FX
Global
Geopolitical concerns continue to keep investors on the defensive.
NASDAQ and S&P were down -0.2% each; DJI finished -0.3%. Nikkei is up +0.6%
this morning as sentiments improved into Asia. Ukraine separatists reached an
agreement with Malaysia on Monday to allow access to the black boxes of the
Malaysia Airlines jetliner as well as the proper removal of bodies. Russian
President Putin remained under pressure amid threats of additional sanctions.
This morning, RBA Debelle spoke though little impact on the AUD. RBA
Glenn Stevens will speak later at 1100 (HKT) and AUD already trades lower
into Asia, wary of more jawboning from the central bank governor. His
comments on downside risks to the AUD tanked the AUD on 3 Jul. His
words will be watched closely today. AUD was last seen a touch under the
0.9370-level this morning. |
There are few notable events today and the official outcome of
Indonesia’s Presidential Election will take centrestage. The official
announcement will be made today by the KPU though key members of Prabowo’s team
have already conceded defeat according to some press report. Eyes will be
probably be on Mr Prabowo to admit defeat, especially after he said he would
not accept the result until allegations of cheating are investigated. On the
side, PBOC and SNB inked a bilateral swap agreement. Beyond Asia, Jun CPI is
due out of the US today, along with existing home sales.
G7 Currencies
|
DXY – Buoyant in Range. The dollar index remained buoyant
within the 80.42-80.68 range yesterday and intra-day momentum indicators flag
slight downside risks. The 18-SMA is still above the 40-SMA on the 4-hourly
chart and there are little technical cues to suggest any breakout of the
range-trading at this point. Jun CPI is due today and any unexpected uptick
from the previous 0.4%m/m could add bullish pressure to the greenback.
USD/JPY – Slight Upside Bias. Re-opening after closing for a holiday yesterday,
USD/JPY continues on its rebound from its intraday low of 101.20 yesterday to
around 101.50 currently. An intraday ichimoku cloud is weighing on the pair,
suggesting upside could be capped today. We look for trades within a tighter
101.20-101.76 range with a slight bias to the upside today. Economy Minister
Amari said that PM Abe will decide on whether to hike the sales tax further
to 10% from the current 8% in Dec after a meeting of experts on the economic
assessment is held in Nov.
AUD/USD – Sideways. AUD/USD sank from its early Mon highs of near 0.9400
and was seen below 0.9370 as we write. RBA Debelle’s speech did not manage to
swerve the southbound course of the pair and focus is likely on Governor
Steven’s speech at 1100 (HKT). The last time he made a comment, AUD fell
one-big figure and investors prefers to error on the side of caution now.
Support for today is found at around 0.9330. 2Q CPI is due on Wed and
softer number may spur more rate cut expectations and perhaps see a breakout
to the downside. Upticks to be deterred by the 0.94-figure ahead of the
0.9423-barrier.
EUR/USD – Shallow Dips. EUR/USD remained around 1.3530 this
morning, not finding much momentum. The intra-day chart shows slight upside
momentum though 18-SMA is still well below the 40-SMA. Expect downsides to be
cushioned with 1.3503-support Bounces on the other hand should be deterred by
1.3557-resistance, if not 1.3477 (Feb low), also the year low. |
EUR/SGD – Supported on Dips. EUR/SGD slipped on Mon trade, weighed by SGD strength
rather than EUR weakness. Last seen around 1.6770, this cross has been on the
uptick this morning from its overnight low of 1.6758. In fact, this level has
been tested multiple times in the past two sessions and could remain intact
today. 1.6829 is still the barrier to watch. Beyond intra-day trades, pressure
is still on the downside with a bearish ichimoku cloud weighing on the pair.
Next support is seen at 1.6713 (12 Nov 2013 low).
Regional FX
The SGD NEER trades 0.58% above the implied mid-point of 1.2469. We
estimate the top end at 1.2221 and the floor at 1.2717.
USD/SGD – Consolidating. USD/SGD broke below the 1.24-figure overnight,
testing a low of 1.2393 before rebounding slightly 1.2397 currently. Intraday
MACD forest continues to hug the zero line closely with RSI indicating
overstretched conditions. 1.2931 remains strong support for today and we need
to see a clearance of this support level for bearish extension towards 1.2343.
Until then, we expect the pair to remain in consolidative trade around current
levels after the aggressive moves overnight.
AUD/SGD – Downticks. AUD/SGD continues its slide lower on the back of relative AUD
weakness, hovering around 1.1616 currently – just off our support at the
1.16-figure. Risks remain to the downside and a break of the 1.16-support
exposes the next at 1.1534 (21 May low). Immediate barrier is around 1.1640
ahead of 1.1668 today. SGD/MYR – Still Capped.
SGD/MYR is inching higher this morning underpinned by MYR strength. Cross is
currently sighted around 2.5581 with intraday MACD showing increasing bearish
momentum. 2.5547 continues to be seen as support today, though a re-test of
this support level remains possible today. Still, the lack of directional clarity
suggests that the cross could trade sideways today within 2.5547-2.5727.
USD/MYR – Heavy. USD/MYR extended its slide to a low of 3.1683 this morning before
rebounding to around 3.1730 at last sight. For the past week. Intra-day chart
shows MACD forest under the zero line though RSI flags oversold conditions.
Expect 3.1660 to continue to guard downsides while intra-day bids to be
resisted by the lower bound of the bearish cloud at 3.1840. The 1-month NDF was
also on the uptick, last seen around 3.1780. There is not downside momentum on
the intra-day chart and we look for more sideway trades.
USD/CNY
was fixed at 6.1544 (-0.0003), vs. previous 6.1547 (+2.0% upper band limit:
6.2800; -2.0% lower band limit: 6.0337). CNY/MYR was fixed at 0.5128 (-0.0015).
USD/CNY – Directionless. Bids remained deterred by the 6.2104-barrier and spot prices are back
to levels around 6.2070 as we write. Momentum is still bullish, despite the
lower fixing, perhaps underpinned by jitters over the potential default by
Huatong Road & Bridge.Risks are to the upside with next barrier iseen
around 6.2170. The upcoming default by Huatong Road & Bridge will be on the
minds of investors with China exposure. PBOC skipped open market operation
today.
1-Year CNY NDFs – Support on Dips. Last seen around 6.2550, guided lower by the softer
USD/CNY fixing. This pair has broken technical support at 6.2575 and is now
testing the next support around 6.2542. A look at the 4-hourly chart reveals
that the pair is also at the lower bound of the Ichimoku cloud (within the
cloud) at 6.2540. Expect some support on dips today. Upticks could be resisted
by 6.2580. USD/CNH – Sideways. USD/CNH remained in the tight band
of 6.2022-6.2094. Little cues are given by the momentum indicators on the
intra-day chart though risks could be to the downside, with 18-SMA below
40-SMA. A clearance of the support around the 6.20-figure is needed for bears
to gun for the next target at 6.1950. CNH now trades at an increasing premium
to onshore spot.
USD/IDR – Biased To The Downside. Official result for the presidential elections is due
anytime today and the Jokowi-Kalla team is expected to be declared the winners.
Latest unofficial results show Jokowi-Kalla leading Prabowo-Hatta by 53.17% to
46.83% and the official announcement is not expected to deviate substantially
from this This has pushed the USD/IDR lower as investors positioned themselves
in anticipation for a Jokowi victory. For the first time since 4 Jul, foreign
funds sold a net USD1.97mn in equities yesterday, but added a net IDR1.87tn to
their outstanding bond holdings as of 17 Jul (the latest data available). Pair
is currently sighted around 11541 with risks still to the downside though RSI
is indicating overstretched conditions. Should Jokowi win and Prabowo concede
the election, this would be IDR-positive and we could see the pair move pass
the 11500-support to 11300. However, should Prabowo dispute the election
results, political uncertainty could extend for at least another month with a
spike towards 12000 possible. 1-month is sighted around 11583 with risks still
to the downside and the pair out of overstretched territory. The JISDOR was
fixed lower at 11577 yesterday compared to Fri’s 11706.
USD/PHP – Downside Bias. USD/PHP is on the slide, hovering lower at around 43.365 this morning.
Intraday MACD is showing increasing bearish momentum though RSI is indicating
close to overstretched conditions. Downsides today are likely to be limited
still by 43.185 while immediate barrier is around 43.528 today. 1-month NDF is
inching higher this morning, sighted around 43.360 with intraday MACD showing
bearish momentum.
USD/THB – Conoslidation. USD/THB remains on the slide underpinned by a more
optimistic outlook for the Thai economy following the revelation yesterday by
Gen Prayuth that exports rebounded strongly in Jun. Foreign buying also
supported the THB yesterday with a net THB558mn and THB10.02bn in equities and
debt bought yesterday. Pair is currently headed towards 31.800, hovering around
31.860 at last sight. Risks are now tilted to the downside though RSI is
indicating overstretched conditions. Given the aggressive moves so far, the
grind lower is likely to be gradual and we reckon that the pair could settle
down and consolidate around 31.900. A firm break of strong support at 31.800
would expose the next support around 31.500.
Rates
Local government bonds saw buying interest on the long ends today as the
curve flattened further with the 10 to 30-year MGS closing 1-3bps lower. The
market saw a strong auction on the 15-year GII12/28 this morning with a BTC of
3.813. Auctioned yields were reported at a high of 4.399% and a low of 4.385%,
while the average was at 4.393%. Post auction results the 15-year GII bonds were
traded at 4.39%.
The IRS market was very quiet. Lower MGS yields and stronger MYR did not
seem to affect the IRS levels. 3M KLIBOR stayed stable at 3.59%.
The PDS market was on a better buying tone for AAA and lower credit
names. GG took a backseat for today possibly due to the relative
over-performance last week. Investors were seeking for names like PLUS, Encorp
and even longer dated Malakoff. Imtiaz 19 traded lower by about 3bps to 4.50%.
Attention was also focused on the GII auction and activity turned a bit more
subdued later in the day.
Singapore
The SGD rates market was quiet with yields on UST hardly changed and
Tokyo out for holiday. The SGS curve stayed pretty much unchanged although the
IRS curve bear flattened. MAS announced a larger-than-expected auction size of
SGD 2.3b for the new 10-year benchmark. This is the reopening of the Sep 24
issue which was short squeezed not too long ago. We are not aggressive into
this auction and would suggest investors to look at the current 15-year
benchmark instead.
The Asian credit market opened on a quiet note with Japan on holiday.
New books opening were more for local currency e.g. Hyflux is doing a Perp NC2
guiding at around high 4%. Halcyon Agri is doing a 5NC3 of SGD125m with final
guidance at 6.50%. Tata Steel, Sino -Ocean Land and China Railway are pre
sounding the market for USD deals and likely will see the book opening in the
next few days.
Indonesia
Indonesia bond market booking gains on the expectation that today’s KPU
election result would meet market expectation. KPU itself will announce the
presidential race result at 4pm today. Therefore we see that the bond market
would again book gains today and the bond auction will receive a huge demand.
Yet we remain intact with our view that investors might be taking profit
towards the end of the week since Indonesia bond market would be closed from 28
Jul – 1 Aug due to Ramadan festival. As we mentioned in our daily report
yesterday, Indonesia bond market would be indulge in positive euphoria and
might experience 10-yr bond yield below 8%. Yet we see this positive euphoria
would vanish after some day. Yield curve continue bull flattening with 5-yr,
10-yr, 15-yr and 20-yr benchmark series yield stood at 7.817% (-0.8bps), 8.003%
(-5.1bps), 8.486% (-3.8bps) and 8.654% (-4.5bps) while 2-yr yield shifts down
to 7.421% (-0.2bps). Trading volume remains this as it was noted amounting
Rp6,073 bn yesterday FR0068 (20-yr benchmark series) and VR0020 (1-yr variable)
was the most tradable bond during the day. FR0068 total trading volume amounted
Rp1,235 bn with 83x transaction frequency and closed at 97.368 yielding 8.654%
while VR0020 total trading volume amounted Rp760 bn with 3x transaction
frequency and closed at 99.16.
DMO will conduct its weekly auction today with five series to be
auctioned today are SPN12150501 (Coupon: discounted; Maturity: 1 may 2015),
SPN12150710 (Coupon: discounted; Maturity: 10 Jul 2015), FR0069 (Coupon:
7.875%; Maturity: 15 Apr 2019), FR0070 (Coupon: 8.375%; Maturity: 15 Mar
2024) and FR0068 (Coupon: 8.375%; Maturity: 15 Mar 2034). Our view
on the indicative yield for the auction are as follows SPN12150501 (range:
6.600% - 6.900%), SPN12150710 (range: 6.600% - 6.900%), FR0069 (range: 7.700% –
7.900%), FR0070 (range: 7.900% – 8.150%) and FR0068 (range: 8.550% – 8.750%).
On the corporate bond segment, trading volume remains thin with total
volume amounting Rp476 bn yesterday (vs average per day (Jan – Jun) trading
volume of Rp677 bn). ASDF02BCN3 (Shelf registration II Astra Sedaya Finance
Phase III Year 2014; B serial bond; Rating: AAA(idn)) was the top actively
traded corporate bond with total trading volume amounting Rp147 bn and was last
traded at 99.9 yielding 10.541%.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.