FX
Global
German IFO came in
softer than expected with Oct business climate at 103.2 vs. 104.7. Current
assessment also eased to 108.4 from previous 110.4. IFO expectations
deteriorated to 98.3 from previous 99.3. European equities slipped into red
after the release but EUR shrugged off the data and steadied around the
1.27-figure at last sight.
In the US, stocks
flat-lined ahead of FOMC meeting which starts today. However, the decision
will only be out tomorrow night. Before that, Sep durable goods orders will
be released followed by the consumer confidence index for Oct. Those will be
the highlights of this session past Asian hours.
Nearer to home,
China starts direct trading of RMB with SGD today. Apart from facilitating
stronger trading and investment ties, that should raise yuan liquidity in the
city state. Indonesia’s new cabinet under President Joko Widodo has had its
first meeting yesterday. Finance Minister Bambang Brodjonegoro expects growth
next year to be sub-7.0% and that the country strives to achieve high
investment and export growth. He also added that fuel subsidies were not
discussed. |
AXJ currencies rose
this morning in the absence of dollar strength. That said, apprehension ahead
of the Fed’s decision tomorrow may keep market players away from aggressive
bets. Early Asian trades also indicate signs of caution and that could also
keep USD/AXJs supported on dips.
G7 Currencies
DXY – Rangy. The
DXY remained in tight swivels, bound by the 18-SMA and 40-SMA on the 4-hourly
chart on Mon. 85.70 remains an interim barrier for intra-day trades, ahead of
the next at 85.91. Support is marked by the 40-SMA around 85.50 and a break
here exposes the next technical support around 85.24. Sep durable goods order
is expected to rise 0.5%m/m after a fall of -18.4% in the month prior.
Thereafter, consumer confidence in Oct is expected to rise to 87.0 from 86.0
previously. Any upside surprise may risk a resurgence in the USD bulls.
USD/JPY – Sideways. The USD/JPY is back on the rebound following the
bounce in the dollar overnight. Pair is currently sighted around 107.92 after
hitting an overnight low of 107.61 though our intraday chart is showing mild
bearish momentum still. Risk though remains on the upside with the 18-SMA still
above the 40-SMA. Ahead of the BOJ meeting later this week, we expect cautious
trade with sideway moves likely ahead. Immediate barrier is seen around 108.08
ahead of 108.38. Support today is seen around 107.20. Retail sales rose by 2.7%
m/m in Sep, coming in better than market expectations of 0.9% and Aug’s 1.9%,
suggesting a recovery in private consumption after the slump caused following
the sales tax hike in Apr. BOJ Governor Kuroda spoke in Parliament this
morning, reiterating his stand that the BOJ would continue easing until the 2%
target is achieved and would not hesitate to add stimulus if needed.
AUD/USD – Consolidation. The
pair was still seen above the 0.88-figure this morning. There is a general lack
of data cue this week and all eyes are on the FOMC decision tomorrow
night. Pair is still likely to keep within the wide trading range
of 0.8660-0.8860. Interim support is seen around the 18-SMA and 40-SMA around
0.8790. The past few sessions suggest bias is tilted to the upside but gains
were made in the absence of dollar strength and any hints of a hawkish tone
from the Fed tomorrow could trigger strong offers.
EUR/USD – Rangy. The pair remained on a
gradual upward drift to trade around the 1.27-figure this morning, underpinned
by speculations that the Fed will aim to keep rates low. The disappointing
German IFO did not weaken the currency much while the ECB stress test outcome
also failed to generate a material shift in its directional bias. Focus at the
moment is still on the Fed. Support is seen around 1.2616 while upticks are guarded
by 1.2775 ahead of the next at 1.2850.
EUR/SGD – Upward Tilt. The EUR/SGD was still on the upswing this as the 18-SMA and 40-SMA
close in on a positive cross-over. Last seen around 1.6190, MACD also indicates
bullish momentum for this cross. Hence, we expect this cross to continue to
trade with an upward tilt within the current range. Next bullish target is
marked at 1.6252 while interim support is seen around 1.6120.
Regional
FX
The SGD NEER trades at 0.01% below the implied
mid-point of 1.2740 with the top end estimated at 1.2485 and the floor at
1.2995.
USD/SGD – Rangy. USD/SGD is currently waffling this morning, sighted
slightly lower around 1.2744. Intraday MACD is showing little directional cues
this morning with RSI indicating ample room for two-way moves. Given the lack
of domestic cues today and with an eye towards the FOMC meeting, we look for
the pair to hover range-bound today. Barrier is seen around 1.2775 ahead of
1.2806, while support remains around 1.2720 before the next at 1.2692.
AUD/SGD – Upticks. AUD/SGD is again on the uptick, hovering around
1.1228 at last sight, underpinned by relative AUD strength this morning. This
cross has lost most of its bullish momentum and RSI is showing ample room in
either direction today. Still, given AUD strength today, we look for the cross
trade with an upside bias within the wide 1.1020-1.1275 range
today. SGD/MYR – Uptrend. SGD/MYR is wobbling this morning, despite the
relative strength of the MYR. Cross remained capped by the 2.57-figure and is
currently sighted below that figure at 2.5682. Intraday MACD is showing little
momentum in either direction currently, suggesting sideway trades are likely
ahead. For bulls to regain control we need to see a firm break of the
2.57-figure for the cross to head towards 2.5750 today. Support is seen at
2.5642 today.
USD/MYR – Rangy. USD/MYR steadied around the 3.2720 this morning, trading sideways in
the absence of dollar strength. The bias is still to the upside but we continue
to be cautious of any agents’ offers around the 3.29 level as our traders have
warned. The FOMC meeting is the key event to monitor as any rise in the UST
yields could also drive a sell-off in the domestic bond markets. However, at
this point, expectations are for the Fed to keep rates anchored. UST 10-yr
yields hovered around 2.26%, off Mon highs of near 2.30%. For the rest of the
session, the USD/MYR is expected to remain within the 3.2500-3.2860. 1-month
NDF also extended its slide this morning, last seen around 3.2785. MACD shows slight
downside bias and that could bring the pair towards the next support at 3.2660.
USD/CNY was fixed at 6.1421 (-0.0025), vs. previous 6.1446 (+2.0% upper band
limit: 6.2674; -2.0% lower band limit: 6.0217). CNY/MYR was fixed at 0.5341
(+0.0006). USD/CNY – Heavy. USD/CNY opened at 6.1179 and
slipped to trade around 6.1145 this morning, on its way to revisit the low
printed on Mon at 6.1134. Pressure is to the downside given the price action in
the past few sessions. Next support is seen around 6.1010 (7 Mar low). Barrier
for intra-week trades is seen at 6.1292. At home, there are is growing
suspicion of fake export-invoicing as the discrepancy between China’s reported
exports to Hong Kong and the SAR’s reported imports from mainland widened in
Sep. Elsewhere, China Securities Journal reports warned about allowing FDI in
SOEs in the grain, medicine and water utilities industries.
1-Year CNY NDFs – Bearish. The NDF slipped towards support at 6.2350 this morning, weighed by the
lower fixing. Risks are to the downside with MACD showing bearish conditions on
the intra-day chart. Next support is seen around 6.2260. USD/CNH – Bearish. USD/CNH remained on the downward drift despite the
delay in the Shanghai-Hong Kong Stock Connect. Pair trades in tandem with the rest
of the USD/yuans. The next support is still seen around 6.1130. Upticks to meet
first barrier around 6.1320. CNH trades at a narrower discount to CNY.
USD/IDR – Upticks. The USD/IDR is on rebound this morning, sighted around 12146, in
contrast to its regional peers. Intraday MACD is showing bullish momentum,
though the pair looks overstretched currently. This could be because cuts to
the fuel price subsidies were not discussed at the first cabinet meeting, while
investors expected immediate action from the President on this front. Upticks
today are likely to meet resistance around 12200, while 11950 continues to be
supportive. Foreign funds were upbeat yesterday following the cabinet
announcement, buying a net USD55.83mn of equities sold on Mon, while recently
released data showed them adding a net IDR1.9tn to their outstanding holdings
of debt on Fri. The 1-month NDF is on the uptick this morning, spotted around
12175 at last sight. The 1-month is currently trapped within an intraday
ichimoku cloud, which suggested rangy trades are likely ahead. The JISDOR was
fixed lower at 12042 as expected yesterday from Fri’s 12065. With spot on the
uptick this morning, a higher fixing can be expected today.
USD/PHP – Rangy. The
USD/PHP is on the downtick this morning, helped by the softer tone in the
dollar. Pair is currently sighted around 44.770, which is around the middle of
its current trading range of 44.500-45.050. Pair has lost most of its bearish
momentum as indicated by intraday MACD with RSI showing ample room for two-way
moves today. We continue to expect rangy trades within 44.500-45.050 today in
the absence of fresh directional cues. Foreign funds sold a net USD6.6mn in
equities yesterday and continue risk aversion today could limit downside to the
USD/PHP. The 1-month NDF slid to 44.800 this moring, though it remains in a
tight trading range of 44.740-44.940. The central bank governor said that
inflation likely cooled in Oct to 3.7-4.6% on the back of lower oil, rice and
other food prices, while previous monetary actions have anchored inflation
expectations.
USD/THB – Bearish Within Familiar Range. The USD/THB is on the slide this morning after yesterday’s uptick. Pair
was last sighted around 32.420 with bullish momentum almost dissipating on the
intraday charts. We continue to expect the pair to hover around the mid-point
of the familiar trading range of 32.355-33.500 today given the lack of strong
directional cues. Customs trade data is out later this afternoon and market is
expecting the trade balance to improve to USD1.30bn in Sep from USD1.15bn in
Aug, though both exports and imports are expected to have contract by 0.2% and
6.9% y/y respectively. Upside surprises in exports could weigh on the pair
today with moves below the mid-point of today’s trading range a possibility.
Foreign funds sold off a net THB1.34bn and THB3.76bn in equities and bonds
yesterday, lifting the pair higher.
Rates
Malaysia
The local government bond market saw active trading on
2y MGS 7/16 with MYR3.6b trades done, likely on a direct basis. Meanwhile, we
noted a 1y Bill issuance of MYR2b being auctioned at a very competitive level
in the morning. We suspect the trades were done on an asset swap basis with
residual MYR likely leaving the market as USDMYR remains elevated at current
levels. The rest of the curve traded mixed amidst thin liquidity. Players look
to the upcoming auction on a retap of 3y GII 11/17, which we expect an issue
size of MYR3.0b.
IRS market started the week on higher quotes, but no
trades were dealt. Overall, rates seem to be normalising in view of higher
Treasury yields and a temporary pause in chasing govies. We believe in
receiving 5y IRS around 3.95% and paying at about 3.85%. 3M KLIBOR unchanged at
3.76%.
Local PDS saw continued buying interest on high grade
papers with market actively seeking for names like Khazanah, Plus, PASB and
Sime Darby. Interest gathered around the belly towards the slightly long end of
the curve. We prefer to look for pickup down the credit curve at names like
Kesas and Kesturi. Kesas has not been actively traded since its primary and we
are looking at another 3-5bps down from the issued yield.
Singapore
SGS closed with prices mostly lower as the SGD IRS
curve was marked up on higher USD rates. SGD IRS rates were up by 3.0-3.5bps
from the 5y point onwards, while the front end rose slightly. A Singapore bank
was seen selling SGS Apr 18 and Jun 19 off the run issues which dragged the 5y
benchmark lower, while the long end of the curve was less active. SGS yield
curve bear flattened slightly.
Asian credits opened the week on a relatively quiet
session in the morning with levels mostly unchanged to trace a firmer tone. CDS
spreads tightened by a couple of bps, but did not seem to flow through the cash
bonds. Sovereigns outperformed by a marginal 0.25pts from Friday's close in
Indonesia. High yield levels mostly unchanged except for AGILE, which traded
stronger after bankers supported a loan facility revision that would enable the
roll-over of loans. The 17s traded higher about 0.5-0.75pts, while 19s rose by
about 1pt. New issue pipeline opened with a slew of new books. China HongQiao
3.5y final print at 6.875%, Tewoo (ICBC SBLC) 3yr guided CT3+215bps, China
Travel Services dual tranche of 5y and 10y at 280bps and 375bps respectively,
and Korea Expressway guided CT3+125bps.
Indonesia
Finalization of President Jokowi’s cabinet structure
and inauguration of Kabinet Kerja ministers should have been the single factor
for bond prices to move higher this week yet it failed to pump in extra fuel to
bring bond prices higher on yesterday’s trading as market muted on yesterday’s
trading session. This week, we see that bond price would move mixed with
limited space for prices moving upwards. Several factor globally and
domestically which would hinder upwards price movements are FOMC meeting results,
3Q 14 US GDP results and escalating discussion on subsidize fuel price hike.
These three factors could either support bond market or might cause correction
this week. A hawkish statement post FOMC meeting and better 3Q 14 US GDP data
would affect negatively towards LCY bond prices. Market also now expects
President Jokowi to announce a subsidize fuel price hike by Rp3.000,- post
Kabinet Kerja kickoff meeting. We recommend our reader to start taking profit
and start underweighting portfolios, anticipating a hike in subsidize fuel
price. Overall, we see that LCY 10-yr bond yield would move within the range of
7.900% - 8.200% this week. 5-yr, 10-yr, 15-yr and 20-yr benchmark series yield
stood at 7.878% (-3.3bps), 8.019% (-0.2bps), 8.366% (+0.1bps) and 8.462%
(-0.1bps) while 2-yr yield shifts down to 7.479% (-6.1bps). Government bond
traded thin at secondary market amounting Rp5,151 bn with FR0058 (18-yr off the
run series) as the most tradable bond. FR00058 total trading volume amounting
Rp1,259 bn with 28x transaction frequency and closed at 97.393 yielding 8.537%.
Foreigners have continuously purchased Indonesia
government bonds worth of Rp12.47 tn since Oct 14th conventional bond auction
till Oct 21st. Foreign ownership stood at Rp453.29 tn or 37.37% of total
outstanding government bond as of Oct 23rd. Within the same period of time,
retailers added Rp21.65 tn as a result of ORI011 issuance while banks bought
Rp0.26 tn.
Corporate bond trading was heavy amounting Rp1,400 bn
(vs average per day (Jan – Aug) trading volume of Rp657 bn). BEXI02BCN3 (Shelf
registration II Indonesia Eximbank Phase III Year 2014; B serial; Rating:
idAAA) was the top actively traded corporate bond with total trading volume
amounted Rp630 bn yielding 9.249%.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.