FX
Global
US equities fell on disappointing ISM manufacturing
data overnight while EU equities firmed on upside surprise to Eurozone,
German manufacturing PMIs. USD fell on weaker than expected ADP data. EUR and
JPY firmed. AUD continues to stay soft amid falling iron ore prices and ahead
of RBA meeting next Tue. USD/AXJs were broadly lower. Oil prices jumped on
lower than expected rise in US DOE weekly inventory count.
US Mar ADP printed a much weaker than expected data
(+189k vs. +225k). This is the weakest number since Jan 2014. To note ADP has
understated the NFP data by about 74k on average in the past 4 months. US Mar
ISM Manufacturing data also disappointed, easing to its lowest level since May
2013 (51.5 vs. 52.5 Cons.). Taken together USD is expected to trade softer
into US jobs report on Friday.
For the remaining week ahead, Singapore PMI on tap
today. For US, Mar services/composite PMI; Feb trade balance (Thu); key focus
on Mar NFP, average earnings, unemployment rate (Fri). Fed’s Yellen is due to
speak tonight; Brainard and Kocherlakota will speak Fri. For Europe, IT
budget balance on tap today. Focus continues to be on Greece as worries of
default looms. USD is expected to trade to the softer side ahead of
NFP, wage numbers tomorrow. A handful of countries including SG, HK,
ID, PH, AU, UK, US will be closed for Good Friday tomorrow. |
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G7 Currencies
DXY – Consolidation; Buy on Dips. The USD
amid disappointing ADP and ISM manufacturing fata overnight. ADP printed a
+189k rise, way below market expectation of +225k. USD likely to remain soft
leading into NFP Fri. Intra-day range of 97.50 – 98.50 likely. But we continue
to see further USD upside; with bias to buy on dips. Daily stochastics is
turning higher from oversold levels. Week ahead brings Mar services/composite
PMI; Feb trade balance (Thu); Mar NFP, average earnings, unemployment rate
(Fri).
USD/JPY – Sideways; Buys On Dips. After
hitting an intraday high of 120.33, the USD/JPY slipped lower towards the
119.40-levels on the back of weaker-than-expected US ADP and ISM print. Despite
the softer dollar tone, the pair failed to break below the 119.40-levels and is
now hovering around 119.65 at last sight. With our support at 119.90 taken out
overnight, new support is now around 119.20 before 118.80. Rebounds should meet
resistance around 120.40 still. Trades though should be thin ahead of US NFP on
Fri and the Good Friday holiday. Intraday momentum and oscillator indicators
are showing a bearish tilt ahead. As well, pair is also now back within the
intraday ichimoku cloud, suggesting sideway trades are likely ahead. Continue
to favor buying on USD dips.
AUD/USD – Sell
on Rallies. AUD/USD continues to ease towards 0.7585
levels amid falling iron ore prices and ahead of RBA meeting next week. Our
bearish view for the AUD remains unchanged. Daily MACD and stochastics continue
to fall from overbought areas suggesting a bearish bias. Still favor fading
rallies. Key support around 0.7560; a break below could bring 0.75 into focus.
Intra-day range of 0.7500 – 0.7630. We continue to see further weakening in the A$ on a
combination of factors including soft domestic economic growth, falling inflation
and further intensification of USD strength. We still see at least another rate
cut to come possibly in Apr or May meeting.
NZD/USD – Fade Rallies. NZD/USD managed to claw back some of its losses overnight on USD
weakness due to disappointing US ADP and ISM Manufacturing data. Key support at
0.7450 (50 DMA); a daily close below key support will see further downside
towards 0.73 levels. Intra-day could see 0.7380 – 0.7460 range. Daily MACD and
stochastics are indicating a bearish bias. Favor fading rallies.
EUR/USD –Fade Rallies.
EUR/USD rose marginally on better than expected Eurozone, German manufacturing
PMI but Greek problems – worries over default kept the pair from further
upside. We continue to maintain our bearish-bias EUR/USD view
amid structural decline in Europe fundamentals and diverging monetary policies
- the Fed is still expected to be on a tightening bias as compared to its
Euro-counterparts whom have just began QE amid ongoing unresolved Greek issues.
Stochastics indicators are falling from overbought areas. We remain better
sellers on rallies. Intra-day see 1.0700 – 1.0800 range.
Day ahead brings IT budget balance (Thu).
EUR/SGD – Bearish
Bias. EUR/SGD continues to trade lower towards 1.4660.
Daily MACD and slow stochastics are indicating a bearish bias. Key support at
1.4570 (previous low in 2015). A daily close below this key support could see
the pair trading in uncharted territories. Intra-day range of 1.4580 – 1.4700
expected.
Asia ex Japan Currencies
The SGD NEER trades around 1.12% below the implied
mid-point of 1.3474. We estimate the top end at 1.3202 and the floor at 1.3747.
USD/SGD – Bearish Bias; Buy On Dips. USD/SGD remained below the 1.37-figure, helped by S&P’s
reaffirmation of Singapore’s triple-A/A-1+ ratings and softer dollar tone
overnight. Pair continues to head lower, edging closer to the 1.35-figure.
Intraday MACD is still showing mild bearish momentum though slow stochastics is
now at oversold levels, suggesting further downside could be limited. Trades
are likely to be cautious and thin ahead of the Good Friday holiday and US NFP
tomorrow. Until then, support is still at 1.3570, while rebounds should remain
capped by 1.3775. S&P reaffirmed Singapore’s AAA/A-1+’ ratings yesterday on
the back of robust public finance, strong external position, political
stability and prudent economic management. The outlook was deemed stable on
expectations that the country will maintain its extensive fiscal and external
positions ahead and continue with its forward looking and pragmatic
policy-making.
AUD/SGD – Bearish.
AUD/SGD plunged towards the 1.03-levels on the back of the relative strength of
the SGD. Cross is currently holding its own around 1.0350 ahead of the Good
Friday holiday and US NFP tomorrow. Still this does not preclude the
possibility of further downside moves towards parity especially with RBA
meeting on Tue. Until then, expect 1.0320 to provide support nearby ahead of
1.0250. Any rebounds are likely to be capped by 1.0460. Intraday MACD continues
to show bearish momentum, though slow stochastics remains stuck at oversold
levels.
SGD/MYR – Sideways. The SGD/MYR spiked towards the 2.71-levels this morning
underpinned by SGD strength before retracing to around the 2.70-figure
currently. In the absence of fresh catalyst and ahead of Good Friday holiday
tomorrow, look for the cross to trade sideways around current levels intraday.
Topside should be guarded by 2.7115 (21 Jan high) and downside should be
limited by 2.69-figure today. Intraday MACD is still showing bullish momentum
though slow stochastics continues to indicate little bias in either direction,
suggesting that sideway trades are possible.
USD/MYR – Tentative Signs of Technical
Pullback. USD/MYR continues to ease towards 3.6770 levels this
morning off the back of a weaker USD and jump in oil prices. Weekly MACD and
stochastics are showing very tentative signs of bearish bias. We caution
that a decisive close below the previous week low around 3.65 levels could open
way for some technical pullback towards 3.5950. That said, our underlying view
for Ringgit weakness off the back of soft oil prices, risk of rating downgrade
amid contingent liability exposure, lower fiscal revenue and narrowing current
account surplus remain unchanged. Intra-day range of 3.6650 – 3.6950 expected.
USD/CNH – Consolidate with Downside Bias. The pair continues to consolidate; traded around 6.2015 levels this
morning. This morning IMF announced that Renminbi will be included in the SDR
basket (i.e. gaining reserve currency status). While this is unlikely to have
an immediate impact on the Renminbi but the move will positively impact the
Renminbi over the medium term, especially with China’s strategic plan of “One
Belt, One Road’; formation of the AIIB, and China’s ongoing shift towards a consumption-based
economy. Key support at 6.1850 (200 DMA); a decisive close below 200 DMA could
open way towards 6.1560 (76.4% Fibonacci retracement of 6.1113 – 6.3021).
Intra-day range of 6.1850 – 6.2100. USD/CNY
was fixed lower by 38 pips at 6.1396 (vs. 6.1434). CNYMYR was fixed lower by 10
pips at 0.5914 (vs. 0.5924).
USD/IDR – Consolidating Lower. USD/IDR slipped lower this morning to hover just above the 13000-figure,
weighed by the softer dollar tone overnight. As well, expectations of further BI
rate cuts have dissipated with yesterday’s Mar CPI print, lifting the IDR
higher. Headline inflation rose by a more rapid 6.38% y/y (Feb: 6.29%) in line
with market expectations. Ahead of the Good Friday holiday and US NFP tomorrow,
consolidative trades within 12950-13100 is likely intraday. Pair has lost most
of its bullish momentum, though slow stochastics continues to fall from
overbought levels, suggesting sideway trades are likely ahead. Foreign funds
bought a net USD37.70mn in equities yesterday, and added a net IDR1.92tn to
their outstanding holding of government debt on 30 Mar (latest data available).
1-month NDF is hovering just around the 13100-levels at 13105 this morning with
intraday MACD showing bearish momentum and slow stochastics now at oversold
levels. JISDOR was again fixed lower yesterday at 13043 from Tue’s 13084 with
another lower fixing possible should the spot’s drift lower this morning be
maintained.
USD/PHP – Closed For Holidays.
Onshore markets are closed for the rest of the week for Good Friday and Easter
holidays and will re-open on Mon. 1-month NDF consolidated lower but still
within 44.400-45.230 this morning amid thin trades with intraday MACD showing
bearish momentum and slow stochastics at oversold levels. Foreign funds bought
a net USD11.62mn in equities yesterday, helping to again cap USD/PHP upside.
USD/THB – Bearish Tilt. USD/THB slipped to an intraday low of 32.461 on the back of a softer
dollar tone. Positive sentiments abounded as well from the lifting of martial
law yesterday, though it was replaced Article 44 giving PM Prayuth near
absolute powers. Pair is now trading near the lower bound of its current
32.430-32.650 trading range. For bears to take control, we need to see a firm
break of the 32.430-support level, which would expose the next support at
32.350. Upside today should be guarded by 32.650 still. Cautious trades ahead
as major markets will be closed for Good Friday holiday tomorrow and ahead of
US NFP. Both intraday MACD and slow stochastics are indicating downside bias.
Yesterday, foreign funds sold off a net THB2.2bn and THB0.9bn in equities and
debt, weighing on the THB. The economy remained in deflation, falling by 0.57%
y/y in Mar from -0.52% in Feb.
Rates
Malaysia
Local government bonds opened range bound in the
morning but saw big foreign flow buying into the late afternoon. Activity
centred on the newly issued 7.5y MGS 9/22 which ended 4bps down from previous
close. Of note, the 20y MGS 4/33s closed 6bps lower. Islamic GIIs also saw
active trading and the curve ended 1-7bps lower across on the back of strong
foreign interest.
IRS rates were unchanged with no trades yesterday.
Only few IRS receivers despite month end buying in govvies lowered yields.
Payers also remained patient. Amidst all the swings, basis levels have been
rather stable. 3M KLIBOR was steady at 3.73%.
Local PDS market had a slight pickup in activity with
9-12y AAA names tightening 1-2bps from previous close. Aman 24s and Suria 24s
dealt at 4.49% compared to 4.50%-4.51% previously. As such, other AAA names
with better credit such as Telekom and Plus should tighten from offer quotes of
4.48% currently. In the AA curve, we saw Sarawak Energy being traded again with
its 9y bond down by 2bps. Kesturi 31s traded 7bps lower than last traded level
at 5.23% but this bond is fairly illiquid. We see AA names tightening and
catching up with the AAA curve as investors tolerate higher risk for better
yields. For GGs, buying was seen at the belly of the curve with names such as
Prasa and Dana widening 1-2bps. 
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