ASIA FX: Broader USD Gains, USD/KRW Testing 1440, PHP Bucks Broader Trends
USD/Asia pairs are higher, except for USD/PHP and USD/INR. USD/CNH is testing above 7.1300, amid broader USD gains and is giving back recent gains against the yen. USD/KRW is probing selling interest around 1440, while USD/IDR is through 16700. A generally supportive USD backdrop remains in play (outside of modest yen gains), with AUD and NZD weaker, while regional equity sentiment is mostly on the backfoot.
- USD/CNH is testing above 7.1300, not too far from the 50-day EMA resistance (7.1335). We had the CNY fixing earlier, which stayed sub 7.0900. CNH/JPY is weaker, back under 21.5700, so off recent highs, but CNY is outperforming most other majors.
- USD/KRW spot has tested above 1440 today but hasn't been able to sustain the break higher. Recent highs were at 1441.45, while beyond this area interest is likely to focus on a test of 1450. The authorities may pick up FX jawboning on a break above this level though. The Kospi is down over 2%, with likely offshore selling a KRW headwind.
- Spot USD/TWD is firmer as well, closing in on 30.90, but only up 0.20%, versus USD/KRW's +0.60% rise. We may see some resistance around the 31.00 figure level. We are already through all the key EMAs though.
- USD/IDR has risen above 16700 and is back eyeing a test near 16800. Broader USD sentiment appears to be driving gains in the pair, with IDR seeing greater losses during periods of USD gains as opposed to greater IDR gains when the dollar is on the backfoot.
- USD/PHP sits off recent highs, last in the 58.65/70 region, down around 0.25%. USD/PHP is showing a fairly low beta to overall USD moves at this stage. The turn of the month may be helping marginally from a seasonal point of view.
- USD/INR is softer, on suspected intervention flows. We were last 88.60/65.
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USDCAD TECHS: Fresh Cycle High
- RES 4: 1.4111 High Apr 10
- RES 3: 1.4045 3.0% Upper Bollinger Band
- RES 2: 1.4019 38.2% retracement of the Feb 3 - Jun 16 bear leg
- RES 1: 1.3989 200-dma
- PRICE: 1.3953 @ 16:02 BST Oct 3
- SUP 1: 1.3897/3825 Low Sep 30 / 50-day EMA
- SUP 2: 1.3727 Low Aug 29 and a bear trigger
- SUP 3: 1.3689 Low Jul 28
- SUP 4: 1.3637 Low Jul 25
A bull cycle in USDCAD remains intact and yesterday’s break above the late September’s high, firms the bullish theme. This move higher also maintains the bullish price sequence of higher highs and higher lows. Note too that moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4019, a Fibonacci retracement point. On the downside, first key support lies at 1.3825, the 50-day EMA.
AUDUSD TECHS: Support Remains Intact For Now
- RES 4: 0.6763 1.382 proj of the Jun 23 - Jul 24 - Aug 21 price swing
- RES 3: 0.6726 1.236 proj of the Jun 23 - Jul 24 - Aug 21 price swing
- RES 2: 0.6660/6707 High Sep 18 / 17 and key resistance
- RES 1: 0.6629 High Sep 30 & Oct 01
- PRICE: 0.6603 @ 16:01 BST Oct 3
- SUP 1: 0.6527/21 61.8% of the Aug 21 - Sep 17 bull leg / Low Sep 26
- SUP 2: 0.6484 76.4% retracement of the Aug 21 - Sep 17 bull leg
- SUP 3: 0.6463/6415 Low Aug 27 / Low Aug 21 / 22 and a bear trigger
- SUP 4: 0.6373 Low Jun 23
The AUDUSD uptrend remains intact and recent weakness appears to have been a correction. Support to watch lies at the 50-day EMA, at 0.6558. A clear break of this average would signal scope for a deeper retracement and expose 0.6527 once again, a Fibonacci retracement. For bulls, a stronger reversal higher would refocus attention on 0.6707, the Sep 17 high. Initial resistance to watch is 0.6629, the Sep 30 and Oct 1 high.
US TSYS/SUPPLY: September's Coupon Auctions Were Generally Solid (2/2)
September’s coupon auctions were generally solid, with three lines trading through, two coming out on the screws and two tailing slightly.
- Looking through the lens of MNI’s Relative Strength Indicator (RSI), five lines saw positive readings while two saw negative readings.
- The 3-year sale was the strongest auction of the month according to MNI’s RSI. The 3-year line traded through 0.7bps, the largest stop through in seven months. Meanwhile, the primary dealer take-up was just 8.4%, the lowest on record (data going back to 2003).
- The weakest sale of the month was the last – the 7-year line. This line saw the second consecutive 0.5bp tail, with the 12.0% primary dealer take-up above August’s 9.8% and July’s record low 4.1%.
September Auction Review:
- 2Y Note on-the-screws: 3.571% vs. 3.571% WI.
- 2Y FRN: 0.200% high margin vs. 0.195% prior
- 3Y Note trade-through: 3.485% vs. 3.492% WI.
- 5Y Note tail: 3.710% vs 3.709% WI.
- 7Y Note tail: 3.953% vs. 3.948% WI.
- 10Y Note trade-through: 4.033% vs. 4.047% WI.
- 10Y TIPS: 1.734% high yield vs. 1.985% prior
- 20Y Bond trade-through: 4.613% vs 4.615% WI.
- 30Y Bond on-the-screws: 4.651% vs. 4.651% WI.
