FX
Global
BOE Governor Carney said ‘the (UK) economy is heading to normal” though left the schedule of
rate hike unchanged. GBP/USD fell more than a big figure before finding support
around 1.6770 for the rest of overnight session. Elsewhere, there were also
reports that a ECB rate cut in June is ‘more or less a done deal’ (Rtrs).
Yields fell across the Atlanta with 10-year bund yields at 1.37% while that of
10-year UST below 2.55%.
Equities slipped in NY session as investors take profit from record highs. There are
a few growth numbers due today, starting with Japan. 1Q GDP came in firmer than
expected at 1.5%q/q, accelerating from 0.1% in the quarter prior. Nonetheless,
risk appetite is still weak. Nikkei fell -1.4%, taking the cue from NY indices
and dragging USD/JPY along. More growth prints to come from the Euro bloc
later, followed by US empire manufacturing, industrial production and weekly
initial claims.
In Asia, sentiments
are likely to remain cautious. Regional currencies had a good session on Wed
but early starters seem to indicate some consolidation in the session ahead.
Singapore retail sales and Philippines’ overseas remittances are due but area
unlikely to inspire. Expect consolidative trade ahead of more data cues post
Asia. Fed Yellen will speak at 6.10am (HKT) tomorrow.
G7 Currencies
DXY – Downside Risks. The greenback settled into tight swivels within 79.99-80.14 for much of
Wed and was last seen around 80.04 this morning. Intra-day chart flag slight
bearish risks in the pair amid some expectations that Fed Chair Yellen will
stick to the dovish script. 79.988 marks the interim support level ahead of the
next at 79.688.
USD/JPY – Heavy. USD/JPY
waffled around 101.80 this morning, weighed by the lack of risk appetite in
overnight session. Price is still showing bearish momentum and pair could drift
lower towards the next support at 101.48. 1Q came in firmer than expected at
1.5%q/q, accelerating from 0.1%. Nikkei still fell -1.2% this morning, taking
the cue from NY indices which slid across the board. BOJ Governor Kuroda spoke
as we write and noted an increase in the mid-to-long term inflation
expectations. He also expects an upward trend in prices towards the later part
of the fiscal year.
AUD/USD – Sideways. AUD/USD edged above 0.9400 in late Asian trade before slipping back to
levels around 0.9370. A strong barrier is seen around 0.9415 but we also note a
strong support level at around 0.9347. We expect consolidation within the
0.9347-0.9400 band given the lack of momentum.
EUR/USD – Tight Swivels. EUR/USD steadied around the 1.3720-axle, little moved by increasing
speculation of a rate cut in Jun. There are growth numbers due from the core
economies today. Risks are tilted to the downside. Softer prints could drag the
pair under the 1.3695-support. Upsides are likely to be capped by the
1.3770-barrier.
Regional FX
The SGD NEER trades 0.50% above the implied mid-point of 1.2558.
We estimate the top end at 1.2308 and the floor at 1.2808. USD/SGD
– Sideways. Pair steadied around the 1.25-figure along with the
rather static dollar. MACD shows an increase in bearish momentum along with a
slightly bearish intra-day outlook for the dollar. We expect the pair to remain
range-bound within 1.2482-1.2540 in intra-day trade. Retail sales are due today
followed by NODX tomorrow. Both are not expected to inspire a break on either
side.
AUD/SGD – Choppy. Cross reteated from its recent high around 1.1750 back
to levels around the 1.17-figure. Momentum indicators show bearish intra-day
risks. Further slides towards the support level around 1.1670 could
happen. 1.1774 remains the barrier to guard upticks. SGD/MYR – Bearish
Risks. The cross
made modest recovery to around 2.5790 as we write early morning. MACD still
point south and we expect the cross to retain a heavy tone below 2.5830.
USD/MYR – Heavy. Pair hovered around 3.2230 this morning, buoyed by some profit-taking
this morning. Sentiments were cautious in the local equity markets with KLCI
down -0.1% at last sight. 3.2170 is the interim support for spot prices while
3.2390 has turned into a barrier to cap upticks. We expect some consolidation
today within the two-levels. Malaysia’s GDP and current account balance are due tomorrow. 1- month
NDF also edged higher to around 3.2280 from the recent low of 3.2218. Momentum
indicators show little bias on either side.
USD/CNY was fixed lower at 6.1640 (-0.0013), vs. previous 6.1653 (+2.0%
upper band limit: 6.2898; -2.0% lower band limit: 6.0431). CNY/MYR was fixed at
0.5203 (-0.0014). USD/CNY –Softer. USD/CNY traded lower to around 6.2260 in
line with the lower fixing. The yuan still trades in tandem with the regional
although further downsides may be guarded by 6.2177. Momentum indicators show
slight 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 keep the pair heavy while
dips could remain supported by the 6.2177-support.
1-Year CNY NDFs –Steady. The 1Y NDF drifted lower to around 6.2330, weighed by
the lower USD/CNY mid-point fixing. 6.2428 continues to be a strong barrier for
the pair. MACD shows increasing bearish momentum. Next support is seen at
3.2256.
USD/CNH – Heavy. Pair was little changed around 6.2270 though momentum is gaining to the
downsides. Dollar weakness to keep pair depressed towards the next support at
6.2186. 6.2335 is the barrier for intra-day trades. CNH still trades at a
discount to CNY but discount is narrowing, indicating a tentative restoration
of calm in the market.
USD/IDR – Onshore markets are closed for Waisak Day. I-month NDF slumped yesterday under the 11400-level,
closing at 11385. 16 May is the deadline for parties to build coalition to
secure the required numbers to nominate a candidate for President. At the
moment, the Presidential Election battle could be between Joko Widodo and
Prabowo Subianto. Both are required to nominate their running mate
(Vice-President) by tomorrow.
USD/PHP – Weighed. USD/PHP was still weighed by risk-on mood, last seen around 43.630. The
43.600-mark proves to be a strong support for the pair. We expect the pair to
remain pressured today as well, not helped the least by a lack of dollar
strength. Expect intra-day trades to remain within 43.600-43.830. Break of the
lower bound exposes the next at 43.394. Philippines have had 54.8mn worth of foreign equity inflows this week and
momentum is set to continue. That should keep the pair away from the
43.830-barrier. 1-month NDF edged only a tad higher to around 43.60 but still
within the familiar range, unlikely to breach the resistance at 43.75.
USD/THB – Consolidation. Pair waffled around 32.44 and pair is paring downside
momentum. 32.520 acts as a barrier for the pair. We see two-way risks for
intra-day trade. Dips around the 32.40 to remain shallow. We expect gyrations within
32.370-32.520 today.
Rates
Yields on local government bonds ended the session
lower. Fresh flow was seen from offshore parties across the yield curve as
yields after recent sell-off maybe attractive. At market close yields on 3 to
10-year MGS slipped by 3-7bps to 3.46%, 3.66%, 3.88% and 4.03% respectively.
Meanwhile at today’s auction, the MGS 4/33 garnered a bid-to-cover ratio of
2.883 times. The highest and lowest successful bid was 4.664% and 4.588%
respectively while the average yield was 4.639%. Post tender it was taken at
4.59% for MYR10m.
The IRS curve closed 1-3bps lower flatter mostly led
by lower UST yields, stronger MYR, and an influx of MGS offshore flows from 3
to 10 years. 5-year was traded at 3.975%. 3M KLIBOR added 1bp to 3.40%.
The credit market was very lacklustre as can be seen
on the thin volume traded today (less than MYR100m). Selective buying can be
seen especially on the slightly longer-dated GGs, possibly due to the
better-than-expected demand on the 20-year MGS auction which contributed to
some flattening on the longer ends. However, market tone remains cautious until
there is a clear catalyst to lead the market.
Indonesia
Belly to long end tenor benchmark series price escalates higher on
yesterday trading. IDR currency and Indonesia stock market were also
experiencing similar bull trend during the day as IDR currency appreciated by
91 points to Rp11,466.75 per USD while JCI index increased by 70 points to
4,991.64. Are investors betting on upcoming formation coalition? We would like
to take the risk in viewing that the rally in local money market and capital
market yesterday might be investor’s speculating that Jokowi’s vice president
candidate would meet market expectation. If the statement is rather true, than
we might be seeing buying happening in the bond market at least until the
Jokowi’s vice presidential candidate is revealed and might rally if the
announcement meets market expectation. Note that till date, Jokowi has gained
34.71% of coalition strength while Prabowo is just backed with 25.93%. Politic
dynamic would continue to occur until May 20 (President and Vice President
Candidate registration). 5-yr, 10-yr, 15-yr and 20-yr benchmark series yield
stood at 7.612% (-3.2bps), 7.988% (-8.0bps), 8.454% (-6.2bps) and 8.532%
(-7.3bps) while 2-yr yield shifted down to 7.327% (-1.4bps). Trading volume at
secondary market remains heavy with trading volume amounted Rp14,936 bn (vs
average per day trading volume of Rp7,602 bn). Top five trading occurred at the
benchmark series bond and 3-yr sukuk retail. FR0070 (10-yr benchmark series)
and FR0071 (15-yr benchmark series) was the most tradable bond during the day.
FR0070 total trading volume amounting Rp3,054 bn with 95x transaction frequency
and closed at 102.581 yielding 7.988% while FR0071 total trading volume
amounted Rp2,426 bn with 97x transaction frequency and closed at 104.543
yielding 8.454%.
Indonesia Deposit Insurance Corporation (LPS) increased the base deposit
rate by 25bps to 7.75% for commercial banks and 25bps to 10.25% for rural banks
(BPR). The increase occurred with a consideration of continues upward interest
rate trend in the banking industry interest rate trend and as a protection to
banking clients. The new rates will be effective from May 15th to
Sept 14th, 2014. With an increase in LPS base deposit rate, SBR001
investor would favour an increase in their third coupon payment (coupon period
of Agus – Oct 2014) with an additional increase of 25bps resulting in a 9.00%
coupon per annum. SBR001 can be purchased by Indonesia retail investors until
May 22nd, 2014.
On the corporate bond segment, trading volume was seen heavy amounting
Rp761 bn on yesterday’s trading (vs average per day trading volume of Rp750
bn). BBTN01CN2 (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 Rp160 bn and was last traded
at 84.00 yielding 10.7199%.
Rgds,
Maybank FX Research
Global Markets
Maybank
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.