numbers surprise.
BOT makes policy decision and majority expects no change.
·
Singapore
also sees the release of its Mar CPI and Industrial Production numbers next
Wed, which should have limited impact on the SGD. Our expectations of dollar
weakness in the near term, could leave the SGD $NEER at the upper end of the
band for now.
G7 Currencies
·
DXY – Weighed. DXY managed a run up towards the 79.920 but started to settle into
79.60-79.90 range for the rest of last week. The greenback is now weighed by
Fed Chair Yellen’s dovish slant and may remain capped under the 79.920 for now,
especially as investors continue to digest her words amid a quieter week ahead.
79.688-support is at risk now ahead of 79.55.
·
USD/JPY – Trapped in Range. USD/JPY edged lower edged higher and hovered around
102.60 at last sight. We expect pairing to remain in choppy trades within the
101.30-103.00 range for a while. Nearby barrier is seen at 102.68. Japan’s
trade deficit came in wider-than-expected in Mar, rising to JPY1.45tn vs.
market’s estimates of JPY1.08tn. This was on the back of sluggish exports,
which expanded by 1.8% y/y in Mar from 9.8% in Feb, and surging imports, up
18.1% in Mar from Feb’s 9.0% due to larger energy imports.
·
AUD/USD
– Two Way
Risks. Pair slipped to a low of 0.9332
at one point before a modest recovery to around 0.9370. Price moves seemed to
have topped, not gaining much from the risk-on mood triggered by the China Q1
GDP. MACD on the daily chart shows slight bearish momentum though support is
still seen around 0.9320. Break of this level exposes next at 0.9256. We see
two-way risks this week as we are wary of an upside surprise to 1Q CPI due next
Wed. Topsides guarded by 0.9380/0.9450.
·
EUR/USD – Range-bound. Pair was back on the upswing after a slump towards
1.3795 at midweek. The daily chart shows paring bullish momentum while 18-DMA
and 40-DMA had a positive cross-over. Directional bias is unclear at this point
though we still favour fading on rallies. Minor resistance is seen around
1.3850 ahead of 1.3879. Dips to meet support at 1.3795 ahead of 1.3770.
The next string of PMI-mfg numbers will be released this week. Watch the space
for volatility.
Regional FX
·
The SGD NEER trades 0.48% above the
implied mid-point of 1.2587. We estimate the top end at 1.2336 and the floor at
1.2837. USD/SGD – Directionless. The USD/SGD has been
choppy since the MAS policy decision last week and has since has its bearish
momentum pared in the past few sessions with MACD forest now at the zero line
this morning. Pair is little changed this morning from its Thu’s close of
1.2527. Scope for two-way action is possible but sluggish dollar ahead could
leave the pair within the 1.2430/1.2570 range this week. Mar CPI and IPI out
later this week are unlikely to have a significant impact on the pairing.
·
AUD/SGD – Choppy. Cross
attempted but failed to close below 1.1685-support last week but could try
again this week amid choppy trade. Still there is a lack of momentum on our
charts, though risks are now leaning to the downside. Immediate support is at
1.1662 and a break here exposes the next support at 1.1623. Topsides will be
guarded by 1.1814. SGD/MYR – Two-way forces. The
cross remained whippy with bids still towards the 2.60-figure. Pair has so far
been confined to trading between 2.5838/2.5974, and a break out on either side
exposes the cross to a wider range of 2.5780/2.6066. Momentum indicators do not
appear to be providing any clear signals and this netural tone is likely to
continue until fresh impetus appears.
·
USD/MYR – Bears to reassert. Pair bounced above the
neckline of the head-and –shoulder set-up on 8 Apr before slipping back towards
the 2.40-figure again. Pair is on the uptick this morning but we see the upmove
likely tentative. Our traders see ample short-term USD liquidity. We also expect
opportunity for bears to reassert themselves and next bearish target is 3.1980.
A more aggressive target could be 3.1470 in the medium term. Spot moved in
tandem with the 1-month NDF which was last seen around 3.2490.
·
USD/CNY
was fixed slightly higher at 6.1591 (+0.0005), vs. previous 6.1586 (+2.0% upper
band limit: 6.2848; -2.0% lower band limit: 6.0383). CNY/MYR was fixed at 0.5238 (+0.0032).
·
USD/CNY – Capped. USD/CNY edged higher to around
6.2243 along with a higher fixing. 6.2120 is still the support for the pair
while 6.2305 guards upsides. We think two-way action could continue unless
fresh cues emerge. China’s MOF urged local finance officials to quicken
spending in Mar, resulting in fiscal spending of CNY 1.3trn for the Mar
compared to CNY1.7 trn for Jan-Feb. In other news, CBRC has stepped up
regulation on non-standard asset businesses in rural banks.
·
1-Year
CNY NDFs – Steady. The
1Y NDF was hardly moved by the fixing this morning, still within the
6.2475-6.2560 band. There is a lack of momentum for the pair on both sides and
we see rangy-trades to extend within 6.2405-6.2647.
·
USD/CNH
– Downward
Tilt. USD/CNH is trapped in tight swivels and last seen around 6.2250. Pair
is guarded on the topside by the 6.2353-resistance. Watch for a slip under
near-by support at 6.2186 for bearish extensions.
·
USD/IDR – Slow grind higher.
The USD/IDR is inching higher at 11433 after returning from the Easter long
weekend with risks still pointing to the upside. A quiet week ahead, moves in
the pair are likely to be triggered by portfolio flows and dollar movements.
Last week, foreign funds bought a net USD140.31mn in equities but sold
IDR0.53tn from their outstanding bonds holdings. Still on the slow grind
higher, pair should hover between 11340/11500 for the week. The 1-month NDF is
edging higher to start the week at 11465 from Thu’s close of 11450 with risks
still to the upside. The JISDOR was fixed lower at 11418 on Thu to end the week
from 11438 on Wed.
·
USD/PHP – Bearish momentum.
Onshore markets re-opened today after a super long Easter weekend with the
USD/PHP slipping below the 44.400 level to 44.372. Risks remain tilted to the
downside with the RSI printing 27, close to oversold conditions. Bearish
momentum could be extended should BOP and trade data surprise on the upside.
44.150 continues to provide support, while 44.700 guards topsides for the week.
The 1-month NDF is currently inching higher at 44.400 this morning from Fri’s
close of 44.380 with risks pointing to the downside.
·
USD/THB – Range-bound. USD/THB
is inching higher at 32.193 from its Fri’s close of 32.180 this morning. Risks
continued to point to the downside though MACD forest is just hovering below
the zero line. Foreign buying should continue to support the THB as they did
last week (with a net THB3.25bn in equities and THB4.76bn in bonds purchased
last week). However, the protracted political uncertainty continues to hamper
downside for the pair. Custom trade data and BOT policy decision are on tap
this week but we do not expect significant development on those fronts. USD/THB
is likely to remain range-bound between 32.050/32.480 in the week ahead. Thailand’s
BOT governor said that the central bank will review its 2.7% GDP estimates in
Jun given that government spending has been delayed longer-than-expected. The
2015 fiscal budget, which should start in 1 Oct, is likely to be delayed by
more than one quarter.
Rates
·
Yields on local bond market ended unchanged in a
subdued and lackluster market. Market was relatively inactive and directionless
as MYR was in range trading while major financial markets close for Easter
holidays. Some buying was seen on 7 and 10-year GII.
·
In the IRS market, rates ended higher in response to
higher UST yields on receding concern of Ukraine situation as steps are being
taken to de-escalate tensions. The market however remained quiet with no trades
being reported.
·
In the PDS market, we see sellers resurfaced for
long-end papers, showing offers for AAA and AA-rated papers. Market continued
to buy selectively. Papers generally changed hands at around their previous MTM
levels with more names being traded.
Indonesia
·
Indonesia
bond market traded thin on yesterday trading session ahead of long Easter
holiday. Bond market was relatively quiet with negative tendency. 5-yr, 10-yr,
15-yr and 20-yr benchmark series yield closed at 7.563% (-1.1bps), 7.905%
(+1.7bps), 8.264% (+0.2bps) and 8.439% (+0.6bps) while 2-yr yield shifted down
to 7.366% (2.8bps). Trading volume at secondary market was recorded thin as
trading volume amounted Rp6,962 bn (vs average per day trading volume of
Rp7,602 bn). FR0068 (20-yr benchmark series) and SR006 (3-yr) was the most
tradable bond during the day. FR0068 total trading volume amounting Rp828 bn
with 52x transaction frequency and closed at 99.373 yielding 8.439%.while SR006
total trading volume was recorded amounted Rp784 bn with 117x transaction
frequency and closed at 101.806 yielding 8.043%.
·
On
the corporate bond segment, trading volume was seen thin as well amounting
Rp343 bn (vs average per day trading volume of Rp750 bn). BBMISMSB1CN1 (Sukuk
subordinasi mudharabah berkelanjutan I Bank Muamalat Tahap I Tahun 2012;
Maturity date: 29 Jun 2022; Rating: idA+(sy)) was the top actively traded
corporate bond yesterday with total trading volume amounting Rp75 bn and was
last traded at 83.88 yielding 11.181%.
·
Onshore
markets were closed on 18 Apr 2014.
Rgds,
Maybank FX Research
Global Markets
Maybank
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