Maybank FX Tech Weekly - 22 May 2015

       For the week ahead, FX markets will be looking for fresh cues for break-outs but we believe markets could be disappointed as recent wide ranges could well hold as liquidity is expected to thin due to holidays in key markets (US, UK, HK) on Monday while economic data calendar appears to be relatively light. US durable goods orders on Tue could be key as upside surprise may potentially push the USD slightly stronger, and USD/AXJs could see a mild upside move. Possible risk asset reallocation could be on the cards next week and could possibly create some volatility for some assets. While Greek development remains fluid, we see value in buying EUR on correction.

       Having suffered 5 consecutive weeks of decline, the DXY finally saw a mild rebound over the past few session amid a mixed bag of US data (better than expected housing starts, building permits and initial jobless claims while existing home sales, Philly, Kansas Fed disappointed). Where do we go from here? Is the downward correction in the USD nearing the end or are we about to expect another wave of correction? FOMC minutes noted that while outlook for employment and GDP softened a bit, the outlook for inflation increased. Overall the FOMC minutes remain consistent with our house-view for a Sept lift-off. We reiterate our USD bull trajectory over the medium term and remain better buyers on USD on correction.

       Week ahead the focus for the majors is centered on US where Apr durable/capital goods orders will be released on Tue. 1Q GDP (second reading) will also be watched on Fri. Consensus is looking for -0.9% q/q, following the first reading of +0.2% q/q. A handful of Fed speaks are also lined up for the week – Fed’s Mester, Fischer (Mon); Fischer and Lacker (Wed); Williams (Thu) before Kocherlakota wraps up on Fri. For UK, 1Q GDP is also expected to be released on Thu (Cons. +0.4% q/q). Canada 1Q GDP (Cons. +0.2%) is also due on Fri. G7 Finance Ministers/ Central bank will be held on 27-29 May in Dresden. Greece is not on the official agenda but according to German Finance Ministry official Martin Jaeger, Greece may be discussed on the sidelines. For AXJs, key focus on Singapore 1Q final GDP (Cons. +2.2% y/y) on Tue; Philippines 1Q GDP (Cons. +6.6% y/y) on Thu and India 1Q GDP (Cons. +7.4% y/y) on Fri.

       Other data that we are watching includes Japan Apr trade data; Singapore Apr CPI inflation for Mon. For Tue, focus on US housing data, May Richmond, Dallas manufacturing activity, consumer confidence data; Singapore Apr IP; Japan PPI services and PH Mar trade data. For Wed, GE, FR consumer confidence data is on tap; China Apr industrial profits; RBA Lowe; BoJ Iwata speak. For Thu, AU 1Q capex; EC May economic, consumer confidence on tap; US initial jobless claims. For Fri, US May Chicago purchasing Manager, Univ. of Michigan Sentiment data and Japan Apr CPI inflation on tap.