FX
Global
Risk off started in late Asian session on news of
sanctions on Russia and softer inflation in Europe. Out of the Eurozone, the
unemployment rate improved to 11.5% from the previous 11.6% but focus was
possibly more on inflation. CPI estimate for July softened to 0.4%y/y from
the previous 0.5%. Sentiments remained sour in NY session with equity bourses
each down around an average of 2% by close.
Despite the dramatic moves in equity markets, the
forex space was relatively duller. Dollar ended the session only a tad
firmer, having moved in tandem with UST 10Y yields. US Jul NFP takes centre
stage today though focus in Asia will be on China PMI-mfg which came in at
51.7 for both NBS and HSBC version. That should provide some relief after
cautious start in Asia. Thereafter, more PMI-mfg prints will be released from
Eurozone and then, the US.
Onshore markets in Indonesia will still be out and
reopens next Mon after Idul Fitri celebrations. Thailand’s CPI is also on the tap today but focus at home is on Junta
who will appoint more than half of Thailand’s new national assembly according
to an official document released yesterday. Despite a decent PMI-mfg print
from China, some caution is likely in Asia today ahead of the US labour
report and some side attention on ISM manufacturing data. |
G7 Currencies
|
DXY – Buoyant
Trades. DXY ended Thu, hardly moved amid some apprehension ahead of
NFP today. Majority expects a much lower change in NFP at 230K compared to
the 288K in Jun. Unemployment rate is also expected to steady at 6.1%. The
Fed had signalled its reluctance to even tweak its monetary policy even in
the face of stronger recovery momentum, citing underutilized labour
resources. Momentum indicators show possible retreat in the greenback today
though there are still upside risks. A print above 230K consensus could
generate greater bullish momentum. Key barrier is still seen at 81.60,
ahead of the next at 81.72. Slides to meet first support around the
81-figure.
USD/JPY – Room On Both Sides. After Wed’s spike higher, USD/JPY is now in consolidative mode in
wobbly trades. Trades in either direction are currently hampered by
deteriorating risk appetite on one side and concerns about the lingering
impact of the sales tax hike on the other. Pair is currently sighted around
102.79, little changed from yesterday’s close of 102.80. Bullish momentum is
fading as indicated by intraday MACD, though risks are still to the upside as
the 18-DMA continues to lie above the 40-DMA. We continue to see immediate
hurdle at around 103-figure today with a firm break of this level could see
bullish extension to the next barrier at 103.680. 102.20 continues to be
supportive today.
AUD/USD – Capped. AUD/USD waffled around the 0.93-figure, weighed by the firm dollar
tone. Intra-day chart shows bearish momentum still though could be still
supported by 0.9274-support. China PMI-mfg came in at 51.7 above the expected
51.4 though not providing AUD bears much relief. 0.9330 is seen as the first
barrier for the pair ahead of the next at 0.9360. Key data next is on the
Bounces are likely to be short-lived, ahead of the RBA next Tue.
EUR/USD – Bearish. EUR/USD swivelled within the tight band of 1.3367-1.3400 for much of
intra-day trades on Thu, unwilling to head lower and likely guided by the
greenback. Intra-day indicators have turned slightly bullish but EUR bulls
are still halfhearted, waiting for clearer signs. Eye a break of the
1.34-figure for an extension towards the 1.3432-resistance while a break of
the support at 1.3367 exposes the next at 1.3316. |
EUR/SGD – Upside risks. EUR/SGD crept above the 18-SMA and 40-SMA on the 4-hourly chart. The
18-SMA is also at the brink of crossing above the 40-SMA, flagging mild bullish
risk. MACD has turned bullish and prices have crossed above the lower boundary
of the ichimoku cloud. There is a tug of war between EUR and SGD bears but SGD
weakness has nudged the cross higher and a sustained move above the
1.6702-support risk more bids towards 1.6760. Eyes on the NFP tonight. Support
is still seen at 1.6641 ahead of the next at 1.6600.
Regional FX
The SGD NEER trades 0.42% above the implied mid-point
of 1.2530. We estimate the top end at 1.2280 and the floor at 1.2779.
USD/SGD – Still Rangy With Upside Bias. USD/SGD again took out another of our barrier at 1.2472 on its way up
yesterday underpinned by still by a strong dollar. Pair is now waffling this
morning, currently hovering around 1.2478, little changed from yesterday’s
close. Intraday MACD continues to show little momentum though risks are still
to the upside given that the 18-DMA lies above the 40-DMA. After the aggressive
moves of the past few sessions and ahead of the NFP tonight, pair is likely to
consolidate and trade range-bound today. Topside is guarded by 1.2483 today
ahead of the 1.2500-figure, while downsides should be limited around 1.2440.
AUD/SGD – Waffling. AUD/SGD
is wobbling this morning after choppy trades yesterday, hovering currently
around 1.1612. Intraday MACD forest is now almost at the zero line, suggesting
limited directional cues today. Risks though are bias to the downside given the
negative cross-over of the 18-DMA and the 40-DMA. Barrier remains at 1.1680
with 1.1573 still supportive today. SGD/MYR – Capped.
SGD/MYR spiked to a high of 2.5716 this morning, dragged higher by MYR
weakness. Since then, the uptick has eased off with the pair now seen hovering
around 2.5687 at last sight. Intraday MACD forest continues to hug close to the
zero line, though risks are still tilted to the downside as the 18-DMA lies
below the 40-DMA. Price action today should see topside capped by 2.5721 with
downsides still limited by 2.5547.
USD/MYR – Buoyant Trades. USD/MYR gapped up towards the 3.21-figure this morning before reversing
lower and was last seen around 3.2050. Two-way interests is seen though upside
momentum to keep the pair supported on dips. This pair needs a decisive break
of the 3.2040-support for bears to re-establish its foothold. Next support is
seen at 3.1953 while topsides are guarded by 3.2123. Our traders noted
short-term bills, notes were in demand on Thu. 1-month NDF reversed from its overnight
high to around 3.2120 before steadying thereabouts. Momentum is still bullish
and 3.2055-support could deter further offers.
USD/CNY was fixed at 6.1681
(+0.0006), vs. previous 6.1675 (+2.0% upper band limit: 6.2938; -2.0% lower
band limit: 6.0473). CNY/MYR was fixed at 0.5185 (+0.0024). USD/CNY –
Downside Bias. Pair hovered around 6.1750 this morning, supported on
dips by firm dollar tone in tandem with most of USD/AXJs. Bearish pressure is
still dominant on the intra-day charts with 18-SMA well below the 40-SMA
(4-hourly). Expect bids to be limited by the 6.1860-resistance. Next support at
6.1699 ahead of the next, some distance away at 6.1533 (50% Fibonacci
retracement of the Jan-Apr rally). China Electricity Council said that power
consumption my rise 6.5%y/y in 2H. In other news, China Securities Journal
reported a possible announcement of a state-owned asset reform plan in early
Aug. On the side, China has declared on Wed, plans to remove distinction
between urban and rural resident to improve the welfare of migrant workers.
1-Year CNY NDFs –Consolidation. The NDF slipped from its overnight highs to around 6.2550 this morning.
MACD forest on the intra-day chart is losing upside momentum though 18-SMA is
still above the 40-SMA. Expect consolidative trades with 6.2625 seen as a
viable barrier for the pair. 6.2519 is marked as an interim support ahead of
the next at 6.2485. USD/CNH – Upward tilt. USD/CNH waffled around
6.1790. MACD shows upside momentum in this pairing on the 4hourly chart. 18-SMA
is still below the 40-SMA and upticks may be on short leash. Expect sideway
trades at this point. Barrier remains around 6.1850 for intra-day trade.
Support is now seen around 6.1706.
USD/IDR – Closed For A Week-Long Holiday. Onshore markets are closed for the Idul Fitri celebrations and will
re-open only next Mon. With onshore markets closed for the week-long holiday,
market focus will be on the offshore price. The 1-month NDF spiked to high not
seen since 4 Jul at 11955 overnight on risk-off sentiments, but has since
come-off slight to around 11904 currently. Intraday MACD show bullish momentum
though RSI indicates overbought conditions. Still, risks are tilted to the
upside given the positive cross-over of the 18-DMA and 40-DMA, suggesting
downticks could be temporary. With a thick intraday cloud below, moves lower
are likely limited with support seen around 11700 (top of the cloud) with 12000
now guarding topside.
USD/PHP – Gapping Higher.
USD/PHP gapped higher at the opening this morning to 43.557 on the back of
deteriorating risk appetite. Pair continues to advance since then, trading
around 43.730 currently. The rate hike yesterday did not lift the PHP as it was
expected. Intraday MACD indicate mild bullish momentum though RSI shows
overbought. Though the 18-DMA continues to lie below the 40-DMA, it inched
higher towards the 40-DMA, suggesting further downsides could be limited. Next
barrier is seen around 43.835 today ahead of the 44-figure. 1-month NDF
continues on its uptick this morning, hovering around 43.770 currently.
Intraday MACD is showed mild momentum though RSI indicates overbought. After
holding steady since Dec 2012, the BSP finally raise its overnight borrowing
rate by 25bp to 3.75% yesterday to anchor inflationary expectations amid a
favorable macroeconomic environment. Besides pre-empting second round effects,
the rate hike was also to guard against possible outflows once the global rate
cycle begins. No changes were made to the Special Deposit Account (SDA) rates
as well as the RRR. While the BSP has warned that it would remain vigilant and
ready to take further action as necessary, it is likely that the central bank
will paused to allow the rate hike to work its way into the system. Further
moves by the BSP will likely be data dependent but for now we do not expect any
further moves.
USD/THB – Supported. USD/THB broke through the intraday ichimoku cloud yesterday on
risk-off, climbing to a high of 32.210 overnight. Since then, pair has
corrected slightly to hover around 32.159 currently. Risks are still to the
upside given the positive cross-over of the 18-DMA and 40-DMA, though RSI is
indicating overbought conditions. The sell-off in equities by foreign funds
continued yesterday with a net THB1.09bn sold yesterday, but this was offset by
the purchased of a net TH8.67bn in debt, which if continues today should cap
upside to the USD/THB. New hurdle is now around 32.245 (10 Jul high). Support
is now seen around 31.990 (top of the ichimoku cloud). The current account
recorded its first surplus in three months in Jun, posting a surplus of
USD1.8bn on the back of an export recovery in exports and a contraction in
imports, which offset the repatriation of profits and dividends by foreign
companies and a drop in tourism income. The BoT asserted that the economy is
recovering on the back of political stability and government policy. The
central bank expects real GDP to contract by just -0.4% y/y in 2Q, but not a
technical recession. Meanwhile, the first step towards the return of power to
civilian control was taken yesterday when the King endorsed the 200-member
National Legislative Assembly picked by the junta leader. The body will meet
for the first time in 7 Aug to decide on a prime minister and cabinet as well
as to consider the FY15 budget.
Rates
Local government bonds ended mixed with yields
seemingly undisturbed by high UST yields overnight. Short term bills, notes and
short-tenured MGSs and GIIs were in demand as the huge maturity of MYR8.4b MGS
this month may have driven reinvestment activities. Volumes remained thin, but
activity should pick up next week.
IRS levels shifted higher in response to higher UST
yields. 5y IRS traded to a recent high at 4.06% but receiving interest arose at
this level. The rest of the curve was quoted steeper but no trades went
through. 3M KLIBOR inched up 1bp to 3.60%.
The PDS market was relatively quiet. Some trades were
reported but we suspect they are merely month end asset reallocations.
Singapore
SGD rates rose on stronger-than-expected GDP numbers
from the US. The IRS curve bear steepened with the front end up about
2bps and the 5y and 10y point up 4-5bps respectively. Despite the higher IRS
curve, SGS stayed resilient and the long dated papers in particular were
strongly supported. Swap spreads in general widened by about 1-3bps. SGS yields
ended mostly higher by 1-3bps by.
In the Asian credit market, Greenland is planning to
issue a 3y USD paper again. The Baa3 rated issue is guided at 5.00% area. A bit
of mixed response was seen in Asian HY post the overnight jump in UST yields.
Chinese property names were generally supported, but Fantasia traded down 2-3
points due to concern on the investigation of its executive director for
corruption allegation.
Indonesia
Please note that there is no write-up on Indonesia
fixed income this week.
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