FX
Global
Fed surprised with a statement
that was deemed a little more hawkish than expected. Focus was on the “solid
job gains and lower unemployment rate” since its Sep meeting and even noted
“diminishing underutilization of labor resources”. Equities closed a tad
lower after the committee wound up Quantitative Easing. DXY bounced on the
statement, back on the upmove, albeit still a distance away from Oct high.
NZD extended its overnight
slide after RBNZ kept official cash rate unchanged at 3.50% and the central
bank may keep status quo for a longer period amid slowing price pressures.
Nearer to home, USD/AXJs were on the upmove following the overnight action.
In the absence of data cues in Asia, expect the regional currencies to remain
on the backfoot against the greenback. More action expected post Asian hours
as Europe releases consumer confidence data followed by the advanced estimate
of US GDP for 3Q. Expect data to confirm a growing divergence in terms of
growth and policy between the US and EU that could keep the EUR heavy. |
G7 Currencies
DXY – Rangy. The
DXY bounced to a high of 86.11 this morning, extending its overnight climb
after the Fed released a statement deemed more bullish than expected. There was
only one dissenter this time which implies that most of the voters agreed that
there were “solid gains and lower unemployment rate” and that “underutilization
of labour resources were gradually diminishing”. The unexpected shift just when
most investors have expected the Fed to stay stubbornly non-committal triggered
broad-based USD bids. That said, this index is still some distance away from
the Oct high of 86.746. Fed has not dropped “considerable period” from its
statement and the spike in yields was partially reversed out towards the end of
NY session with the 10-yr yields softer around 2.31%, off its overnight highs
of 2.3577%. Still, the DXY index remains on the rise with next barrier
seen around 86.74 ahead of the next at 86.96. Support is seen at 85.24. The
advanced estimate of 3Q GDP is due tonight and consensus expects a slower
growth of 3.0%q/q (annualized) from the previous 4.6%.
USD/JPY – Bullish. The USD/JPY breached the 109-figure this morning
underpinned by the more hawkish stance of the FOMC. But exporter sale,
profit-taking and selling of JPY crosses have tempered the pair’s rise.
Currently the pair is just off the 109-figure at 108.97 and a re-test of the
109-figure is likely given the dollar momentum so far. Intraday chart is
showing renewed bullish momentum, though the pair appears overstretched
currently. A break there could see the pair met resistance around 109.26 ahead
of the next at 109.90. Support today is seen around 108.38. Tomorrow’s BOJ
meeting is unlikely to throw up any surprises, though downside surprises in the
CPI tomorrow could see JPY bulls head for the exit.
AUD/USD – Swings Back Into Range. The
pair was unable to sustain a move above the 0.8860-barrier and slamdunked after
the slightly more hawkish than expected Fed statement was released overnight.
The pair continued its downward drift towards levels around 0.8780 this
morning, on its way to the next support level around 0.8750. With that
downswing, the pair is again within the 0.8660-0.8860 range and another upward
surprise in the US 3Q GDP could press the pair towards the lower bound of the
range at 0.8660 – a strong support to break.
EUR/USD – Bearish. The pair pulled back
towards the 1.2616-support this morning, weighed by the upbeat Fed statement.
With the growth and policy divergence more pronounced now, upticks could be
opportunities to sell. Still, the Fed did not give an explicit signal on a
sooner rate hike, only stressed on data-dependency in addition to a better
assessment of the labour market. Next support is seen around 1.2571 ahead of
the next at 1.25-figure.
EUR/SGD – Bearish. The
EUR/SGD reversed out the gains made in the past few sessions and was back at
levels around 1.6140. The overnight pullback has led the cross back into range
of 1.6098-1.6252 range. The MACD has crossed below the signal line and the zero
line as well. Given the current momentum, intra-day trades are unlikely to see
a revisit of the barrier around 1.6252. Momentum is lacking on the daily chart
but fundamentally, risks are to the downside in this cross as the policy
divergence between the Fed and ECB becomes more pronounced. That could press
the cross towards the Oct low of 1.6008 sooner or later.
Regional
FX
The SGD NEER trades at 0.06% below the implied
mid-point of 1.2783. The top end is estimated at 1.2527 and the floor at
1.3039.
USD/SGD – Inching Higher. USD/SGD spiked overnight to 1.2781 after hitting a
low of 1.2705 post-FOMC. Pair continues to head higher towards the
1.2790-region this morning, sighted currently around 1.2787. Intraday momentum
indicators are mostly pointing to an upside bias today with the pair currently
overbought. Though our barrier at 1.2775 was taken out, our weekly resistance
level at 1.2830 remains intact. Interim barrier is seen around the 1.28-figure
today. Support for the pair remains around 1.2720.
AUD/SGD – Bearish. After spiking to a high of 1.1323 overnight, the
AUD/SGD plunged towards the 1.12-figure on the back of relative AUD weakness.
Cross remains on the slide this morning, sighted around 1.1220-level with RSI
edging close to oversold territory. Continued AUD weakness could keep the bias
for the cross to the downside today with 1.1127 still providing supporting
today. SGD/MYR – Supported. Despite the spike in the USD/MYR, the SGD/MYR has
remained relatively resilient. Cross was last seen edging higher around 2.5724
but still well within its current tight trading range of 2.5630-2.5750. Cross
has lost most of its bearish momentum, though risks remains on the upside as
the 18-SMA still lies above the 40-SMA. A breach of the upper bound of its
current trading range though would expose the next barrier at 2.5807.
USD/MYR – Gapped Up. USD/MYR gapped up this morning and was last seen around the
3.29-figure, underpinned by the overnight dollar rally as well as the rise in
UST yields. With a clean break of the 3.2863-barrier, next bullish target is
seen around 3.3019. We are however, wary of agents’ offers and could temper the
pace of the next up-leg. 1-month NDF was also on the rise, within striking
distance of the 3.30-figure. Next bullish target is seen around 3.3077.
USD/CNY was fixed at 6.1457 (+0.0052), vs. previous 6.1405 (+2.0% upper band
limit: 6.2711; -2.0% lower band limit: 6.0252). CNY/MYR was fixed at 0.5357
(+0.0025). USD/CNY – Heavy. USD/CNY bounced back to levels
around 6.1150 this morning, guided by the higher fixing. There is little
momentum shown on the intra-day chart and next barrier is seen around 6.1195.
Support is formed at recent low of 6.1087, ahead of the next at 6.1010 (7 Mar
low). The pair needs to break above the 18-SMA at 6.1186 for bulls to regain
footing. At home, Moody’s still views home prices to be under pressure in
China. On Wed, the World Bank stated that China could afford to lower its
economic growth target to 7% for 2015 without impact on its labour
market.
1-Year CNY NDFs – Weighed. The NDF hovered around 6.2380 this morning, underpinned by the dollar
upmove this morning but upticks ran into offers and capped gains in this pair.
6.2395 is still a strong barrier to break but pair has gained bullish
momentum. A break here exposes the next at 6.2470. Support is seen around
6.2350 ahead of the next at 6.2263. USD/CNH – On the Rebound. USD/CNH rose more than its NDF counterparts and was
last seen around 6.1210. This pair tests the 40-SMA as we write and could head
higher towards the 6.1280 which we expect to remain intact for intra-day
trades. RSI flags near overbought conditions and could mark the start of
range-trading within 6.1130 6.1280 until the approval of the Shanghai-Hong Kong
Stock Connect by China. CNH trades at a discount to CNY.
USD/IDR – Bullish. After sliding to a low of 12078 yesterday on the back of comments by
the new Finance Minister that a fuel price subsidy cut would take place this
year, the USD/IDR is rallying once again on the back of a resurgent dollar. This
is in line with the 1-month NDF, which is seen edging higher around 12243
currently. Pair was last sighted around 12177 with intraday momentum indicators
including MACD still showing an upside bias. With expectations of a Fed fund
rate hike now back on the radar, renewed upside pressure on the pair is likely.
Look for resistance around 12200 today with a firm break here exposing the next
hurdle around 12265. Support is seen around 11950 today. Positive
sentiments led foreign funds to buy a net USD158.56mn in equities yesterday
while adding a net IDR2.51tn to their outstanding holdings of debt on Tue, and
continued foreign purchases today could cap the pair’s upside today. The JISDOR
was fixed higher again at 12163 yesterday from 12158 on Tue, and another higher
fixing is expected today given the uptick in the spot this morning.
USD/PHP – Bullish.
The USD/PHP gapped at the opening to 44.832, pressured higher by the resurgent
dollar. Pair remains on the uptick and currently seen around 44.850, though
momentum continues to be biased to the downside as shown by intraday MACD.
Spurred by expectations of a Fed fund rate hike, pair edge closer to the
45-figure today with resistance still seen around 45.050 today. 44.500 should
continue to be supportive. Unlike its peers, foreign funds continued to
sell-off equities yesterday with a net USD4.5mn in equities sold and if it
continues today, could provide support for the pair today. The 1-month NDF is
edging closer to the 45-figure this morning, seen around 44.900 currently with
momentum indicators mostly pointing towards the upside today as shown in our
intraday chart.
USD/THB – Overbought. The USD/THB, like the rest of its regional peers, is on the uptick this
morning, spurred by a resurgent dollar following the FOMC meeting. Pair is
currently sighted around 32.565 – a high not seen since the beginning of the
month - and is overstretched. With our resistance at 32.500 breached, new
hurdle is now seen around 32.630 ahead of the next at 32.696 (6 Oct high).
Support nearby is around 32.500 before 32.420. Waning risk appetite today could
see foreign funds sell-off Thai assets, supporting the pair, unlike yesterday
where a net THB0.98bn and THB3.75bn in equities and debts were purchased.
Rates
Malaysia
Local government bond market saw a second day of
buying interest on the 15y benchmark MGS 4/30. Any uptick in price was met with
sellers in a rather thin market ahead of the FOMC meeting. Biddish USDMYR did
not help the already subdued market sentiment either. WI for GII 11/17 was
quoted tight at 3.66/65 but muted response.
IRS market appears to be sensing some flows and shaded
the curve higher. 4y IRS traded at 3.87%. Local players seem to prefer to pay
following the normalisation of rates. We think the market is less interested in
trading on views and more focused on squaring positions/flows. 3M KLIBOR steady
at 3.76%.
Local PDS market saw trading volume soar. We believe a
large portion comes from month-end asset reallocation by end-clients. However,
we did see genuine buying interest focused on the few same names such as
Manjung, Aman, and Aquasar. Moving down the credit curve, Kesas 21 was taken at
4bps below its selldown level. At this point in time, market’s offer for Kesas
19 and 20 appears to be fair at 4.35% and 4.43%. We believe market would be
rather quiet for the rest of the week, except for some action on GG names,
depending on the outcome of the FOMC meeting.
Singapore
SGS market started the day weak as overnight
Treasuries fell. The FOMC meeting and announcement of 2015 SGS issuance
calendar kept the market on its toes. With Treasury futures holding up and IRS
curve caught in a tight range around the same levels, prices closed almost
unchanged. The 2015 issuance calendar turned out friendlier with 7 scheduled
issuances compared to 9 in 2014. In addition, MAS introduced a new
“mini-auction” feature which affords them the ability to issue SGS bonds up to
SGD1.0b in size. There was not much reaction to the announcement after market
close.
Asian credit traded on a constructive tone in the
morning but quiet down in the afternoon. High yields outperformed investment
grades with most papers lifted up by almost 1pt in names like AGILE, KAISA and
TPHL. The new HUWHY performed well with spreads tightening 2-3bps across both
tranches. CHITRA’s 10y bonds were still on an impressive rally, tightening
another 5-7bps on the back of retail buying. Indonesian quasis and sovereigns
caught some bids as well with Indois 24 taken up 0.30pts to 100.90. Last night’s
FOMC meeting result will set the direction for Asian market this morning.
Indonesia
Bond market closed lower on yesterday trading. During
the first session, bond price was quite in pressure as some profit taking was
seen with foreigners selling but relatively in a small size. Post lunch break,
bond prices start creeping up specifically after Indonesia Finance minister
announced that a subsidize fuel price hike might occur before January 2015 with
fixed subsidy scheme. Most probably market was also anticipating any dovish
statement post FOMC meeting. With no positive sentiment yesterday, it’s
relatively normal for bond prices moving lower. 5-yr, 10-yr, 15-yr and 20-yr
benchmark series yield stood at 7.901% (+1.1bps), 8.114% (+5.3bps), 8.465% (+6.1bps)
and 8.568% (+7.1bps) while 2-yr yield shifts down to 7.499% (-0.5bps).
Government bond traded heavy at secondary market amounting Rp13,597 bn from
Rp5,994 bn with FR0070 (10-yr benchmark series) as the most tradable bond.
FR00070 total trading volume amounting Rp2,923 bn with 57x transaction
frequency and closed at 101.673 yielding 8.114%.
Corporate bond trading was heavy amounting Rp787 bn
(vs average per day (Jan – Aug) trading volume of Rp657 bn). ASDF02ACN3 (Shelf
registration II Astra Sedaya Finance Phase III Year 2014; A serial bond;
Rating: AAA(idn)) was the top actively traded corporate bond with total trading
volume amounted Rp120 bn yielding 8.353%.
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