ASIA FX: KRW & TWD Tracking Lower For The Week, Amid Tech Equity Rout
At this stage KRW and TWD are tracking comfortably lower for the week, as the tech equity rout continues. The won is the worst performer in EM Asia, down around 1.4%, although it looks like there is some supply above the 1470 level. USD/TWD continues to track higher, last above 31.30. Earlier highs were just short of 31.36. CNH is also down for the week, but remains a relative outperformer against stronger USD trends.
- USD/CNH was last near 7.1135, with near selling interest emerging on recent moves above 7.1200. The USD/CNY fix moved back under 7.0900 and the fixing error stayed near recent wides. CNH/JPY remains in a strong uptrend (although the FinMin stated today FX intervention is an option). This pair was last near 22.11, aiming for 2024 highs at 22.2089.
- Spot USD/KRW was last wedged between 1471/72. Earlier highs were at 1474, amidst sharp equity losses of over 3.5%. Offshore investors have also returned to being large sellers of local stocks today, amidst the sharp equity reversal seen in the tech space as Thursday trade unfolded. We may be seeing supply of USD/KRW above 1470 though as the FinMin looks to stabilize FX supply/demand imbalance.
- Spot USD/TWD continues to track higher, with little signs of equity relief (Taiex down 3.5% to early Oct levels). We were last near 31.30/35. We continue to close the gap with break down levels near 32.00 from late April/early May. BBG notes: "Taiwan's life insurers proposed changes to accounting rules to cut annual hedging costs and provide relief for excessive currency swings." See this link.
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EURUSD TECHS: Support Intact For Now
- RES 4: 1.1919 High Sep 17 and a bull trigger
- RES 3: 1.1820 High Sep 23
- RES 2: 1.1775 61.8% retracement of the Sep 17 - Oct 9 bear leg
- RES 1: 1.1730 50.0% retracement of the Sep 17 - Oct 9 bear leg
- PRICE: 1.1615 @ 06:28 BST Oct 22
- SUP 1: 1.1542 Low Oct 9 and the bear trigger
- SUP 2: 1.1516 76.4% retracement of the Aug 1 - Sep 17 bull leg
- SUP 3: 1.1392 Low Aug 1 and bear trigger
- SUP 4: 1.1313 Low May 30
EURUSD is trading above 1.1542, the Oct 9 low. Recent gains signal a potential reversal, suggesting the corrective phase between Sep 17 - Oct 9, may be over. Note that moving average studies are in a bull-mode position - for now - highlighting a dominant M/T uptrend. A resumption of gains would open 1.1775 next, a Fibonacci retracement. Key support and the bear trigger lies at 1.1542, the Oct 9 low. Clearance of this level reinstates a bear theme.
BOBL TECHS: (Z5) Bull Cycle Intact
- RES 4: 119.780 High Apr 22 (cont)
- RES 3: 119.600 High May 7 (cont)
- RES 2: 119.250 76.4% of the Apr 7 - Aug 15 bear leg (cont)
- RES 1: 118.970/119.000 High Oct 17 / Round number resistance
- PRICE: 118.640 @ 06:08 BST Oct 22
- SUP 1: 118.450 Low Oct 15
- SUP 2: 118.246 20-day EMA
- SUP 3: 117.880 Low Oct 9
- SUP 4: 117.710 Low Oct 6
Bobl futures continue to trade below last week’s high.Recent impulsive gains reinforces the uptrend that started Sep 25. Sights are on the 119.00 handle next. A break of this level would open 119.25, a Fibonacci retracement point. Note that the contract is in overbought territory, a pullback would allow this condition to unwind. Initial key support is at the 20-day EMA, at 118.246. A clear break of the 20-day EMA would undermine the bullish theme.
LOOK AHEAD: UK Timeline of Key Events (Times BST)
| Date | Time | Period | Event |
| 22-Oct | 0700 | Sep | Consumer inflation report / Producer Prices |
| 23-Oct | 1100 | Oct | CBI Industrial Trends |
| 24-Oct | 0001 | Oct | Gfk Monthly Consumer Confidence |
| 24-Oct | 0700 | Sep | Retail Sales |
| 24-Oct | 0930 | Oct | S&P Manuf / Services / Composite PMI (p) |
| 27-Oct | 1100 | Oct | CBI Distributive Trades |
| 28-Oct | 0001 | Oct | BRC Monthly Shop Price Index |
| 29-Oct | 0001 | Sep | Brightmine pay deals for whole economy |
| 29-Oct | 0930 | Sep | BOE Lending to Individuals / M4 |
| 31-Oct | 0930 | --- | ONS Blue Book / Pink Book |
| 03-Nov | 0930 | Oct | S&P Global Manufacturing PMI (Final) |
| 05-Nov | 0930 | Oct | S&P Global Services / Composite PMI (Final) |
| 06-Nov | 0930 | Oct | S&P Global/CIPS Construction PMI |
| 06-Nov | 1200 | --- | Bank Of England Interest Rate |
| 06-Nov | 1400 | Oct | Decision Maker Panel Data |
| 11-Nov | 0001 | Oct | BRC-KPMG Shop Sales Monitor |
| 11-Nov | 0700 | Sep/Oct | Labour Market Report |
| 13-Nov | 0700 | Sep/Q3 | GDP / Services / Production / Trade / Construction |
