FX
Global
·
NY
indices managed to retain
much of Mon’s gains with the exception of the NASDAQ. DJI and S&P ended
near its record highs at 16715 and 1897 respectively. Gains were capped by
anaemic retail sales growth of 0.1%m/m in Apr, easing from its previously
revised 1.5%. Meanwhile, the international community was not entirely
convinced by the electoral victory claimed by the East Ukraine separatists.
Risk sentiments were thus unaffected for the moment.
·
EUR/USD was hit overnight by the softer German ZEW survey
and a report suggesting German Bundesbank’s support for any ECB stimulus. The
pair tested 1.3700 and waffled thereabouts in early Asian trades. German ZEW
survey of current situation firmed to 62.1 though expectations deteriorated
to 33.1 from the previous 43.2. Australia’s Liberal Government aims to bring
the deficit down from current AUD49.9bn to AUD29.8bn next financial year. AUD
was little changed after the Budget delivery.
·
While softer EUR support USD/AXJs, equity-related inflows
could keep regional pairings in a trap. Asia has its own stories. Thailand’s
political uncertainty continues amid calls for a non-partisan leader to
ensure reforms and fair general election. Elsewhere, Malaysia also had a
political scare over the Vesak holidays when three of Barisan Nasional
assemblymen quit in Terengganu, resulting in a loss of majority in the
32-seat state assembly. However, it was reported by the local press that
Bukit Besi assemblyman Rosleee Daud has retracted his resignation while Ajil
assemblyman Ghazali Taib is persuaded to do the same. There is little data of
note today in Asia. UK’s ILO unemployment print could move markets amid few
other cues.
|
G7 Currencies
·
DXY
– Firm. The greenback is on the upmove towards the next
barrier at 80.275, last seen around 80.120 this morning. The index was
propelled by soggy EUR and JPY on softer EUR data, threats of ECB action on the
EUR in June as well as healthy risk appetite. While we see the base established
at 79.820 for now. Intra-day moves seem to lack momentum according to the
4-hourly chart which shows slowing bullish momentum. Next barrier is seen at 80.524
after 80.275.
·
USD/JPY
– Two-Way Interests. USD/JPY edged lower after touching a high of 102.36 on
Tue. Bullish momentum is also waning on the price and we see pair likely to
settle within the 101.96-102.47 range today unless stronger cues emerge. This
morning, Apr domestic CGPI met expectations at 2.8%m/m, an upswing from a flat
growth in the previous month. Year-on-year, the index indicated a 4.1%
acceleration from the previous 1.7%.
·
AUD/USD
– Supported. AUD/USD
was little affected by the budget and remained at the firmer end of the recent
range-trades, last seen around 0.9370. Pair has pared much of its bearish
momentum and is likely to remain within the 0.9320-0.9420 for interim trade. An
interim barrier is seen at the 0.94-figure.
·
EUR/USD
– Downside risks. EUR/USD slumped to around the 1.37-figure on the
deterioration in the German ZEW expectations. MACD tilts south and price
actions indicate downside risk. A move below the 1.3695-support exposes the
next support at 1.3625. Failure to do so could risk a near-term correction
towards the 1.3770-barrier.
Regional FX
·
The
SGD NEER trades 0.45% above
the implied mid-point of 1.2566.
·
We
estimate the top end at 1.2316 and the floor at 1.2816. USD/SGD
– Sideways. USD/SGD traded with a firm tone since the start of the
week and barrier at 1.2540 capped aggressive upticks as we have expected. Pair
is on the downtick despite the overnight dollar gains. We expect the pair to
remain range-bound within 1.2489-1.2540 in intra-day trade. Retail sales are
due tomorrow followed by NODX on Thu. Both are not expected to inspire a break
on either side.
·
AUD/SGD
– Firm. Cross
swung towards the upper bound of familiar range trading. The 1.1740-barrier
proves to be a firm resistance for the pair. Momentum indicators flat but we do
not rule out the possibility of breaking the 1.1740 barrier as price continues
to push north. Next resistance level is 1.1774 ahead of 1.1840. SGD/MYR – On
The Tumble. The cross spiked
to fill the gap towards 2.5945 before tumbling to sub-2.58 levels. The momentum
indicators point south and we do not rule out more aggressive downticks towards
2.5720.
·
USD/MYR
– Choppy. Pair
is now back at around 3.2235, weighed by inflows. This was despite the
political scare on Vesak holidays. Sentiments were buoyant on the KLCI, up
0.40% this morning. The 3.2230-suupport level looks precarious now, given the
sharp pullback this morning. RSI flags oversold conditions. A decisive break of
this level flags a deeper slide towards the 3.1980. If not, the pair is likely
to remain within 3.2230-3.2495.
Malaysia’s GDP and current account balance are due this Fri.
·
USD/CNY
was fixed higher at 6.1653 (+0.0017), vs. previous 6.1636 (+2.0% upper band
limit: 6.2911; -2.0% lower band limit: 6.0444). CNY/MYR was fixed at 0.5216
(-0.0008). USD/CNY
–Softer. USD/CNY slipped to around 6.2260 despite the higher fixing.
The yuan trades in tandem with the regional although further downsides may be
guarded by 6.2177. Momentum indicators show slowing bearish momentum on the
4-hourly chart while 18-SMA and the 40-SMA has a negative cross-over on Tue.
Hence, we expect bears to still dominate. China’s PBOC asked banks
improve efficiency in mortgage approval processes as it strengthens supervision
of mortgage risks (Rtrs).
·
1-Year
CNY NDFs –Steady. The
1Y NDF steadied around 6.2390, supported by firm USD/CNY mid-point fixing.
6.2428 seems to be a strong barrier for the pair though we cannot ignore the
upside pressure indicated by price. MACD shows paring bullish momentum given
its recent inability to push higher. Support is seen at 3.2358 while we pencil
in 6.2485 as the next barrier.
·
USD/CNH
– Downside Risks. Pair
slipped, in tandem with the majority of regional pairings. Last seen around
6.2310, the pair is on its way to test minor support at 6.2290 ahead of the
next at 6.2186 despite the higher fixing. 6.2392 is seen as the barrier for
intra-day trades. CNH now trades at a discount to CNY.
·
USD/IDR
– Bearish. The
USD/IDR gapped down and extended downsides to around 11480, weighed by the
better sentiments at home. JKCI was up 0.7% this morning. We see further
downside risks towards 11475/11450. Topsides guarded by 11550. 18-SMA and
40-SMA on the 4-hourly chart is narrowing for a negative cross-over as well.
Political mood improves at home when the local press reported Presidential
candidate Joko Widodo’s discussion for a coalition with Golkar. On the side,
President Yudhoyono has approved Hatta Rajasa’s resignation from his post as
coordinating minister for the economy.
·
USD/PHP
– Downside Risks. USD/PHP
was still weighed by risk-on mood, last seen around 43.675. The 43.600-mark
proves to be a strong support for the pair. We expect the pair to remain under
downside pressure with a break of the nearby support to expose the next at
43.39. BSP Governor Tetangco is confident of further Philippine upgrade from
other rating agencies to be sooner rather than later (BBG).
·
USD/THB
– Downside risks. Pair was hammered this morning and reached support at 32.52. 32.600 has
turned into an interim barrier for the pair. The THB is resilient despite
political uncertainty on the domestic front. We do not rule out further
downsides in the USD/THB pair given the increasing momentum shown on the
4-houly chart. That said, we are not convinced of a reversal to a downtrend and
pencil in next support at 32.44. Dips beyond the current support at 32.520 to
remain shallow.
Rates
·
Govvies were quoted wide at the opening after last
week’s bear flattening sell off post MPC. The 5-year benchmark 10/19 rose 4bps
amidst thin liquidity. Volumes were low as trading was muted for this holiday
shortened week. All eyes are on the upcoming 20-year MGS re-tap of MYR2b. Only
bids were seen since the WI (When Issued) trading started. Levels should range
around 4.60/55% levels at the auction judging from the WI levels.
·
IRS rates were quoted slightly higher and steeper. It
is possible that the curve would bearish flatten as talks of rate hike gets
fuelled further, though at current levels we believe the rates market has
priced in more than a 25bps hike in OPR. 3M KLIBOR was stable at 3.39% and only
the 5-year was traded at 3.99%. This week's 20-year MGS re-opening would likely
keep rates elevated.
·
The PDS market was very quiet after the hawkish tone
from MPC last week. Most prices were wider compared to previous week. There is
still some bargain hunting around trying to find value in some of the high-grade
stocks. Volume was thin at close since we are heading for a public holiday
tomorrow. We expect to see better clarity when market is back in full force on
Wednesday.
Indonesia
·
Indonesia
bond market corrected on yesterday’s trading supported by a heavy trading
volume at the secondary market. 10-yr tenor bond strong support at 8.00% seems
unbreakable today as the bond tested the support for several time within the
day. 5-yr, 10-yr, 15-yr and 20-yr benchmark series yield stood at 7.644%
(+2.2bps), 8.068% (+3.3bps), 8.516% (+2.5bps) and 8.605% (+1.4bps) while 2-yr
yield shifted down to 7.342% (-3.3bps). Trading volume at secondary market
remains heavy with trading volume amounted Rp11,234 bn (vs average per day
trading volume of Rp7,602 bn). FR0071 (15-yr benchmark series) and FR0070
(10-yr benchmark series) was the most tradable bond during the day. FR0071
total trading volume amounting Rp3,121 bn with 88x transaction frequency and closed
at 104.013 yielding 8.516% while FR0070 total trading volume amounted Rp2,958
bn with 73x transaction frequency and closed at 102.039 yielding 8.068%.
·
On
the corporate bond segment, trading volume was seen moderate amounting Rp608 bn
on yesterday’s trading (vs average per day trading volume of Rp750 bn).
FIFA01BCN3 (Shelf registration I Federal International Finance Phase III year
2014; B serial bond; Rating: idAA+) was the top actively traded corporate bond
yesterday with total trading volume amounting Rp140 bn and was last traded at
100.04 yielding 10.480%.
·
Corporate:
Pefindo assigned idA- rating for the PT Wika Realty MTN I/2013 and MTN II/2014.
The rating reflects the company’s strategic importance to its parent, PT Wijaya
Karya (Persero) Tbk, strong cash flow protection indicators and its favorable
asset quality and relatively diversified property locations. However, the
rating is constrained by the company’s lower margins compared to peers, low
proportion of recurring income, and the sensitivity to the changes in
macroeconomic condition.
Rgds,
Maybank FX Research
Global Markets
Maybank
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