FX
Global
Risk appetite was poor amid the current standoff between Ukraine and
Russia. DJI, S&P and NASDAQ closed around 0.5% lower each. Safe havens
are bid with USD/JPY reversing Asian gains and UST 10-year yields slipped
towards the 2.4% by the end of NY and just extended its fall to low of
2.3835% after US President Obama authorized air strikes on Iraq.
EUR/USD retained a heavy tone throughout Thu and dipped below the
1.3550-mark after the rate hold decision by ECB. President Draghi was
confident that a cheaper EUR could boost exports. Impact of the geopolitical
risks between Russia and Ukraine is still under assessment. BOE also kept
policy rate steady, adding to the bearish tone in the GBP. Softer tone in the
majors overnight underpinned the dollar DXY and the index was last seen
around 81.55 this Asia morning.
China releases its Jul trade numbers today around 1000 (HKT). The
print is normally an AUD mover but at this point, any lift from the trade
numbers is likely only tentative. The currency was last seen around 0.9260.
Thereafter, BOJ deliberates on its monetary policy. No action is expected.
RBA’s quarterly Statement on Monetary Policy was in and added more bearish
outlook to the AUD with lower growth and inflation forecasts. |
ADXY was last seen around 115.80, testing support around 115.8335 (Jul
low). AXJ has been succumbing to the dollar strength in the past few sessions
and could remain on the backfoot. Nikkei is down -1.2% and Kospi is -0.4%
lower. We doubt that China’s Jul trade numbers is able to lift the gloom but
could still be a leading indicator of global demand for the rest of the region.
Otherwise, more position adjustments ahead of the weekend will dominate
intra-day trades.
G7 Currencies
DXY – Supported on Dips. The greenback bounced higher after
Asian trading and hovered around 81.55 as we write. Intra-day chart still does
not give much clue to its directional bias but the reasonably thick ichimoku
cloud has been reliable enough to support the greenback on dips. We continue to
expect support around 81.535 while bids are likely to be deterred by recent
high of 81.7160. Initial claims came in lower at 289K vs. the previous 303K but
failed to lift risk sentiments overnight. No key data is on the tap tonight.
USD/JPY – Waffling With Downside Risks. USD/JPY slid overnight on safe-haven flows to the key
102-level before correcting slightly this morning. Pair continuers to waffle
and is currently sighted hovering around 101.92 likely on safe-haven flows
following news of possible US airstrikes on Iraq. Intraday MACD is showing mild
bearish momentum with risks bias to the downside as the 18-DMA lies below the
40-DMA. Moreover, a thick ichimoku cloud lies overhead that could determine
price action today. There is a risk that the key 102.000-figure could be tested
today, with a break exposing support at 101.76. Upside today is likely to be
capped by the lower bound of the cloud at 102.20 ahead of 102.44. Current
account deficit widened to JPY399.1bn in Jun, coming in higher than consensus’
JPY326.5bn, the first current account deficit in five months. Meanwhile, BOJ
meets today and no change in policy is expected. Instead, BOJ Governor Kuroda’s
press conference will be eyed for details and any hints of directional changes.
AUD/USD – Bearish Risks. AUD hovered around 0.9274 this morning, having broken
multiple support levels after the labour report. The shock from the jump in
jobless rate indicated that the market is now very aware of the amount of slack
in the economy. Next support is seen some distance away at 0.9209 and key
release of the day is RBA’s Statement on Monetary Policy. The central bank
lowered growth forecast to 2-3% from the previous 2.25-3.25%. Core inflation is
now expected to be within 1.75-2.75%, compared to the previous
2.25-3.25%. China’s trade numbers are also due later and any
surprise could add to some noise to the currency but any lift is expected to be
only tentative.
EUR/USD – Choppy. EUR/USD remained heavy within the 1.3330-1.3430 as Asian trading
starts. This pair is still capped by the ichimoku cloud is thins out ahead.
Still we see resistance around 1.3409 in a possibly quieter session today.
Expect price action to meet resistance around 1.3410. Support is seen around
1.3316 with an interim around recent low of 1.3333. President Draghi was
pleased with the recent EUR decline and expects the currency to fall further.
He was also confident that the lower currency would boost exports as well as
the economy. His unusually explicit comments on the currency seem to confirm
that a lower EUR was one of its intended goal from the Jun monetary easing.
EUR/SGD – Upside Risks. EUR/SGD hovered around 1.6720 this morning. Overnight
bids to 6.16760 were rejected at the highs, along with the soggy EUR. MACD
forest on the 4-hourly chart shows a slight bullish pressure and a break of the
resistance around 1.6760 could happen. Thereafter, the barrier around 1.6830
will be exposed. The upside pressure is spurred by SGD weakness and risk is
higher during the Asian session. That said, it is Friday and position
adjustments ahead of the weekend could temper its rise. Support is now seen
around the 1.67-figure.
Regional FX
The SGD NEER trades 0.26% above the implied mid-point of 1.2560. The top
end is estimated at 1.2310 and the floor at 1.2811.
USD/SGD – Overbought. USD/SGD took out our resistance at 1.2502 on its way up yesterday, and
remains on the uptick around 1.2534 currently, lifted by global risk aversion.
Risks are still to the upside given that the 18-DAM continues to lie above the
40-DMA, though the RSI is indicating overbought conditions. With the escalation
in global geopolitical tensions, further upticks are possible ahead, though
some safe-haven flows could cap upside. Immediate hurdle is seen around 1.2550
today ahead of the stronger barrier at 1.2587. Support is seen around 1.2500.
AUD/SGD – Capped. AUD/SGD plunged to a low of 1.1578, taking out several of our
support levels on its way down, before recovering back above the 1.1600-level. Cross
is currently still bouncing higher around 1.1609 with intraday MACD hugging
close to the zero line, suggesting choppy trades ahead. Risks remain biased to
the upside given the recent positive cross-over of the 18-DMA and the 40-DMA.
But upside are likely to be capped by the thick intraday ichimoku cloud that
lies above. New resistance is now seen at 1.1620 ahead of 1.1640. Support today
is around 1.1590. For bearish extention, we need to see a firm break of the
recent low of 1.1578. SGD/MYR – Upside Risks.
SGD/MYR spiked to an intraday high of 2.5693 yesterday before settling the back
of relative MYR weakness and is currently sighted around 2.5652. Intraday MACD
is showing little momentum in either direction, though risks are tilted to the
upside still as the 18-DAM continues to lie above the 40-DMA. Topside remains
guarded by 2.5730 today while 2.5547 continues to provide support.
USD/MYR – Choppy. USD/MYR extended its rise to a high of 3.2178 before easing a tad this
morning, last seen around 3.2140. Expect upmoves to run into selling interest
as our onshore traders expect continued interest in the longer dated MGS.
Overnight UST 10-year yields had drifted lower, improving carry trade
conditions. We hold our view that range-trading has indeed shifted higher and
topsides are likely to remain deterred by resistance at 3.2243. Momentum
indicators also point to the north. Interim barrier is seen around the
3.22-figure. 1-month NDF was also on the uptick and was last seen around 3.2230
and resistance at 3.2196 is again at risk. Next barrier is seen around 3.2372
while 3.2141 is the support for NDF.
USD/CNY
was fixed lower at 6.1562 (-0.0108), vs. previous 6.1670 (+2.0% upper band
limit: 6.2818 -2.0% lower band limit: 6.0355). CNY/MYR was fixed at 0.5212 (+0.0020).
USD/CNY – Bearish. Pair edged lower, extending its downtrend but seemingly less responsive
to the fixing which was fixed 108 pips lower. Last seen around 6.1585, the pair
is hovering uncomfortably close to next support at 6.1533. (50% Fibonacci retracement
of the Jan-Apr rally). The spot and fixing have converged recently in tandem
with improving fundamentals. The 18-DMA remains well below the 40-DMA.
Unexpected bids could be dettered by the 6.18-figure. July trade numbers are
due today and a steady pace of growth for exports (Cons.:7.0%y/y) and
imports(2.6%y/y) are expected. In news, CBRC strengthened regulations for trust
company risk management (BBG).
1-Year CNY NDFs – Choppy. The NDF was last seen around 6.2420, steady after the
upmove yesterday. MACD forest on the 4-hourly chart shows bullish momentum. We
cannot rule out further bids and first barrier is seen around 6.2520. Support
is pencilled in at 6.2350. USD/CNH – Heavy. USD/CNH drifted lower
to around 6.1645. Support is still seen around 6.1591. MACD shows increasing
bearish momentum and 18-SMA is below the 40-SMA. Downside risks are still
dominant. The CNY has caught up with CNH and trades above the offshore yuan,
against the dollar.
USD/IDR – Bullish Momentum. USD/IDR remains above the intraday ichimoku cloud
after breaking free of it yesterday, helped by deteriorating risks sentiments.
Pair is currently sighted around 11830 with intraday momentum indicators
including MACD showing mild bullishness. Risks are still tilted to the upside
given the recent negative cross-over of the 18-DMA and the 40-DMA. Foreign
appetite for Indonesia assets continue to wane with a net USD20.26mn in
equities sold yesterday, while a net IDR0.99tn in debt were removed to their
outstanding holdings in the the two days of 5 and 6 Aug (latest data
available). Further sell-off today on the back of deteriorating risks appetite
should put upside pressure on the pair. Immediate barrier remains at 11835 and
a firm break here could see a bullish extension towards 11950. 11750 continues
to be supportive. The 1-month NDF is on the uptick this morning, hovering
around 11899 with intraday MACD still indicating mild bullish momentum. The
JISDOR continued to be fixed higher at 11766 yesterday compared to Wed’s fixing
of 11756.
USD/PHP –
Upswing. USD/PHP sailed pass the 44.000-figure yesterday and remains
above this morning on the back of global risk aversion. Pair is currently
sighted around 44.185 with intraday MACD showing mild bullish momentum though
RSI is indicating overbought conditions. With our resistance at the
44.000-handle taken out, new barrier is seen around 44.280 today ahead of the
next at 44.370. 43.750 should limit bids today. The upswing in the 1-month NDF
continues this morning with the 1-month last sighted around 44.250. Further
upside is possible with intraday showing mild bullish momentum, though RSI is
indicating overbought conditions.
USD/THB – Upside Risks. USD/THB remains on the uptick, spurred by
deteriorating global risk appetite with foreign funds fleeing Thai assets with
a net THB1.02bn and THB3.77bn in equities and debt sold-off yesterday. Pair is
currently sighted around 32.280 with intraday MACD forest at the zero line
currently, suggesting two-way trades are possible today. Still, risks are to
the upside given that the 18-DMA continues to lie above the 40-DMA. Offers
today should be capped by 32.355. Downsides are likely to be limited by top of
the intraday ichimoku cloud lying below around 32.115.
Rates
Local government bonds traded mixed with better buyers on dips as
volumes picked up. Demand remained strong on the longer dated 15y to 30y MGS
with the 30y lower by 1bp. Noteworthy were trades done on the 7y MGS 9/21 which
traded 3bps lower despite the upcoming supply likely next week. While overall
bonds seem to be trading rangebound we think the next catalyst will be the 7y
re-opening auction, with WI expected to start trading next week on 12 Aug. We
estimate a size of MYR3.5b.
The IRS curve flattened with receiving interest at the longer end for 5
years and beyond. 5y IRS traded at 4.04%. The receiving interest was likely
driven by lower local and global bond yields which might have prompted dealers
to square some of the paid positions. 3M KLIBOR stayed unchanged at 3.60%.
In the PDS market, high grades with 7 years and higher in tenors were
taken. Offers shifted 2-5bps lower. Danainfra 21 was taken from 4.21% early
this week to 4.18%. AAA-rated Aman was taken on the 7 and 10years. Meanwhile,
the spreads of GG papers over MGS have tightened to around 45-50bps.
Singapore
In line with lower global bond yields, SGS market rallied with the
sovereign curve flattened 1bp along the 2/10, and 2bps along the 10/30. The
market tone was broadly bullish throughout the day as yields continued to inch
lower, especially at the backend. Bonds outperformed the IRS with the former
generaly 2bps stronger while the latter 1bp softer. At market close, the 10y
SGS was stronger by 1bp to close at 2.40%, while at the tail end the 30y SGS
traded 3bps lower to close at 2.98%.
In the credit market, SGD corporate bonds got wider due to selling from
PBs. Overall market tone was softer, with Malaysian names still heavy on the
selling side. Elsewhere in the USD space, Shanghai Electric Group opens book
for its 5y USD issue guided at T5+165bps. The company is rated A2 by Moody's
and it is one of the largest energy and industrial equipment management
conglomerates. Given that this is the first USD issue by the company and the
amount is capped at USD500m, we expect it to tighten to T5+150bps.
Indonesia
Indonesia bond market remains booking losses as investors continue
reacting negatively to the recent published data such as slower economy growth.
Other than that, we see there weren’t any sentiment which could drive the bond
prices higher this week. Indonesia finance ministry sees that Indonesia economy
growth may reach 5.40% in 3Q 14 supported by better exports and investments. 5-yr,
10-yr, 15-yr and 20-yr benchmark series yield stood at 8.002% (+0.3bps), 8.236%
(+2.1bps), 8.614% (+1.5bps) and 8.867% (+3.6bps) while 2-yr yield shifts up to
7.528% (+5.4bps). Trading volume remains heavy amounting Rp11,623 with FR0070
(10-yr benchmark series) and FR0068 (20-yr benchmark series) was the most
tradable bond during the day. FR0070 total trading volume amounted Rp2,280 bn
with 57x transaction frequency and closed at 100.895 yielding 8.236% while
FR0068 total trading volume amounted Rp1,955 bn with 91x transaction frequency
and closed at 95.454 yielding 8.867%.
Corporate bond trading volume was seen relatively moderate amounting
Rp545 bn (vs average per day (Jan – Jun) trading volume of Rp677 bn). SSIA01B
(Surya Semesta Internusa I year 2012; B serial bond; Rating: idA) was the top
actively traded corporate bond with total trading volume amounting Rp126 bn.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.