FX
Global
US added 248K jobs in Sep, above the consensus of
215K. The Aug print was also revised higher to 180K from 142K. Unemployment rate
slipped under the 6.0-mark to 5.9% for the first time since Jul 2008. US
equity benchmark indices were up >1% by Fri close, the USD rallied and
USTs sold off.
In the day ahead, central bank meetings are aplenty.
Expect RBA to stand pat at its policy meet today. Labour report is due on Thu
(Cons.:-30K). BOJ and BI are also likely to keep status quo. Malaysia’s trade
numbers is due at mid-day.
Onshore markets in China remain closed for National
Day, to resume tomorrow. China will release more of its Sep data from Fri
onwards. Between now and Fri, the Asia data calendar is light with only
Philippine’s CPI of note tomorrow. Key event of the week is perhaps
Malaysia’s Budget 2015 on Fri. Its industrial production will also be
released on the same day along with Philippine’s exports. |
Dollar has reversed a big part of its Fri gains on Mon
but Minutes of the Sep FOMC meeting on Wed night should keep its current
uptrend intact. On the side, there is a number of Fed Speaks this week but
comments are unlikely to derail the dollar from its northbound course after
strong Sep NFP.
G7 Currencies
DXY – Uptrend. The DXY index touched a high of 86.746 on Fri after the strong NFP
number before reversing out to levels around 85.870 by this morning. Pullbacks
are likely tentative. Sep added 248K NFP, firmer than the average monthly pace
of 215K which underscores a rise in hiring momentum. Focus is on the Minutes of
the FOMC meeting in Sep on Wed night. Still, next barrier is eyed at 86.962.
Support is marked at 85.377.
USD/JPY – Rangy. USD/JPY is rebounding slightly
after sliding yesterday to a low of 108.65 and is hovering around 108.90 this
morning, within striking distance of 109-figure. Markets though remain cautious
ahead of the BOJ decision today and the governor’s pressie thereafter. Market
and we are not looking for a move at today’s meeting but further bearish
comments about a weak JPY could send the pair rallying back towards the
110-levels again. Support is seen around 108.16. Beyond the near term, a break
of the 108-figure exposes the next support around 106.65 (the 38.2% Fibo
retracement of the Jul-Oct rally) and that level could be a possible entry
point for the next upmove.
AUD/USD – Choppy. Last seen around 0.8750, on the
downtick as USD steadies from its overnight slide. The daily tools show waning
bearish momentum. RBA decides on cash target rate today and we expect the
central bank to leave rates unchanged at 2.50%. Whilst softer demand for
commodities, deteriorating terms of trade and pervading dollar strength will
still cap gains for the pair, recent daily moves indicate major indecisiveness
in this pair. Next barrier is seen at 0.8853 while the 0.8660 (ytd low) is a
strong technical support level to break. Sep labour report is out on Thu. The
Aug report was shrugged off as an outlier. Another strong job report could
however, give a boost to the pair. Break of the 0.8853 brings the pair to the
upper bound of the ichimoku cloud on the intra-day chart at 0.8930.
EUR/USD – Tentative Bulls. The EUR/USD touched a high of
1.2675 on Mon and leveled off (again) to levels around 1.2630 by Asia morning.
Bulls are still unable to get a strong foothold though we acknowledge current
bearish momentum on the daily chart is weak. Barrier is seen around 1.2755 for
intra-week upticks. Expect this pair to extend choppy trades within
1.2500-1.2755. A break of the 1.25-figure could see slippage towards the next
support nearby at 1.24653.
EUR/SGD – Choppy. The EUR/SGD headed higher this Asia morning before easing to trade
around 1.6120. Price moves have been choppy and directional bias in the
near-term is unclear. Despite the sharp rise on Mon, this cross still lacks
bullish momentum and could extend choppy trades within 1.6000-1.6210. Beyond
the near-term, pair is still on a downtrend and could break the 1.60-figure
sooner or later. In a less likely case of a rebound, bulls require a move above
the 1.6213-barrier for greater extension.
Regional FX
The SGD NEER trades 0.23% above the implied mid-point of 1.2798. We
estimate the top end at 1.2542 and the floor at 1.3053.
USD/SGD – Bearish Divergence. The USD/SGD jumped towards the 1.2830-level (100% Fibo retracement of the
Jan-Jul downswing) on Fri following the strong US NFP. Pair has retreated slightly
since then and is now seen hovering around 1.2767, back below our
1.2780-resistance level. There is a lack of momentum of the charts and signs of
divergence suggest a possible pull-back towards the 1.2652-support. Still, the
strong US NFP print has returned focus on the 1.28-figure and a break of the
1.2780-resistance level will again reignite bullish momentum towards that
figure.
AUD/SGD – Bearish. The AUD/SGD seemed
to have found a tentative bottom around the 1.10-figure. Cross has lost bearish
momentum and could remain in sideway trades within 1.1060-1.1275 for now in the
absence of stronger cues. Beyond the near-term, downtrend is still intact but
support at recent low of 1.1062 could be a strong support to overcome. Markets
will be eyeing RBA policy meeting today for fresh clues. SGD/MYR – Two-Way
Risks. The SGD/MYR is back on the uptick after yesterday’s move towards
the 2.5400-figure. Cross has lost its bullish momentum and is now tilted to the
downside with next support around the 2.5465. Risks are not all on the downside
given that the 18-DMA is still above the 40-DMA. Rebounds to meet barrier at
2.5750.
USD/MYR – Retracement. Onshore markets are back from the long weekend. USD/MYR hovered around
3.2610 this morning, on the uptick from its open at 3.2575. The pair seemed to
have missed out the choppy dollar action and expectations for a small decline
in Aug exports, due today, underpins the pair. The 18-DMA still provides a
support for the pair but recent moves suggest that a period of consolidation is
in store within the 3.2310-3.2870 for the rest of the week. Meanwhile, 1-month
NDF is on the downtick at around 3.2660 this morning. Support is still seen at
the 3.25-figure. We expect the 1-month NDF to consolidate within 3.25-3.30 for
this week as well.
As of 30 Sep, USD/CNY was fixed at 6.1525 (-0.0014), vs. previous 6.1539
(+2.0% upper band limit: 6.2781; -2.0% lower band limit: 6.0319). CNY/MYR was
fixed at 0.5298 (-0.00210). USD/CNY – Onshore markets closed for
National Day Holiday, to resume tomorrow. The World Bank lowered its
2014 China’s growth forecast to 7.4% from previous 7.6%. The Bank also expects
China to grow at a slower pace of 7.2% in 2015 compared to its original
forecast of 7.5%.
1-Year CNY NDFs – Sideways. The NDF slipped overnight to trade around 6.2480, in
tandem with most USD/AXJs. The slide has opened the way towards 6.2395 and next
support is seen at 6.2263. A technical resistance is still seen at 6.2625. USD/CNH
– Pressured by
the Cloud. USD/CNH
hovered around 6.1520 this morning, weighed by the dollar fall in the past
session. This pair is still pressured to the downside with support seen around
6.1320. Upticks to meet barrier around the 6.1770-mark. Hang Seng slipped -0.4%
in early trades.
USD/IDR – Shallow Dips. The USD/IDR remains above the 12200-handle this
morning even as it pull-back from yesterday’s upmove. Pair is currently sighted
around 12201, though any dips should present a buying opportunity. We continue
to expect further upside given concerns that the president elect’s reforms
could either be stalled or delayed in the face of a hostile parliament as well
as ongoing concerns about the twin deficits. The IDR is also not getting much
support from foreign portfolio inflows with a net USD7.84mn in equities sold yesterday,
while latest data from 1 Oct showed foreign funds removing a net IDR3.97bn from
their outstanding hold of government debt. Despite the move lower today, we
continue to expect risks to be tilted to the upside given that the 18-DMA
continues to lie above the 40-DMA. Rebounds are likely to meet resistance
around 12280 ahead of the next at 12300 12100 remains supportive this week. The
1-month NDF is back on the uptick, hovering around 12278 with bullish momentum
on the wane. The JISDOR was fixed higher at 12212 on Mon to start the week
compared to Fri’s fixing of 12.144.
USD/PHP – Two-Way
Trades. The USD/PHP is on the slide this morning, hovering around
44.755. Pair has lost most of its bullish momentum and trades with a downward
tilt towards support at 44.500. Still, upside risks remain given that the
18-DMA lies above the 40-DMA. Any rebound is likely to meet resistance at
45.050. The 1-month NDF is is back on the uptick, hovering around 44.760,
though it has lost all its bullish momentum and is now tilted to the downside.
The release of Sep CPI has been deferred till tomorrow. Consensus expects
headline inflation to rise by 4.5% y/y in Sep, a slight dip from Aug’s 4.9%.
USD/THB – Sideways. The USD/THB is still on the slide after the massive jump higher on Fri
following the US NFP and taking out our resistance at 32.500. Pair remains
above that level, hovering around 32.573 currently. We look for the pair to
trade sideways this week within the confines of 32.420-32.720 though the risks
are still to the upside given expectations of dollar strength ahead. We are
already seeing this risk aversion to emerging markets reflected in the asset
markets where foreign funds have sold a net THB3.43bn in debt on Mon, though
they did buy a net THB0.18bn in equities.
Rates
Malaysia
Please note that there is no write-up on Malaysia Fixed Income as
onshore markets were closed for a holiday on 6 Oct.
Singapore
Please note that there is no write-up on Singapore Fixed Income as
onshore markets were closed for a holiday on 6 Oct.
Indonesia
LCY bond market continues its decline as US labour data was recorded
stronger than expected. NFP data which came in at 248K along with unemployment
rate declining to 5.90% have made contributed negatively to the bond market.
Political instability between Prabowo and Jokowi camp remains pressuring
Indonesia bond market. In regards to today’s Indonesia central RDG meeting, our
economist sees that BI would halt their reference rate at 7.50% during today’s
RDG meeting. 5-yr, 10-yr, 15-yr and 20-yr benchmark series yield stood at
8.314% (+5.5bps), 8.539% (+4.7bps), 8.914% (+2.7bps) and 9.051% (+3.0bps) while
2-yr yield shifts up to 7.750% (+0.7bps). Government bond traded thin at
secondary market amounting Rp3,955 bn from Rp14,809 tn with FR0068 (15-yr
benchmark series) as the most tradable bond. The thin traded volume occurred as
several EM market were closed yesterday. FR0068 total trading volume amounted
Rp1,483 bn with 55x transaction frequency and closed at 93.857 yielding 9.051%.
DMO will conduct their weekly auction this week with three series to be
auctioned which are SPN-S08042015 (Coupon: discounted; Maturity: 8 Apr 2015),
PBS005 (Coupon: 6.750%; Maturity: 15 Apr 2043) and PBS006 (Coupon: 8.250%;
Maturity: 15 Sep 2020). We do believe that the auction will be oversubscribe by
1.5x – 2.0x from its indicative target issuance while our view on the
indicative yield are as follows SPN-S08042015 (range: 6.900% – 7.050%), PBS005
(range: 9.300% – 9.450%) and PBS006 (range: 8.250% – 8.400%). On total,
Indonesia government has raised approx. Rp384.90 tn worth of debt through
domestic and global issuance which represent 89.46% of this year target of
Rp430.2 tn.
Corporate bond trading remains thin amounting Rp275 bn (vs average per
day (Jan – Aug) trading volume of Rp657 bn). ISAT07B (Indosat VII Year 2009; B
serial bond; Rating: idAAA) was the top actively traded corporate bond with
total trading volume amounted Rp60 bn yielding 9.789%.
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