FX
Global
Another subdued night devoid of significant data
releases gave EUR bears some reprieve. News that ECB might not ease further
in its policy meeting lifted the EUR/USD from its 11-month low to around
1.3190 this morning. The bounce is modest and awaits further confirmation
from perhaps German CPI, out later this session. The central bank had
mentioned that no action would be taken so soon unless inflation prints
indicate a significant move towards deflation. Look for the data release as
the main EUR swinger of the session.
Thereafter, focus should shift towards the latest
estimate of 2Q US GDP in NY session. Within Asia, Philippine also releases
its growth numbers and bullish expectations keep USD/PHP amid rate hike
expectations. There is also focus on Indonesia’s President-elect Joko
Widodo who is expected to announce his cabinet line-up by early Oct.
Elsewhere this morning, Australia releases its 2Q CAPEX report. |
Almost all Asian currencies are on the climb and we
expect little in the way of Asian bulls today. Any unexpected dips to remain
shallow.
G7 Currencies
DXY – Correction. The
DXY index may have traded lower on Wed but the index has not lost its buoyant tone,
still underpinned by support around 82.35. Prices gained bearish momentum and a
break of the support exposes the next technical support around the 82-figure,
which coincides with the intra-day ichimoku cloud. Conditions are still a tad
overbought and could slow further bids. Pullbacks are nonetheless likely
tentative. The second estimate of 2Q GDP is due today and could be
watched for any bullish extension.
USD/JPY – Cautious. USD/JPY slipped below the 104-figure yesterday and has remained there
even up to this morning on the back of peckish global equities. Pair was
sighted around 103.85 currently with intraday MACD still showing mild bearish
momentum. However, dips are likely to be shallow given that the risks are still
to the upside as the 18-DMA continues to lie above the 40-DMA. Pair is likely
to trade cautious today ahead of data out tomorrow (CPI, jobless rate and
industrial output) and on the back of weakness in the equity market. Look for
103.43 to remain supportive today.
AUD/USD – Upticks Checked. AUD/USD bounced above the
0.9330-barrier and hovered thereabouts, taking advantage of the dollar retreat
overnight. Next barrier is seen at 0.9360 and bias is to the upside. RSI also
indicates some room for upsides though limited. AUD bounced to a high of 0.9372
on 2Q CAPEX report with the headline surpassing expectations of +0.3%q/q with a
print of +1.1%. Pair has since retreated towards 0.9360-barrier. We continue to
expect upticks above this level to remain checked by selling interest. Support seen
at 0.9330 for today while 0.9390 should cap upmove.
EUR/USD – Eyes German CPI. EUR bulls made multiple attempts at the 1.3208-barrier
and last seen thereabouts still. Next resistance is seen around 1.3235-barrier
ahead of the 1.33-figure. German CPI would be a key indicator to watch for
further cue on ECB action on Sep. US 2Q GDP estimate thereafter should also be
watched for dollar moves that could swing the EUR/USD. Support is still at
1.3160 and a softer German CPI could could take prices towards the next support
around 1.3105 (Sep 2013 low).
EUR/SGD – Awaiting further cues. The cross tracked the EUR higher and steadied around 1.6460 this
morning. This pair is still unable to shake off the bearish pressure and we see
a move above the 1.6486-barrier required for further bullish extension. Barrier
for today is seen at 1.6510. MACD forest on the 4-hourly chart flags a
tentative upside bias in the cross but so far price moves signal that bids are
still resisted. We await German CPI today for further cues followed by 2Q GDP
out of the US. Next support is still at 1.6424 (recent low) ahead of the
1.6306.
Regional FX
The SGD NEER trades 0.19% above the implied mid-point
of 1.2490 with the top end estimated at 1.2240 and the floor at 1.2739.
USD/SGD – Downside Risks. After bouncing higher towards 1.2481 overnight, the USD/SGD is on the
slide this morning as risk appetite recovered. Pair is sighted around 1.2466
currently with risks now titled to the downside given the cross-over of the
18-DMA below the 40-DMA overnight. With our support at 1.2472 broken this
morning, next support is now seen around 1.2435 (15 Aug low) should downside
pressures be sustained. Topside is likely to be capped by above price action
today at around 1.2481 ahead of 1.2500.
AUD/SGD – Supported. AUD/SGD took out our barrier at 1.1640 overnight, but continues to
bounce higher this morning on the back of Australia 2Q capex print. Cross is
hovering around 1.1668 currently as a result. On the back of a resurgent AUD,
further upside is likely with immediate barrier at 1.1683 ahead of the next at
1.1718, while 1.1590 should remain supportive. SGD/MYR – Wobbly.
SGD/MYR broke out below its recent tight trading range of 2.5280-2.5400
yesterday and is on the move towards the 2.5200-handle. Cross is sighted
currently around 2.5220 with intraday MACD forest is hugging close to the zero
line from below though RSI is indicating oversold conditions. Rangy trades are
likely today with our former support at 2.5820 now turning resistance and new
support around 2.5176.
USD/MYR – Bearish. USD/MYR broke below recent low of 3.1471 to waffle around
3.1460 this morning, weighed by Asian strength. Selling interest was spurred by
foreign inflows into the domestic bond markets which were seen throughout the
day. Our traders expect good interest in the auction on the 10yr retap GII524s
today with real money involvement. The FX move has exposed the next
support around 3.1232. 1-month NDF also recovering from the overnight pullback,
weighed by the dollar retreat s well. Next support is seen at 3.1277.
USD/CNY was fixed lower at 6.1638 (-0.0020), vs. previous 6.1658 (+2.0%
upper band limit: 6.2896; -2.0% lower band limit: 6.0429). CNY/MYR was fixed at
0.5109 (-0.0017). USD/CNY – Weighed. Pair has retreated to
around 6.1420, in line with most of the USD/AXJs. Bullish momentum has pared
for this pair and risks are to the downside now, albeit within range
6.1292-6.1700. Interim support is seen around 6.1348. Targeted stimulus
continues as PBOC lowered relending rates by 1 ppt for some rural banks in poor
areas and granted CNY 20bn re-lending quota to boost rural credit on 27 Aug.
1-Year CNY NDFs – Bearish risk. The NDF waffled around 6.2220 for much of overnight trade and was
still thereabouts in early Asia. This pair is capped by the ichimoku cloud, and
next barrier is seen around 6.2307. Risks are still to the downside according
to the 4-hourly chart. Pullbacks to meet support at 6.2126. USD/CNH – Rangy.
USD/CNH was on the uptick this morning and hardly recovering from southbound
drift seen overnight. Pair last printed 6.1443 and remained bias to the
downside towards next support around 6.1426 ahead of the next at 6.1375. CNH
trades at a discount to CNY now.
USD/IDR – Upticks.
USD/IDR slipped below the 11700-handle yesterday and continues to trade below
that level at around 11687 currently. Intraday MACD is showing increasing
bearish momentum, albeit mild, though risks are still to the upside given that
the 18-DMA lies above the 40-DMA. Meanwhile, foreign funds bought a net
USD22.87mn in equities yesterday and added a net IDR1.84tn to their outstanding
bond holdings on 25 and 26 Aug (latest data available). Continued improving
risk appetite today should cap upside for the pair today. Month-end dollar
demand should keep the pair supported ahead. Moreover, upside risks remain as
there remains concerns about the president-elect’s cabinet choices, his ability
to build a parliamentary majority and most importantly, his determination to
deal with the problems facing the economy, particularly fuel price subsidies
and nationalistic policies. Thus any downside could be limited for now with
11600 still providing support today. Topside remains guarded by 11750. The
1-month NDF is wobbling this morning, currently sighted around 11728 this
morning. Intraday momentum indicators are still pointing to the downside,
though risks have now flipped to the downside with the cross-over of the 18-DMA
below the 40-DMA this morning. After two straight days of being fixed higher,
the JISDOR was set lower at 11708 on Wed. The central bank expects full-year
current account deficit (CAD) to come in around 3.2% of GDP or USD27bn,
slightly lower than 2013’s 3.34% of GDP. As well, the central bank expects 3Q
CAD to come in around USD8bn, and inflation forecasted around 3.7% y/y in Aug.
USD/PHP – Gapping Lower.
USD/PHP gapped lower at the opening to 43.636 this morning and continues to
edge lower to around 54.550 as 2Q14 GDP outperformed expectations. out this
morning to around . Also helping is expectation of further risk appetite like
yesterday where foreign funds purchased a net 27.3mn in equities. Intraday MACD
is showing increasing mild bearish momentum, though RSI is indicating oversold
conditions. With the pair now inching towards our support at 43.528, a firm
break here would expose the next at 43.463 (76.4% Fibo retracement of the
Jul-Aug upswing). Resistance today is seen around 44.750. The 1-month NDF slid
lower this morning to around 43.610 after edging higher yesterday. Four-hourly
MACD is still showing mild bearish momentum ahead, though RSI is indicating
oversold conditions. 2Q14 GDP outperformed expectations, rising 6.4% y/y
beating estimates of 6.1% and our economic team’s 6.3%.
USD/THB – Downside Risks. USD/THB is waffling this morning with the pair sliding lower currently
to around 31.890. Momentum indicators continue to show little directional cues
ahead, though the RSI is inching closer to oversold territory. Risks though
have flipped to the downside yesterday with the negative cross-over of the
18-DMA and the 40-DMA. Meanwhile, continued foreign buying of Thai assets, like
they did yesterday of a net THB0.42bn and THb0.29bn in equities and debt,
should be supportive of the THB again. Two-way trades within 31.865-32.050
remains likely today, though with a downward tilt. We need to see a firm break
in either direction for moves towards a wider trading range of 31.740-32.245.
Rates
In the local government bond market, foreign inflows
were seen throughout the day with short-term bills and bonds up to the belly of
the curve were taken 1-4bps lower. Market will see the 10y retap on GII 5/24 on
Thursday. We a pretty good demand with onshore real money participation.
In the IRS market, rates declined by 1-6bps on the
back of rally in bills and MGS. Heavy receiving interests were seen with IRS
curve being brought lower and flatter. Any decent bids came out were sold down
by the dealers. In contrast, 3M KLIBOR stayed firmly on its upward trajectory,
climbing another 1bp to 3.70%. 2y IRS was traded at 3.83%, 4y at 3.98% and 5y
at 4.03%.
The PDS market was better bid on some financial papers
with Public Bank 2019 (senior) traded lower to 4.10% from 4.14%. Thin activity
was seen on GG even though 2-way quotes were plentiful. Rantau 2019 traded to a
low of 4.104% before closing back up to 4.12%. There was some bargain hunting
down the curve with Kesturi 28 traded lower by 6bps and Sarawak Energy 2024
eased 4bps. Overall market sentiment remained on better buying underpinned by
the bullish stance on the govies late in the afternoon.
Singapore
It was another quiet day in the SGS market with both
IRS and SGS prices hovered within a tight range in light trading. As IRS inched
lower to the year's low, SGS prices were marked high but capped by profit
taking activities. The results of the 2y SGS benchmark auction came in at 0.51%
cutoff with muted market reaction post auction.
Asian credit started off on a bid note with the new
issues of ORIEAS 19 and 24 tightening almost 5-10bps from the break. We saw
real money adding on risk when they could not get enough allocation from the
primary book. Link REIT started off with a buying bias but profit taking set in
and closed down back to print level. Some selling was seen on some HY papers
like Evergrande and GZRFPR following worse than expected financials. However,
the overall tone seemed to be on a buying bias. New book opened was only the
Lend Lease Retail Investment which is looking to print a 7y SGD with price
guidance around 3.4%.
Indonesia
Indonesia bond market closed lower yesterday amid
Rupiah appreciation. There were minimum market sentiments moving the market
yesterday. Our economist sees August CPI would creep down to 3.86% yoy from
4.53% yoy in July 2014 with prices of goods and services tend to decline and
stabilized as the condition post Ramadan and Eid celebrations normalcy. July
trade balance is expected to come in surplus of US$0.07 bn as a result of
falling imports performance in the month of July which is caused by seasonal
factors, namely the existence of a long holiday Eid celebration. Imports may
fall to US$ 14.80 billion in July 2014 compared to US$ 15.72 billion in June
2014 while exports will decline to US$ 14.87 billion in July 2014 compared to
June 2014, which reached US$ 15.42 billion. 5-yr, 10-yr, 15-yr and 20-yr
benchmark series yield stood at 8.026% (+1.0bps), 8.293% (+2.1bps), 8.643%
(+0.5bps) and 8.891% (-0.4bps) while 2-yr yield shifts down to 7.639%
(-0.4bps). Trading volume was noted almost doubled amounting Rp18,466 bn from
Rp9,514 tn with FR0068 (20-yr benchmark series) and VR0020 as the most tradable
bond. FR0068 total trading volume amounted Rp4,666 bn with 185x transaction
frequency and closed at 95.245 yielding 8.891% while VR0020 total trading
volume amounted Rp2,084 bn with 8x.
Indonesia Debt Management Directorate General (DMO)
release bond ownership data as of Aug 26th, 2014 which showed a significant
purchase by foreigners as they have added Rp6.06 tn between Aug 19 – 22. The
significant foreign inflows occurred during the conventional bond auction and
aftermath. Since the purchase was done mostly through primary market, bond
prices at the secondary market fail to surge. Foreign ownership now stood at
its new peak at Rp430.18 tn (36.75% of total outstanding of government bond).
During the conventional auction (Aug 19), banks bought Rp9.42 tn worth of
government bond followed by foreigner amounting Rp2.56 tn, central bank and
insurance amounting Rp1.35 tn and Rp1.12 tn respectively.
Corporate bond traded heavy amounting Rp678 bn (vs
average per day (Jan – Jul) trading volume of Rp684 bn). PNBN04 (Bank Panin III
Year 2009; Rating: idAA)) was the top actively traded corporate bond with total
trading volume amounting Rp200 bn yielding 11.316%.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.