FX
Global
US stocks ended a
tad firmer on Friday after weaving in and out of red for much of the
session. This will be a busy week - housing data, consumer sentiment and
industrial production will figure prominently in the scheduled releases. Upbeat
US numbers may likely have little support for the dollar if we take signals
from the higher payrolls which only helped the dollar marginally. In addition,
we have Fed Yellen’s two-day semi-annual testimony on 15 Jul. Investors would
be sniffing for the slightest hawkish bias. Our current view remains for the
DXY to remain listless at around 80 next week but with a tinge of upward bias.
Data-heavy this week with Q2 GDP from China, plus industrial
production and retail sales. Markets looking at China for signs of stabilization
though domestic demand remains soft. Potential impact of next week's China data
barrage to move the AUD towards the 0.94 level, not least of all the 2Q GDP
(Cons:7.4%y/y).
Elsewhere, RBA releases the minutes of its July meeting on Wed.
The statement was rather nonchalant of the AUD strength at that point of time
but the rally that followed was quickly reversed out after Stevens’ jawboning.
Expect antipodeans to remain buoyant albeit within range given the conducive
carry environment. On the side, BOJ meets tomorrow. In ASEAN, Singapore
released the advanced estimate of 2Q GDP disappointed a tad with a print of
2.1%y/y vs the consensus of 3.1%. 1Q GDP was also revised lower to 4.7%.
Malaysia’s CPI (Cons:3.3%y/y) is due on Wed and a decent figure should keep MYR
in its current range. Expect USD/AXJs to remain supported on dips this week
with keen eyes on the West.
G7 Currencies
|
DXY – Sideways. The greenback pulled back after a rather dovish FOMC
Minutes but retreat was rather shallow as risk off took the index a tad
higher again and the index extended upmove to around 80.22 this morning. VIX
index was on the uptick before steadying towards the end of last week. There
is little momentum shown on the daily MACD indicator and suggest likely rangy
trades within the 79.920-80.419.
USD/JPY – Rangy. USD/JPY dipped to a low of 101.07 last week, dragged lower by
safe-haven flows on risk-off. Since then, pair has rebounded with the pair
hovering around 101.37 this morning. Risks are still tilted to the downside,
though dips are likely to be supported by 100.77-technical support. Buying on
dips could be a good bet now as we do not expect BOJ to move on Tue. Topsides
remain guarded by 102.20 is likely today. Data out this week include IPI (May
F) and machine orders (May).
AUD/USD – Sideways. AUD/USD spiked to a high of 0.9457 before reversing
back to around 0.3990, still thereabouts as we write on Mon morning.
Australia’s data calendar is rather empty next week apart from the release of
RBA Minutes on Tue. The statement had been rather nonchalant about AUD
strength at that point but the upside rally that followed was stopped short
by Governor Glenn Stevens who effectively jawboned the currency lower. As we
have expected, dips are still shallow given the rather anchored rates outlook
and low volatility. Carry trade still thrives and continues to boost AUD.
This week, we have another string of data from China, not least of 2Q GDP.
Expect whippy trades within 0.9330-0.9450.
EUR/USD – Capped. EUR/USD has been guided lower by the 50-DMA with the moving average
capping upticks in the pair. Last seen around the 1.36-figure, prices need to
break the 1.3575-support for bears to extend towards 1.3503.Otherwise,expect
sideway trades within 1.3575-1.3700 for another week. German ZEW survey is
due at the start of the week and a poorer report could drag on the pairing.
Later in the week, there is a pre-Summit meeting held by EU center right
leaders. EUR/SGD – Shallow Dips. EURSGD is on a gradual downward drift
with dips towards the 1.6860 meeting buying interests. Still, slight bearish
momentum is intact notwithstanding the uptick this morning. Last seen around
1.6890, expect pressure to remain on the downside though oversold conditions
to keep dips supported. Next technical support is seen at 1.6821. 1.6984 is still
seen as the technical barrier to deter unexpected bids. |
Regional FX
The SGD NEER trades 0.53% above the implied mid-point of 1.2482. We
estimate the top end at 1.2234 and the floor at 1.2731.
USD/SGD – Bears Petering Out. USD/SGD drifted lower in tandem with most of the
USD/AJXs. 2Q14 advanced GDP estimates did not have a significant impact on the
pair as expected. Pair is currently sighted around 1.2415, almost static from
the past three sessions, which hints of a reversal in the making. Pair needs to
clear the recent low of 1.2396 to bearish extension towards 23 Oct low of
1.2343. Otherwise, control could be ceded to bulls with a possible bullish
divergence in the making, though this needs confirmation from price patterns.
Bounces to be resisted at 1.2472. Advance estimates for 2Q14 GDP disappointed,
expanding by just 2.1% y/y (-0.8% q/q sa) vs. market expectations of 3.1%
(+2.6% q/q sa). The underperformance could be attributed to a broad weakening
of manufacturing, construction and services, which rose by 0.2%, 5.0% and 2.8%
y/y respectively in 2Q from 1Q’s 9.9%, 6.4% and 3.9%. Jun NODX is due on Thu
(cons: -2.2%).
AUD/SGD – Downside Bias. AUD/SGD trades within a tight range of
1.1620-1.1735 as the cross was pulled in two directions by AUD and SGD
strength. While 2Q14 GDP did not move the cross by much, Wed’s RBA’s minutes
could be a different storey. Cross is now bias to the downside still as
indicated by MACD forest. Next support is seen around 1.1600 and 1.1724 acts as
interim barrier for upticks. SGD/MYR – Choppy. After
gapping higher on Fri, SGD/MYR is retracing to around 2.5630 as we write. Cross
has pared most of its bearish momentum with the recent upmove and MACD forest
is now at the zero line. Topsides could be guarded by 2.5721, which coincides
with the 50-DMA, ahead of the next at 2.5790. Expect the cross to settle within
the current 2.5447-2.5790 range this with risks on both sides. Jun CPI (cons:
3.3% y/y) on Wed will be eyed.
USD/MYR – Heavy. USD/MYR bounced to around 3.1860, unwinding daily oversold tools though
still deterred by barrier at 3.1940. BNM hiked rates by 25bps as expected
and investors took profit even before the decision that was out. With some
still expecting another hike before the year ends, price moves are likely to
remain within the lower range of 3.1664-3.2040 for now. The pair was last seen
around 3.1820, on the downdrift. Elsewhere, the 1-month NDF steadied around
3.1864 and losing bearish momentum. This pairing had been static in the last
session and could remain range-bound in this week as well. Jun CPI is due on
Wed (Cons.:3.3%y/y).
USD/CNY
was fixed higher at 6.1485 (+0.0016), vs. previous 6.1469 (+2.0% upper band
limit: 6.2740; -2.0% lower band limit: 6.0279). CNY/MYR was fixed at 0.5154
(-0.0001). USD/CNY –Choppy in Range. Spot had been choppy in the past week with bids to a
high of 6.2106 rejected and pair is back within the 6.1950-6.2110 range. There
is not much momentum, unless pairing breaks out on either side. Last seen
around 6.2045, prices are steady, not gaining much inspiration from the rather
flat fixing. Risks are tilted to the downside. From the local press, the first
slew of reform trials could be announced for central government-administered
companies tomorrow as reported by Securities Daily.
1-Year
CNY NDFs – Sideways. NDF opened higher this morning but was back on the downtick despite the
firmer fixing and was last seen around 6.2570. MACD on the daily chart shows an
upside bias though the pair is still likely to remain buoyant within the 6.2430-6.2670
range.
USD/CNH – Rangy. USD/CNH edged higher to around 6.2050 this morning though bids are
still capped by the 6.2094-barrier, ahead of the next at 6.2193. Pair is losing
momentum on the MACD forest but there are little directional cues at this point
unless prices break out of the 6.1967-6.2193 range. CNH trades at a discount to
CNY at the moment.
USD/IDR – Rangy. After last week’s slide on the possibility of a Jokowi victory, the
USD/IDR is currently bouncing higher underpinned by a firmer dollar tone and
rising political tension ahead of the official election results next week on 22
Jul. The possibility of a dispute election result remains with an appeal to the
Constitutional Court likely. However, foreign funds are betting on a positive
outcome for Jokowi, buying a net USD816.09mn in equities last week with about
USD616mn bought on Thu and Fri alone. With the pair now in the thick of
the ichimoku clouds, range-bound trade within 11500-11750 is likely for the
week ahead, barring any risk events. The 1-month NDF is currently little
changed from Fri’s close of 11670 with risks still bias to the downside. For
the first time in two days, the JISDOR was fixed higher at 11627 on Fri from
Tue’s 11549. BI expects the current account deficit to come in around
USD9bn or about 4% of GDP in 2Q. Not helping was the more moderate inflows for
Jun compared to May.
USD/PHP – Sideways. USD/PHP is wobbling to start the week with the pair currently edging
lower to around 43.550. Daily MACD is currently showing waning bearish
momentum, suggesting rangy trades are likely in the week ahead. With our
barrier at 43.528 taken out last week, next hurdle to cross is 43.958 with
interim barrier at 43.665. 43.185 continues to provide support this week. The
1-month NDF is remains on the uptick, hovering around 43.560 with daily MACD
forest hovering near the zero line. The central bank now expects the surpluses
in the BoP and current account to come in lower than expected at USD1.1bn and
USD6bn respectively vs. USD3bn and USD10.4bn previously. The lower forecasts
could be attributed to the uncertainties in advanced economies and volatile
conditions in global markets.
USD/THB – Range-bound. Onshore markets re-opened today after closing for a
holiday on Fri. USD/THB is bouncing slightly higher on the back of a firmer
dollar, hovering around 32.152 at last sight. Daily MACD is indicating little
directional momentum in either direction to start the week though RSI is
showing overstretched conditions. Last week, foreign funds were net
buyers of equities and debt with a net THB9.47bn and THB18.68bn purchased,
providing supporting for the THB. Lacking directional impetus for now, we look
for range-bound trade within 32.050-32.355 this week.
Rates
§ Post OPR hike, local government bond market rallied
with the MGS curve flattened 3-7bps lower on the belly but afternoon session was
met with some profit takers. Meanwhile, BNM auctioned a 5-year reopening MGS
10/19 with a strong bid/cover ratio of 2.184. Results came in at a high of
3.717% and low of 3.688%, while the average was at 3.707%.
§ The IRS market was rather stable post OPR hike as
mostly was priced in by the market. The IRS curve flattened a little with short
end marginally higher and long end slightly lower. Some offshore party was
probably cutting paid positions for 2 years and above bracket as the initial
reaction in IRS wasn't higher levels. 1-year traded at 3.69-3.695% while 5-year
traded at 4.03%. 3M KLIBOR moved up 1bp to 3.58%.
§ The PDS market was quiet despite govvies were being
sought after especially the long papers. GGs and AAAs were offered slightly
lower but very little was traded.
Singapore
§ The SGD rates market was very quiet with low volumes
so as the SGS. IRS closed marginally higher after fluctuating around
unchanged levels amidst thin market conditions, while the SGS curve ended
unchanged.
§ In the credit market, China Gold priced its 3-years
USD issue at T3+ 275bps (T2+310bps). In the secondary market, the stock was
traded down to T2 + 299/+296. Meanwhile, we saw general interest in SGD papers
with better buyers, while CNH and USD names were seen with better sellers.
Indonesia
After yesterday’s market closed on euphoria Joko Widodo victory on
unofficial counts in the presidential election, today’s market opened with
defensive tone. Bid retreat by 50bps – 200 bps across the tenor with thin
market. We saw foreign names in the bid side while local banks in the sell side
as they took profit in the street and think the today’s prices are still higher
than auction price last Tuesday. At the closing session, 10Y bond yield up to
8.11% and 20Y bond up to 8.72%. Furthermore, yield closed at
7.93/8.11/8.54/8.72% for 5Y/10Y/15Y and 20Y respectively. 
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.