ASIA FX: CNH, KRW Little Changed, USD/TWD Firmer On Potential Seasonal Outflows
In North East Asia FX markets, trends have been fairly steady for CNH and KRW (with the BOK holding the policy rate steady). USD/TWD has bucked this trend and pushed higher (potentially on dividend related outflows). USD/HKD spot remains at the top of the peg band.
- USD/CNH spot was last near 7.1815, little changed for the session. We had a brief dip under 7.1800 as broader USD trends were softer but there was no follow through. The USD/CNY fixing move backed down close to recent lows. This should help cap USD/CNH upside. Local equity sentiment remains positive, with the CSI 300 trying to build a base above 4000.
- Spot USD/KRW was last near 1373, down a touch from end Wednesday levels in the pair. We remain close to recent highs near 1380. The BoK held rates as expected but maintained an easing bias. The central bank is worried around financial imbalances particularly in relation to household borrowing/house prices in Seoul. Stability on this front might be needed before the central bank eases again to support domestic growth. The Kospi continues to rally, up a further 1.3% today to fresh cycle highs. This isn't helping KRW sentiment much though.
- USD/TWD has pushed higher, last above 29.20, the pair up around 0.25% so far today. Sell-side analysts are noting the July/August dividend outflow season to offshore investors as a potential TWD headwind. Note that for USD/TWD the 20-day EMA is around 29.33. We haven't been above this resistance point since early April (outside of a brief spike in early July).
- Spot USD/HKD holds close to 7.8500.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
EURUSD TECHS: Trend Needle Points North
- RES 4: 1.1625 1.500 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 3: 1.1608 High Nov 9 2021
- RES 2: 1.1573 High Apr 21 and the bull trigger
- RES 1: 1.1495 High June 05
- PRICE: 1.1401 @ 06:04 BST Jun 10
- SUP 1: 1.1348 20-day EMA
- SUP 2: 1.1224/1.1065 50-day EMA and a pivot level / Low May 12
- SUP 3: 1.1026 38.2% retracement of the Feb 3 - Apr 21 bull cycle
- SUP 4: 1.0943 Low Apr 10
EURUSD is in consolidation mode but continues to hold on to the bulk of its recent gains. The breach of 1.1419, May 26 high, confirmed an extension of the current bull cycle and opens 1.1573, the Apr 21 high and bull trigger. MA studies are in a bull-mode position, highlighting a dominant uptrend. Support to watch lies at 1.1224, the 50-day EMA. A clear break of this average would undermine the bull theme. Initial support is 1.1348, the 20-day EMA.
ASIA STOCKS: Positive Day for Stocks with Taiwan Leading
With markets broadly positive across the region, Taiwan's TAIEX was the outperformer as TSMC shares surged. TSMC shares were up almost 4% on hopes that there could be some reduction of curbs on techs from the ongoing trade talks as the US indicated it would remove restrictions in exchange for rare earth shipments.
- Most of China's major bourses were up with the Hang Seng leading the way. The Hang Seng is up +0.33%, following yesterday's close up +1.63%. The CSI 300 gained just +0.16% today whilst the Shanghai Comp rose +0.11%. Shenzhen however went the other way, down -0.25%.
- The TAIEX in Taiwan is up +2.11% following on from yesterday's gain of +0.60%.
- The KOSPI is moderately higher by +0.22%, to be up over 6% in the last five trading sessions.
- The FTSE Malay KLCI rose a mere +0.14%, similar to yesterday's modest gains of +0.17%
- The Jakarta Composite is very strong, up +1.30% having been closed Friday and Monday.
- The FTSE Straits Times in Singapore is down -0.11% and the PSEi in the Philippines is down -0.55%.
- The NIFTY 50 has had a good start to the day up +0.22% following on from yesterday's gains of +0.40%.
OIL: Crude Holds Recent Gains While Watching Trade Talk Progress
Oil has held onto gains from recent trading during today’s APAC session with prices slightly higher as the market watches the second day of US-China trade talks to take place today. WTI is up 0.2% to $65.39/bbl but off the intraday high of $65.66. It remains above resistance at $64.86. Brent is 0.3% higher at $67.21/bbl following a peak of $67.40, approaching resistance at $67.73, a Fibonacci retracement level. The USD index is up 0.2%.
- Crude reacted sharply to the announcement of US reciprocal tariffs on fears of their impact on global energy demand. Thus it is watching the US-China trade talks closely and is currently mildly optimistic following US Commerce Secretary Lutnick describing negotiations so far as “fruitful”.
- The other issue markets are watching is US-Iran nuclear negotiations. The UN said that Iran’s stockpiling of almost weapons grade uranium needs to be monitored and addressed. There is a UN watchdog meeting this week in Vienna followed by one between the US and Iran in Oman on Sunday, according to Iranian officials.
- Later US May NFIB small business optimism and UK April/May labour market data are released. ECB’s Donnery and Buch appear. The focus remains on Wednesday’s May US CPI data but also Thursday’s US long-dated Treasury auction given fiscal concerns.
