ASIA FX: CNH Weakens Amid Fresh Property Concerns
USD/Asia pairs have been mixed today, although the USD has still been supported on dips for the most part. USD/CNH rebounded amid fresh property woes for China. FX stability remains a focus for the South Korean authorities, while IDR hasn't seen much follow through support after yesterday's surprise rate hike.
- CNH: USD/CNH shrugged off a noticeably stronger than expected CNY fixing, with onshore equities weaker, particularly in the property sector. This follows fresh reports of corruption crackdowns in the sector. USD/CNH dipped towards 6.8550 post the fix but rebounded from here and edged above 6.8800 before selling interest emerged. We last tracked at 6.8730.
- KRW: Spot USD/KRW was lower in early trade, but got dragged higher by a weaker CNH trend. FX levels remain in focus with South Korean President Yoon stating FX volatility was on the rise. Dips below 1340 are supported but the pair hasn't tested resistance above 1345 today.
- IDR: The rupiah has weakened anew amidst risk aversion, despite catching a bid yesterday as Bank Indonesia delivered a surprise 25bp hike to the 7-Day Reverse Repo Rate. Spot USD/IDR has added 25 figs to last trade at IDR14,863. The central bank will also undertake an Operation Twist-style measure to stabilise the rupiah. The Bank will sell more short-term gov't debt in the market, while buying longer dated bonds.
- THB: Spot USD/THB trades +0.04 at THB36.14, shrugging off overnight greenback sales. The minutes from the BoT's most recent monetary policy meeting provided few, if any, surprises. The MPC judged that gradual policy normalisation will be consistent with sustainable growth, even as one member called for faster tightening. Foreign investors bought a net $133.0mn in Thai stocks on Tuesday, marking the 13th consecutive day of net inflows.
- MYR: USD/MYR couldn't sustain early downside, with the pair moving up from 4.4840 to 4.4880. A weaker CNH has arguably not helped onshore sentiment. We remain below recent highs above 4.4900 for now though. A reminder that we will get an update on Malaysia's CPI inflation this Friday.
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Historical bullets
EUROSTOXX50 TECHS: (U2) Bull Flag
- RES 4: 3722.70 76.4% retracement of the Jun 6 - Jul 5 downleg
- RES 3: 3689.00 High Jun 10
- RES 2: 3650.10 61.8% retracement of the Jun 6 - Jul 5 downleg
- RES 1: 3620.00 High Jul 22
- PRICE: 3574.00 @ 05:38 BST Jul 25
- SUP 1: Low Jul 18 / 19
- SUP 2: 3343.00 Low Jul 5 and the bear trigger
- SUP 3: 3321.30 50.0% of the major 2020 - 2021 upleg (cont)
- SUP 4: 3300.00 Round number support
EUROSTOXX 50 futures touched a new high Friday at 3620.00, but the price has moved back into its recent range and the contract continues to consolidate. This pause in the bull cycle appears to be a bull flag. If correct, it reinforces current bullish conditions and suggests scope for a stronger recovery towards 3689.00, Jun 10 high. The key support and bear trigger is unchanged at 3343.00, Jul 5 low. Initial support is at 3467.00.
SCHATZ TECHS: (U2) Bull Trigger Remains Exposed
- RES 4: 110.412 1.382 proj of the May 16 - 24 - 28 price swing
- RES 3: 110.256 1.382 proj of the May 16 - 24 - 28 price swing
- RES 2: 110.063 1.236 proj of the May 16 - 24 - 28 price swing
- RES 1: 110.005 High Jul 6 and the bull trigger
- PRICE: 109.745 @ 05:28 BST Jul 25
- SUP 1: 109.389 20-day EMA
- SUP 2: 108.950 Low Jul 21
- SUP 3: 108.760/425 Low Jun 30 / Low Jun 28 and a key support
- SUP 4: 108.025 Low Jun 21
Schatz futures found support last week at 108.95, on Thursday. This marks a key short-term trend support. The current uptrend remains intact and attention is on key resistance and the bull trigger at 110.005, Jul 6 high. A break would confirm a resumption of the bull cycle and open 110.063 and 110.256, Fibonacci projections. Note that price is also trading above the 50- and 20-day EMA’s, reinforcing current bullish conditions.
BOBL TECHS: (U2) Challenges Key Short-Term Resistance
- RES 4: 127.940 1.50 projection of the Jun 16 -24 - 28 price swing
- RES 3: 127.160 High May 12
- RES 2: 126.879 1.236 projection of the Jun 16 -24 - 28 price swing
- RES 1: 126.860 High Jul 22
- PRICE: 126.350 @ 05:20 BST Jul 25
- SUP 1: 125.043 20-day EMA
- SUP 2: 124.030 Low Jul 21 and a reversal trigger
- SUP 3: 123.010 Low Jun 30
- SUP 4: 121.910 Low Jun 28 and a support
Bobl futures have defined a key short-term support at 124.030, the Jul 21 low. A bull cycle remains in play and Friday’s gains resulted in a high print above 126.560, the Jul 6 high and bull trigger. This signals a resumption of the current uptrend and maintains the bullish price sequence of higher highs and higher lows. The focus is on 127.160, the May 12 high. A break of 124.030 is required to signal a reversal.
