FX
Global
The greenback rebounded overnight, lifted by a firmer CPI print for
May at 0.4%m/m compared to the 0.3% in the month prior. Year-on-year, price
pressures picked pace to 2.1% from the previous 2.0%. USD bulls see hopes of
a possibly less dovish FOMC statement tonight but apprehensions capped
aggressive bids. In other data, housing starts softened to 1001K in May from
the previous 1071K. Earlier in the session, UK also released inflation
numbers and softer print of -0.1%m/m for May saw GBP/USD chopped around the
1.6960-level before steadying around the mark for the rest of NY session.
The pound still retains much of its strength despite the decline in
CPI, possibly because of the BOE Minutes that is due later today. Talks of
more hawkish voters kept dips supported for the pair as bulls still eye
1.70-figure.
This morning, Japan’s trade deficit widened less than expected to
JPY909.0 bn from previous JPY811.7bn. Exports shrank -2.7%y/y, more than
expected while imports also disappointed with a decline of -3.6%. BOJ
releases its Minutes for its 13 Jun meeting which should not have much impact
on the range-trading JPY crosses. |
Other key event today is BOT’s decision on its benchmark interest rate,
currently at 2.00%. The central bank is not expected to move as it adopts a
wait-and-see approach amid fiscal disbursements by the Junta military which
should be growth supportive. Most of Asian markets are likely to remain in
range today, apprehensive of what tonight holds. FOMC statement will be watched
closely and the greenback would be kept in range.
G7 Currencies
DXY – Two-Way Risks. The dollar index gyrated within 80.420-80.680 for much of Tue as the
firmer May CPI supported the index on dips. Intra-day chart shows slight
bullish momentum and the greenback may test the 80.828-barrier next.
Apprehension over the FOMC statement later tonight should keep the index in
range and within the wider 80.275-80.828 band. Break of the upper bound could
embolden aggressive bids towards 81.020 while a break of the lower level
exposes the next support level at 79.920.
USD/JPY – Upside Risks. USD/JPY is wobbly this morning ahead of FOMC. Pair
re-tested our resistance at 102.20 this morning before easing to around 102.15
currently. With risks tilted to the upside and the pair hovering close to
overbought conditions, a re-test of 102.20 seems likely with a firm break
exposing the next hurdle at 102.44. 101.76 should be supportive today. Japan’s
exports fell for the first time since Feb 2013 as demand from China slowed,
dipping by 2.7% y/y in May from +5.1% in Apr. This was worse than the -1.3%
market was expecting. Imports fell by a steeper 3.6% y/y in May from Apr’s
+3.4%, resulting in a wider trade deficit of JPY909bn in May vs. JPY808.9bn in
Apr.
AUD/USD – Downside Risks. AUD/USD settled around 0.9340 overnight, weighed by
broad dollar upmoves and the somewhat less positive Minutes released yesterday.
MACD still shows strong bearish momentum on the 4-hourly chart and next support
is seen at 0.9320. There are few cues that could be more market moving than
FOMC decision (and delivery) tonight. Expect any dips below 0.9320 to be
shallow and topsides guarded by 0.9365.
EUR/USD – Tight Swivels. EUR/USD remained in tight swivels within
1.3503-1.3586. The German ZEW survey provided mixed signals with the sentiments
of the current situation firmer at 67.7 from previous 62.1 while expectations
of economic development in the next six months deteriorated to a print of 29.8
from previous 33.1. The survey provided little inspiration and
directional bias hereforth could depend on the FOMC statement tonight. Should
the Fed deliver any hint of a switch to a more hawkish stance, we can expect
that divergence from a more accommodative ECB to trigger more EUR offers.
Regional FX
The SGD NEER trades 0.59% above the implied mid-point of 1.2607. We
estimate the top end at 1.2357 and the floor at 1.2858.
USD/SGD – Bullish Momentum. USD/SGD broke pass our interim hurdle at 1.2516 and
tested our 1.2540-resistance yesterday before easing to close lower at 1.2536.
A mild correction is currently underway with the pair hovering around 1.2533 as
we write. Still, momentum indicators are tilted to the upside ahead of FOMC tonight.
Moreover, global concerns over Iraq and Ukraine could intensify. With our
1.2516-resistance taken out, interim hurdle remains at 1.2540 with the next
hurdle around 1.2570. 1.2516 now provides support nearby before 1.2482.
AUD/SGD – Capped. AUD/SGD is on the uptick this morning on the back of a slight
resurgence in the AUD. Cross is currently sighted around 1.1709 though momentum
indicators are still tilted to the downside, suggesting upside could be capped
today. Immediate hurdle is seen around 1.1735 ahead of 1.1780, while downside
is limited by 1.1680 nearby before 1.1.1665. SGD/MYR – Consolidation.
Cross is on the uptick this morning on the back of MYR weakness. Cross was last
sighted around 2.5812 with intraday MACD forest hugging the zero line. Ahead of
FOMC tonight, we expect the cross to be in consolidative trade within
2.5665/2.5940 today.
USD/MYR – Bullish Divergence. Pair extended upsides around to around the
3.2340-level this morning, approaching the 3.2390 as the pair catches up on overnight
dollar upmove. Risks are to the upside, according to the intra-day MACD and the
current momentum, if sustained, could lift the pair towards the next barrier at
3.2390. Barrier at 3.2275 has turned into a viable intra-day support for the
pair and we look for an upward tilt in this pair. 1-month NDF had been buoyant
overnight with dips met with buying interest, last seen around 3.2390 this
morning. MACD on the daily chart flags slight bullish momentum and risks are
still bias to the upside. The Secretary General at the Finance Ministry told
the press that budget deficit could be lowered to 3.5% of GDP this year, on
target to achieve 3.0% of GDP. He counts on a stronger GDP growth.
USD/CNY was fixed higher at 6.1559 (+0.0030), vs. previous 6.1529 (+2.0%
upper band limit: 6.2815; -2.0% lower band limit: 6.0352). CNY/MYR was fixed at
0.5214 (+0.0007). USD/CNY – Range-bound. USD/CNY rebounded from its lower
close and hovered around 6.2330, underpinned by a higher fixing. Momentum is
now slightly bullish on the 4-hourly chart. Upticks remained deterred by 6.2335
but that level is likely at risk. Next barrier is seen at 6.2413. Support is
still at 6.2230. China’s FDI fell -6.7%y/y in May from the previous
growth of 3.4% in Apr. More data released this morning, 15 of the 70
cities monitored by the National Bureau of Statistics reported a month-on-month
increase in prices for new homes in May. That was drop from 44 reported in Apr.
1-Year CNY NDFs – Steady. The 1Y NDF slipped to around 6.2370 this morning. The
higher fixing is likely to support the pair on dips. Barrier is still seen at
6.2434 while downsides are now guarded by 6.2324. MACD shows bullish momentum
albeit with some deceleration. We expect prices to remain supported within
6.2320-6.2435.
USD/CNH – Supported. USD/CNH remained on the upmove and was last seen around 6.2350,
underpinned by bullish momentum and higher fixing. 6.2394 marks the next
barrier to watch ahead of the next at 6.2456.
USD/IDR – Gapping Higher. USD/IDR gapped higher at the opening pass the
19000-level to 11928 this morning, taking out our 11893-resistance. Pair is
rallying towards the 12000-level on the back of a combination of dollar
strength, political uncertainty over the outcome of the presidential polls on 9
Jul and geopolitical concerns over Iraq and Ukraine. This has led to foreign
funds fleeing the stock market with a net USD2.27mn in equities sold-off
yesterday. Pair is currently sighted around 11966 with risks increasingly
tilted to the upside and the pair still in overbought territory. We look for
12000 to guard topside in the interim ahead of the next at 12031 (13 Jan low).
1-month NDF is crossed the key 12000-threshold this morning at 12030 with the
risks still tilted to the upside and the 1-month still in overbought territory.
The JISDOR was fixed at 11863 yesterday, up from Mon’s fixing of 11814.
USD/PHP – Upticks. USD/PHP broke pass the key 44.000-level this morning on the back of
dollar strength overnight. Pair is currently hovering at 44.005 with momentum
indicators showing risks just tilted slightly to the upside with the pair
hovering just off overbought conditions. With the upmove above 44.000, the next
hurdle is now at 44.150. Support today remains around 43.695. The 1-month
NDF edged pass the key 44.000-level this morning at 44.06 with momentum still
closer to the key 44.000-level this morning, with intraday MACD forest hugging
close to the zero line.
USD/THB – Upside Bias. USD/THB is correcting this morning after yesterday’s
upward moves that took out our resistance at 32.440. Pair is currently sighted
around 42.485 with momentum indicators still biased to the upside this morning,
though the pair is currently out of overbought conditions. Foreign investors
continued to dump equities with a net sell of THB753.43mn, but bought a net
THB1.71bn in bonds yesterday. With no surprises expected from BoT today by our
economic team, focus remains on FOMC and geopolitical tensions over Iraq and
Ukraine, which should keep the pair trading in the upper end of the 32.355-32.550
trading range today. The military junta has set up a 24-member committee to
examine obstacles to trade, investment and the overall economy. Members will
include the BoT governor, head of NESDB, key ministries and private
associations.
Rates
Local government bonds ended the session mixed in a
rather quiet market. Buying interest was seen on selected benchmark MGS. Market
seemed to be cautious ahead of the US FOMC but support was seen on price
weakness. At market close, yield on the 15-year benchmark MGS edged up 2bps to
4.34% but the 5-year benchmark eased 2bps to 3.73% while the 10-year benchmark
MGS ended unchanged despite a good buying interest. Meanwhile, BNM announced a
MYR3b re-opening of MGS 3/17. WI was quoted at 3.47%-3.42% but nothing was
traded.
IRS shaded marginally lower today amidst stronger MGS
levels, although nothing was dealt. The IRS curve ended flatter with the long
ends shedding 1-3bps. 3M KLIBOR stayed steady at 3.52%.
In the PDS market, a slight bullish tone can be seen
on high grades. There were more bids on government guaranteed and AAA papers.
Bid-offer spreads tightened as there seemed to be greater willingness of buyer
to move closer to the offer price.
Singapore
SGD rates ended slightly higher in a quiet
session. SGS yields were steady throughout the day after the initial
adjustment to the opening levels of the SGD IRS. The only thing that
stood out was the buying interests seen in the outgoing 15-year
benchmark. Bidding interests were seen both outright and switches.
At market close, SGS yields ended about 1-2bps higher with swap spreads almost
unchanged at the long end.
In the credit market, eSun Holdings Limited, the
investment holding company for Lai Sun Group, opened book for a CNH 4-year
senior paper with guidance of 8.50% area. On the USD front, new issue includes
Commercial Bank of Qatar (rated A1 Moody's) with a price guidance of USD 5-year
mid swap + 135 bps. It is understood that Sri Lankan Airlines is in the
pipeline to issue USD paper.
Indonesia
Please note that there is no write-up on Indonesian
fixed income today.
Rgds,
Maybank FX Research
Global Markets
Maybank
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