Maybank FX Tech Weekly - 28 Mar 2016

       Markets – be it oil or equity or risk proxy currencies – took a breather after recent rally. Oil settled just above $40/bbl. USDMYR fell below 4-figure to a 7-month low of 3.96 levels before rebounding higher to around 4.03 levels. And it seems there could be some retracement ahead.

       Focus this week on US on a handful of releases including PCE core (Mon); Fed speaks including Yellen, Kaplan as well as Williams (who will speak from Singapore on Tue); ISM manufacturing and Mar payrolls data (Fri).  Consensus expects NFP to come in at +208k (vs. +242k in Feb); hourly earnings at +0.2% m/m (vs. -0.1% in Feb) and unemployment rate to hold steady at 4.9%. Strong set of data will reinforce the case for Fed to tighten and this could potentially see a build-up in expectation (and positioning) for rate hike in Apr or Jun, and this could lend strength to the USD. Market implied probability for an Apr or Jun rate hike only stand at 6% and 38%, respectively. For the year, market is only pricing in 35bps hike. Our bias remains for Fed to hike rates by twice this year, with the next hike of 25bps likely to take place in Jun.

       USD could face some upside pressure. USDJPY resistance at 113.50 before 115 levels. Downside in USDMYR and USDSGD could stall; retracement could re-visit 4.08 and 1.38, respectively.  Our SGDNEER model shows USDSGD is about +0.1% above our midpoint of 1.3700.    SGDMYR could see a retracement towards 2.9650; but bias remains for further downside. We observed a death-cross in the making (50 DMA cuts 200 DMA to the downside – bearish in nature). AUD risk a pullback towards 0.7350.

       Some of the other data we are watching this week includes US Feb PCE core, pending home sales; Mar Dallas Fed Mfg on Mon. For Tue, ECB Makuch speaks; ECB publishes weekly QE data; US releases Mar consumer confidence; Fed’s Yellen, Kaplan, Williams speak; BoE publishes Financial Policy Committee statement. For Wed, US Mar ADP employment; Fed’s Evans speaks; Euro-area Mar consumer confidence. For Thu, Fed’s Evans and Dudley speak; Euro-area publishes Mar core and CPI estimate; Australia releases Feb new home sales; BoE Carney speaks; UK 4Q GDP; China releases 4Q current account. For Fri, US Mar payrolls on tap; Fed’s Mester speaks; US Mar ISM Mfg, Univ. of Michigan Sentiment; Australia Mar commodity index, house prices on tap; Japan 1Q Tankan survey and Indonesia Mar CPI There is also PMI releases from around the world including China, US and Europe.

       Australia, NZ, UK and most major cities in Europe as well as HK markets are closed for holidays on Mon.