ASIA FX: SEA FX Firmer, MYR & THB Lead
In South East Asian FX markets, USD selling pressures have been dominate. MYR has been a strong performer today, as has THB. We have seen more modest gains elsewhere, but nevertheless a clear USD downside bias. This fits with the majors where G10 currencies have rebounded against the USD, after Thursday saw some USD stability.
- USD/MYR is back under 4.2500, near recent lows. Downside focus will rest with a test back under 4.2000. The ringgit has been a strong performer in the past week, outperforming a softer local equity backdrop, along with higher US real yields. Commodity prices are also mostly under pressure. The MYR may be benefiting from repatriation flows given large FX deposits.
- USD/THB is back under 32.70, with upticks back towards 33.00 faded in recent sessions. Gold supported above $3300 is helping.
- USD/PHP is lower, back to 55.40/45 after holding steady in recent days. We had numerous comments from BSP Governor Remolona earlier. 2 more cuts are likely in 2025, although they won't necessarily be consecutive. The central bank looks at monthly trends in FX before deciding if its intervention thresholds have been met. Earlier May lows in the pair were at 55.235.
- USD/IDR is lower but holding above 16300 for now, which is very close to recent lows.
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AUSSIE BONDS: Twist-Flattener, IMF Panel Discussion For RBA Gov
ACGBs (YM -6.0 & XM +1.5) are dealing mixed on a data light Sydney session, with the short-end under pressure as markets re-assess tariff-tied risks to global trade and the Trump Admin's efforts to meddling with the Federal Reserve's independent policy making.
- Risk-on sentiment extended into today's Asia-Pacific session after US President Trump stated that he had no intention of firing Fed Chair Powell.
- Trump also stated that the final tariff number for China wouldn't be near the current 145%.
- Cash US tsys have twist-flattened in today's Asia-Pac session, with yields 2bps higher to 8bps lower.
- Cash ACGBs are 5bps cheaper to 1bp richer with the AU-US 10-year yield differential at -10bps.
- Today’s auction of the Apr-29 bond saw the weighted average yield settle 0.88bps below the prevailing mid-yield. However, the cover ratio declined dramatically to 3.2200x from 4.2143x at the previous auction.
- Swap rates are flat to 5bps higher, with the 3s10s curve flatter.
- The bills strip is cheaper with pricing -4 to -9.
- RBA-dated OIS pricing is 2-11bps firmer across meetings today. A 50bp rate cut in May is given a 13% probability, with a cumulative 114bps of easing priced by year-end.
- Tomorrow morning, RBA Governor Bullock will participate in a panel discussion at the IMF Spring Meetings.
EURUSD TECHS: Corrective Pullback
- RES 4: 1.1696 1.618 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 3: 1.1625 1.500 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 2: 1.1608 High Nov 9 2021
- RES 1: 1.1573 High Apr 21
- PRICE: 1.1389 @ 06:05 BST Apr 23
- SUP 1: 1.1308 Intraday low
- SUP 2: 1.1167 20-day EMA and a key support
- SUP 3: 1.0919 50-day EMA and a short-term pivot level
- SUP 4: 1.0805 Low Apr 3
The trend in EURUSD remains bullish and the pullback from Monday’s cycle high is considered corrective. A bullish price sequence of higher highs and higher lows remains intact and note that moving average studies are in a bull-mode position too, signalling a continued dominant uptrend. The focus is on 1.1608 next, the Nov 9 2021 high. Key support is unchanged at the 20-day EMA, at 1.1167.
BUND TECHS: (M5) Bullish Trend Structure Intact
- RES 4: 133.90 1.236 proj of the Mar 25 - Apr 7- 9 price swing
- RES 3: 133.00 round number resistance
- RES 2: 132.56 High Feb 28 and a key resistance
- RES 1: 132.03 High Apr 7 and the bull trigger
- PRICE: 131.82 @ 05:45 BST Apr 23
- SUP 1: 130.87/130.31 Low Apr 17 / 20-day EMA
- SUP 2: 129.02 Low Apr 10
- SUP 3: 128.60 Low Apr 9 and a key support
- SUP 4: 128.47 Low Mar 28
Bund futures continue to trade closer to their recent highs. A bull cycle remains in play and the pullback between Apr 7 - 9 is considered corrective. A fresh short-term cycle high on Apr 7 reinforces a bullish theme. The contract has recently cleared 131.14, 76.4% of the Feb 28 - Mar 11 bear leg. This opens 132.56 next, the Feb 28 high. Firm support lies at 128.60, the Apr 9 low. A break below this level would alter the picture.
