FX
Global
·
US
ISM non-mfg comp
came in firmer at 55.2 for Apr compared to the previous 53.1. The better data
gave a modest lift to indices but overall trading interest was lackluster with
little moves in the FX space, not helped the least by the UK holiday. ECB
Executive Board Member Yves Mersch said that he sees neither inflationary risk
nor deflationary risk over the medium term, specially noting the difference
between the risk of a prolonged low inflation and that of a deflation. EUR did
not react much to his words and steadied around 1.3880 into Asia morning.
·
Australia
released a narrower trade surplus of AUD731mn for Mar compared to AUD1257 mn
previously (revised). RBA makes its policy decision at mid-day. Majority does
not expect a change but the central bank may attempt to jawbone the AUD lower
after the softer 1Q CPI release.
·
In
Asia, Japan is still away for Golden Week and markets resume operations
tomorrow. Onshore markets in Thailand return from a long break. This session
could be another quiet one with most regional currencies likely to maintain a
holding a pattern ahead of policy decisions by BI, BNM and BSP tomorrow. Hence,
expect USD/AXJs to keep within familiar ranges. KRW is in the lead as we write.
US trade balance tonight will also offer some cues on global growth momentum.
G7 Currencies
·
DXY – Rangy. The greenback was little changed throughout Mon, still hovering around
the 79.50-mark as we write. Tentative support is seen at 79.40 ahead of
the key support at 79.268 for the week. Intra-day indicators show an increase
in bullish momentum. A minor resistance level is penciled in at 79.582 ahead of
the next barrier at 79.688. The US trade balance due tonight could provide more
impetus to the index.
·
USD/JPY – Stuck in Range. USD/JPY hit the floor around 101.92 before reversing
higher to trade around 102.10 as we write. Momentum is flat now and we expect
two-way risks within familiar range of 101.96-103.00. The current tight swivels
indicate uncertainties over the Russian-Ukraine conflict. Any mobilization
of armies by Moscow could drag the pair towards the 101.66-support.
·
AUD/USD
– Sideways.
Pair consolidated within 0.9250-0.9300 on Mon, last sighted at 0.9280. MACD
on the 4-hourly chart tilts up, perhaps in anticipation of a better trade
surplus. We are wary of more jawboning by the RBA at mid-day even as they are
expected to hold rate steady. We still maintain our view that price needs to
sustain a move above the 0.9319-barrier for more upsides. Otherwise, we expect
the pair to remain in sideway gyrations within 0.9200-0.9319. Break of the
lower bound risks a deeper pullback towards 0.9154.
·
EUR/USD – Resilient. The EUR/USD pairing hovered around 1.3880 for much of
Mon. Next barrier is seen at 1.3914. Momentum indicators are flat now but price
actions have shown resilience. Support is seen at 1.3860 and 1.3847. An ability
to sustain above the latter support level at 1.3847 would allow bulls to
consolidate before the next upmove. We expect the intra-week action to be
confined within 1.3770-1.3930.
Regional FX
·
The SGD NEER trades 0.65% above the
implied mid-point of 1.2584 with the top end estimated at 1.2334 and the floor
at 1.2834. USD/SGD – Creeping lower. The USD/SGD is
currently hovering around the key 1.2500-figure this morning. Momentum remains
mildly bullish with the RSI edging closer to oversold conditions at around 34.
We need to see a sustained break of the 1.2500-figure for bears to gain control
and expose the next support at 1.2451 (9-Apr low). However, the grind lower
could be slow because of the Ukraine tensions. Immediate barrier is at 1.2506
ahead of 1.2518 today.
·
Singapore’s PMI rose the highest since Oct
2013 to 51.1 in Apr from Mar’s 50.8, driven by higher new orders and new
exports orders as well as further growth in production output and inventory.
However, electronics PMI slipped to 50.4 in Apr from 51.6 in Mar, though still
in expansion mode, suggesting the sector continues to lag the pick-up in the
electronics cycle.
·
AUD/SGD – Cautious rebound.
After grinding lower for the past week or so, cross is rebounding around 1.1606
with momentum flipping and intraday MACD forest indicating mild bullishness
this morning. Still upticks are likely to be cautious ahead of RBA with bids
today likely to be curbed by 1.1650, while 1.1590 nearby guard downsides before
1.1530. SGD/MYR – Lower. Cross is on the retreat this
morning on the back of relative MYR strength, though risks are still to the
upside with four-hourly MACD forest still indicating bullish momentum ahead.
This suggests that downticks could be limited today. With the cross hovering
lower around 2.6036 currently, support is seen around 2.6019 nearby before
2.5990. 2.6066 continue to guard topsides.
·
USD/MYR – Bearish Tilt. USD/MYR opened at 3.2540 and
steadied thereabouts. This pairing has been grinding lower in the past few
sessions, helped by the dip in US treasury yields which spurred bids in local
bond markets. Intra-day momentum indicators show bearish tilt. Next support is
seen at 3.2495. Break here opens the way towards 3.2362. 3.2770 caps topsides.
The 1-month NDF steadied around 3.2615 for much of overnight session into Asia
this morning. A failure to break under the 3.2593 suggest more range-trading
within 3.2593-3.2796.
·
USD/CNY
was fixed higher at 6.1565 (+0.0005), vs. previous 6.1560 (+2.0% upper band
limit: 6.2821; -2.0% lower band limit: 6.0358). CNY/MYR was fixed at 0.5252 (-0.0005).
·
USD/CNY – Downside risks. Pair ended lower 6.2449 on
Mon, weighed by corporate yuan buying. Pair is still on the downtick despite
the marginally higher fixing this morning, on its way towards the next support
at 6.2305. Intra-day indicators flag bearish risks. 1-Year CNY NDFs – Focus
on the Downside. The pair has broken the 6.2358-support and on its way
lower towards next support at 6.2154. Risks are to the downside with barrier
now seen at 6.2428.
·
China’s
local
officials contemplate on asset sales to curb provincial and municipal debt as
the top pushes for more competition amongst SOEs.
·
USD/CNH
– Bearish
Risks. USD/CNH slipped on Mon and was sticky around the 6.2450-support. The
18-SMA and 40-SMA made a negative cross-over on the 4-hourly chart yesterday
and we see further downside risks towards 6.2240. 6.2361 could slow offers in
the interim. 6.2550 is the resistance for the pair.
·
USD/IDR – Rangy. The
USD/IDR tested the key 11500-support this morning at 11497 but quickly
rebounded to around 11520 currently. Intraday MACD forest continues to indicate
bearish momentum with the the pair hovering a tad off oversold conditions.
Support for the IDR could also come from continued purchase of equities by
foreign funds (who bought a net USD26.44mn yesterday). With growth
disappointing, downsides could be limited today. For bears to gain control, a
sustained break of the 11500-level is needed to expose 11475 as next support.
Otherwise, pair should trade range-bound within 11500/11584 today. The 1-month
NDF is little changed this morning at 11551 though risks are still to the
downside. The JISDOR was fixed lower at 11511 yesterday compared to Fri’s
11537. Indonesia’s 1Q14 GDP market expectations of 5.59%,
due to weak exports (-0.78% y/y in 1Q vs. 4Q’s 7.40%). Private consumption and
investment growth remained healthy, rising 5.61% and 5.13% y/y in 1Q vs. 4Q’s
5.25% and 4.37%. Despite the weaker 1Q print, our economic team continues to
expect full-year GDP to come in at 5.6% iin 2014.
·
USD/PHP – Downticks. The USD/PHP
continues on its retreat, hovering lower at 44.390 this morning. With momentum
bearish and pair close to oversold conditions, support at 44.368 is at risk. A
break of the latter should expose the next support at 44.279. Immediate barrier
is seen at 44.421 ahead of 44.492 today. 1-month NDF is inching lower again,
hovering around 44.410 with risks still to the downside.
·
USD/THB – Tighter range.
Onshore markets re-opened today after a long weekend with the USD/THB choppy.
Pair is currently hovering around 32.350, little changed from yesterday,
despite dollar weakness overnight. Political tensions continue to simmer with
rulings of the Constitutional Court over the Thawil case (expected 7 May) and
that of the NACC on whether to charge PM Yingluck for dereliction of duty over
the rice case (expected 8 or 13 May) expected anytime soon. USD/THB is likely
to remain choppy as a result and has been trading in a tight range between
32.310/32.450 recently. We continue to expect the pair to trade in that range
for the time being. Next hurdle is likely at 32.480 and support at 32.137.
Rates
·
Yields on local government bonds ended the session
lower led by locals buying. Market opened firmer in response to dip in US
treasury yields. Gradual strengthening of MYR to 3.2520 from 3.2640 at the
opening further buoyed market sentiment and boosted buying momentum. At market
close, 5, 7 and 10-year benchmark MGS ended lower by 1-4bps at 3.56%, 3.88% and
4.01% respectively in a fairly active market. Meanwhile, good buying interest
was seen on 5 to 15-year GIIs due to attractive spreads over MGS.
·
In relatively quiet trading, the IRS curve
bull-flattened on the back of stronger MGS and UST markets. There were no
trades reported with the curve ended circa 1-5bps lower.
·
Volume was thin on the credit front. Market interest
seemed to be one-sided on the high grades like government guaranteed and AAA
credit names. Bids are shown across the tenors but no offers were found. We
hope to see more directions after the new Aman Sukuk is priced.
Indonesia
·
Indonesia economic growth in Q1/2014 posted 5.21%
y-o-y, slowing from 5.72% y-o-y in Q4/2014, driven by contracting exports and
imports. Furthermore, export contraction of -0.78% y-o-y in Q1 2014 is due to
the slow recovery of the global economy that has an impact on slowing global
demand. The export slowdown is also the impact of government policy which ban
of the raw minerals export since the beginning of this year. Meanwhile,
domestic consumption is still showing a positive trend which grew 5.61% y-o-y in
Q1 2014, an increase compared to 5.25% y-o-y in Q4 2014. Indonesia's economic
growth in Q1 2014 is also supported by the growth of investment which grew
5.13% y-o-y, up from 4.37% y-o-y in Q4 2013. On the other hand, government
spending grew only 3.58% y-o-y, down from Q4 2013, which grew 6.45% y-o-y.
Based on the industry, Indonesia's economic
was slowing in Q12014 mainly due to
the slowdown in the mining sector, manufacturing
sector, and the financial sector.
·
Indonesia bond market booked gains amid GDP number
missed economist consensus. 5-yr, 10-yr, 15-yr and 20-yr benchmark series yield
closed at 7.636% (+0.1bps), 7.961% (-1.6bps), 8.438% (+0.3bps) and 8.551%
(-0.6bps) while 2-yr yield shifted up to 7.353% (-1.9bps). Trading volume at
secondary market was noted amounted Rp6,333 bn. FR0069 (5-yr benchmark series)
and SPN12140731 (3-mo) was the most tradable bond during the day. FR0069 total
trading volume amounting Rp1,039 bn with 17x transaction frequency and closed
at 100.961 yielding 7.636% while SPN12140731 total trading volume was recorded
amounted Rp1,000 bn with 6x transaction frequency and closed at 98.834 yielding
5.126%.
·
DMO will conduct Sukuk auction with indicative target
issuance of Rp1.5 tn. Four series to be auctioned this week are SPN-S07112014
(Coupon: discounted; Maturity: 7 Nov 2014), PBS003 (Coupon: 6.000%; Maturity:
15 Jan 2027), PBS005 (Coupon: 6.750%; Maturity: 15 Mar 2043) and PBS006
(Coupon: 8.250%; Maturity: 15 Sept 2020). Our view on the indicative yield for certain
series as follows PBS003 (range: 8.600% – 8.750%), PBS005 (range: 8.800% –
8.950%) and PBS006 (range: 8.000% – 8.150%).
·
On the corporate bond segment, trading volume continue
being thin amounting Rp329 bn (vs average per day trading volume of Rp750 bn).
BNGA01ACN2 (Shelf registration I Bank CIMB Niaga Phase II Year 2013; A serial
bond; Maturity date: 24 Dec 2016; Rating: idAAA) was the top actively traded
corporate bond yesterday with total trading volume amounting Rp73 bn and was
last traded at 99.54 yielding 9.072%..
Rgds,
Maybank FX Research
Global Markets
Maybank
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