FX
Global
The focus of the night was not in the US but rather in Ukraine where a
Malaysian Airlines plane was shot down. NY stock indices dived with more the
1% of losses clocked by S&P and NASDAQ. DJI fared little better, down
-0.9%. Flight to safety began in fervent with JPY back to around the
101-figure, at the stronger end of the range that has held since the last
quarter. Treasuries also gained with 10-year yields lowered to trade around
2.45% by early Asia.
Earlier in the session, data was mixed. Housing starts in Jun
underwhelmed with a print of 893K vs. prev. 985K (also revised lower).
Initial claims for the week that ends on 15 Jul was a tad lower than the
previous week at 302K. Philadelphia Fed Business outlook improved to
23.9 for Jul compared to 17.8 previously. |
As a Malaysian investigation team is on its way to Ukraine, concerns
over heightening tensions in Ukrain could weigh in Asia. Nikkei was down
-1.5%. Kospi was also -0.6% lower at last sight. Negative sentiments, not
helped the least by news of default in China’s Huatong Road & Bridge, will
keep USD/AXJs buoyant in the region especially with little other cues or data
to distract investors.
G7 Currencies
|
DXY – Bullish Tilt. Market jitters kept the greenback buoyant
and was last seen around 80.55. As markets take in pictures of what was left
of MH17, demand for safety should cushion downsides and keep this index well
above the 80.42-support level. Next barrier is pencilled in at 80.681 though
some resistance is detected at the 80.60-level. There are fewer data of note
– only the leading index for Jun and the preliminary University of Michigan
Confidence index for Jul.
USD/JPY – Supported. USD/JPY is correcting after edging to low of 101.09
on deteriorating risk sentiments. Pair is rebounding at around 101.24 at last
sight with intraday MACD showing increasing bearish momentum though RSI is
indicating close to overstretched conditions. With our support at 101.30
broken, new support is seen at 101.07 before 100.77. 101.76 remains the
barrier to overcome today.
AUD/USD – Heavy. AUD/USD peaked into New York session and reversed lower towards 0.9340
as we write. Soured risk sentiments keep the pair on downside pressure and
intra-day chart shows little momentum at this point. The pair is revisiting
recent low of 0.9330 which could be a tough technical support to break for
the bears. Momentum is also lacking. Expect dips to remain support though
risk aversion could keep the pair heavy. Upticks to meet barrier at 0.9370.
Australia became the first country to abolish the carbon tax, amid protests
from the Labour and Greens party.
EUR/USD –Sideways. EUR/USD swivelled tin narrow range for much of the
last session and was last seen around 1.3520. This pair has lost much of its
bearish momentum and downdrift could be gentler. With the 18-SMA increasingly
diverging from the 40-SMA, we reckon that risks are still to the downside
towards next support at 1.3500. Upticks to be resisted at first at 1.3542.
Ventures above this level are unlikely but unexpected bids will met next
resistance at 1.3557.
EUR/SGD – Tentative Relief for the Bears. EUR/SGD bounced in European session but bids were
met by strong offers which led the cross lower to around the 1.68-figure.
Intra-day signals indicate little momentum on either side at this point.
Still, price patterns show that risks are still tilted to the downside, not least
of all weighed by the bearish cloud. Upticks are now limited by the
1.6829-barrier while a break of support at 1.6779 (17 Jul low) could lead the
cross towards the next support at 1.6762. |
Regional FX
The SGD NEER trades 0.68% above the implied mid-point of 1.2514. The top
end is estimated at 1.22655 and the floor at 1.2762.
USD/SGD – Inching Lower. USD/SGD is edging lower this morning, helped
probably by safe-haven flows. Pair is currently sighted around 1.2427 with
intraday MACD forest just a tad off the zero line. 1.2391 should limit downside
today while barrier remains around 1.2450.
AUD/SGD – Rangy. AUD/SGD is inching lower this morning to around 1.1608 on the
back of AUD weakness, taking out of support at 1.1620. With intraday MACD
forest continuing to hug the zero line closely, which suggested little
directional cues ahead, cross is likely to see new support at around 1.1590 and
immediate barrier at 1.1640 today. SGD/MYR – Offers in Range.
SGD/MYR is on the rebound, hovering around 2.5668 currently on the back of MYR
weakness. There is still little directional clarity though as indicated by
intraday MACD forest. Price action today should see the cross trade at the
upper end of the current 2.5564-2.5771 trading range.
USD/MYR – Tilted to the Downside. USD/MYR gapped up this morning on risk-off before
easing lower towards the 3.19-figure. Upside momentum is decelerating at
this point as bids are repeatedly met with selling interests. On the 4-hourly
chart, a thick ichimoku cloud hovers ahead and could keep pressure to the
downside. 3.1748 marks the support for downside for now. Bids towards the
3.20 are likely to be short-lived. The 1-month NDF retreated to around 3.1950
following its overnight upmove to a high of 3.2070. Yesterday, Second Finance Minister
Ahmad Husni Hanadzlah told the press that Malaysia will maintain a growth of
5-5.5% until 2020. Current debt-to-GDP ratio is 54.7% and the country will
strengthen its financial position to achieve a budget deficit-to GDP ratio of
3% next year.
USD/CNY
was fixed at 6.1568 (+0.0004), vs. previous 6.1564 (+2.0% upper band limit:
6.2824; -2.0% lower band limit: 6.0361). CNY/MYR was fixed at 0.5158 (+0.0008).
USD/CNY – Directionless. Spot was directionless, last seen around 6.2040. Momentum is slightly
bullish, albeit decelerating. Support is seen around 6.1950, which marks
the lower bound of the current range that spot is trading. Pair is likely to
remain suspended within the band for now and we watch for a break on either
side for clearer direction indication.
1-Year CNY NDFs – Buoyant. NDF hovered around 6.2615 this morning, underpinned
by bullish cloud. There is not much momentum on either side on the MACD and
recent price patterns suggest side way trades within 6.2577-6.2625. A break on
either side widens the range-trading to 6.2542-6.2672. USD/CNH – Downside
Pressure. USD/CNH was still on the downtick this morning but dips are
still supported by the 6.20-figure. A clearance here is needed for bears to gun
for the next target at 6.1950. Momentum is still bearish. CNH now trades at a
premium to onshore spot.
USD/IDR – Rangy. USD/IDR is inching higher this morning underpinned by dollar strength.
Also likely underpinning the pair’s move higher is the possibility of an
extended period of political uncertainty over the presidential results as well
as concerns about the country’s twin deficits. Foreigners though continue to
add to their equity holdings with a net USD45.32mn yesterday, likely
positioning themselves for a Jokowi victory. Pair is currently sighted around
11711 with bullish momentum still on the wane as indicated by intraday MACD.
Ahead of the official results on 22 Jul, pair should trade range-bound within
11500-12000 today still. The 1-month NDF is inching lower this morning,
hovering around 11768 with intraday MACD indicating waning bearish momentum.
After two consecutive higher fixing, the JISDOR was set lower at 11668
yesterday compared to Wed’s 11805.
USD/PHP – Bids in Range. USD/PHP is on the rebound this morning underpinned by
global risk aversion. Pair continues to trade within the 32.185-32.855 range
with the pair last sighted around 43.635. Intraday MACD forest is hugging
close to the zero line this morning. 43.855 should continue to cap upside,
while 43.185 continues should limit downsides today. After hitting a recent
high of 43.800 yesterday, 1-month NDF correcting this morning, hovering around
43.650 with intraday MACD forest at the zero line.
USD/THB – Wobbly. USD/THB continues to trade around the middle of its current 32.050-32.310
range. Pair currently wobbly, hovering around 32.190 currently with intraday
MACD indicating increasing bullish momentum. Foreigners remained sanguine about
Thailand, buying a net THB1.86bn and THB9.56bn in equities and debt yesterday,
which could help cap upside. Topside continues to be guarded by 32.310 and
support remains around 32.050 today. The VAT was cut to 6.3% from 7% for 1 year
from 1 Oct. Including municipal tax, the total VAT rate will remain at 7%. This
however will rise to 10% after Sep next year when the rate cut ends (9% VAT +
1% municipal tax).
Rates
The MGS curve bull flattened further today on the back of foreign flows
into the 10 and 30-year MGS benchmarks. The 10, 20 and 30-year benchmarks
dropped 4-6bps lower from last traded. Afternoon session saw buying on the
Islamic GII as the auction size on the 15-year reopening came in smaller than
expected at MYR1.5b. WI was last seen quoted at the 4.46/43% level with nothing
done.
The IRS curve came under pressure today with bond prices marching ahead.
Offshore levels collapsed to the similar levels as onshore. Some offshore
parties were cutting their paid positions amidst lower global bond yields. At
current levels, players might look to turn paid IRS once the bond sentiments
fade. 3M KLIBOR stayed unchanged at 3.58%.
In the PDS market, GG and AAA papers in the credit market were bid up in
line with the strong govvy market. Danainfra 4/21 was taken at 4.24%, 1bp
higher than the printed yield of the new Danainfra 7 years. We might see more
buyers coming in, most probably fund managers and insurance companies that are
still cash rich and underinvested.
Singapore
In quiet trading, SGD IRS curve opened flatter with the front end yields
higher by 2bps and the long end lower by 1bp. However, it steepened back by
2bps at market close. On the other hand, SGS volumes were fairly low with a
biddish tone as bond swap spreads stayed compressed. We continue to like the
SGS market against the IRS or UST.
In the credit market, Singapore's Housing Development Board is issuing a
10-years SGD paper at 3.10%. We saw good real money interest in this issue.
Meanwhile, we noted some selling on Yanlord, and Olam as players deemed the
papers to be expensive.
Indonesia
Indonesia bond market continues moving higher supported by positive news
that Jokowis would strengthen coordination between fiscal and monetary policy
to manage IDR volatility. As we know, as of yesterday, Jokowi secured 51.41%
while Prabowo secured 48.59% of the 63.96 mn votes counted according to KPU
real counting. Jokowi sees no subsidizes fuel price increase this year.
Foreigners were seen bidding in the market while local names were seen on the
sell side. As we mentioned in our daily report early of this week, market would
move in sideway pattern. If Jokowi continue to lead in KPU real count than we
would see Indonesia bond market book a slight gain this week. 5-yr, 10-yr,
15-yr and 20-yr benchmark series yield stood at 7.824% (-3.1bps), 8.100%
(-4.6bps), 8.567% (-5.0bps) and 8.745% (-6.3bps) while 2-yr yield shifts up to
7.455% (+3.3bps). Trading volume remains this as it was noted amounting Rp6,129
bn yesterday. FR0068 (20-yr benchmark series) and FR0071 (15-yr benchmark
series) was the most tradable bond during the day. FR0068 total trading volume
amounted Rp1,795 bn with 104x transaction frequency and closed at 96.540
yielding 8.745% while FR0071 total trading volume amounted Rp726 bn with 43x
transaction frequency and closed at 103.554 yielding 8.567%.
On the corporate bond segment, trading volume remains thin with total
volume amounting Rp428 bn yesterday (vs average per day trading volume of Rp750
bn). BNLI01ACN1 (Shelf registration I Bank Permata Phase I Year 2013; A serial
bond; Rating: idAA+) was the top actively traded corporate bond with total
trading volume amounting Rp120 bn and was last traded at 100.98 yielding
7.6681%.
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