ASIA FX: SEA FX Higher, USD/IDR At 200-day EMA Support, BoT Later
In South East Asia FX, there is a more clear bias of a softer USD trend, although part of this is catch to USD losses post onshore markets closing yesterday. IDR is up around 0.30%, likewise for PHP, while MYR is up close to 0.25%. Regional equities are mostly up firmly, following the strong lead from US markets on Tuesday (as Fed easing expectations build post the CPI print).
- Spot USD/IDR is testing under 16240 at the time of writing. This is around the 200-day EMA support zone. Recent breaks sub this support level haven't been sustained. We have to go back to 2024 for a meaningful period where we were under this support level. Cross asset signals are in favor of IDR, with global and local equities rallying. Better offshore inflows are also evident into local stocks and bonds.
- USD/PHP has found support just under the 50 and 100-day support points, getting to lows of 56.83, but we sit back above 56.90 in latest dealings. Philippines equities have been laggards of late, which may be reducing PHP impetus at the margins.
- USD/MYR is back around 4.2200, +0.25% in MYR terms. This is fresh lows back to late July. Downside focus in the pair will be on a re-test of the 4.2000 region.
- USD/THB was higher in the first part of trade, getting to 32.41, after onshore markets were out for the first two days this week. We sit back at 32.33 now though, unchanged from end Friday levels last week. The main focus today will be on the BoT decision later. As per our preview: Given that inflation is below the Bank of Thailand's (BoT) 1-3% target band and growth is lacklustre and lending continues to contract, 14/23 analysts surveyed by Bloomberg are forecasting a 25bp rate cut to 1.5% on August 13. However, there are also numerous reasons for it to be on hold, thus it is a close call. A new governor takes over from October 1, Vitai, and he is considered to be dovish. If rates are left at 1.75%, it will be a dovish hold and there is likely to be at least one 25bp cut in one of the two BoT meetings left in 2025.
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BUND TECHS: (U5) Bear Cycle Remains Intact
- RES 4: 131.95 High Jun 13 and the bull trigger
- RES 3: 131.33 High Jun 20
- RES 2: 130.76 High Jul 4
- RES 1: 130.10/130.56 High Jul 8 / 50-day EMA
- PRICE: 129.26 @ 05:50 BST Jul 14
- SUP 1: 129.12 Low Jul 11
- SUP 2: 128.97 Low May 14 and a reversal trigger
- SUP 3: 128.90 Low Apr 10
- SUP 4: 128.40 Low Apr 9
Bund futures traded lower last week, and a bear cycle remains intact. Friday’s extension resulted in a break of 129.30, the May 22 low. The breach strengthens the current bearish theme and exposes the next key support at 128.97, the May 14 low and a bear trigger. On the upside, resistance around the the 50-day EMA, at 130.36, marks the key short-term hurdle. A clear breach of it is required to highlight a possible reversal.
CRYPTO: Bitcoin Makes New Highs Through $120 000 As We Head Into Crypto Week
Bitcoin has had a range of $118 312.80 - $121 365.19 in the Asia- Pac session, it is currently trading around $121 280, +1.80%. Bitcoin is making new all time highs through $120 000 this morning as the market and institutional in particular seem to be getting ahead of what they perceive to be an important week for the industry.
- (Bloomberg) - ‘House Plans ‘Crypto Week’ to pass Stablecoin, Other Bills. House Republicans are turning their attention toward advancing President Trump’s cryptocurrency agenda as they seek to send landmark stablecoin legislation to the president’s desk and advance other digital currency legislation. The week of July 14 is set to be “Crypto Week.”
- Lance Roberts on X:“There has been a lot of talk about the demise of the dollar, even though it still comprises 58% of foreign reserves. However, one thing that could change that is the rise of stablecoins, where 99% of all stablecoins are pegged to the dollar. If the world goes digital, as expected, the dollar may be the dominant reserve."
- Andreas Steno Larsen - “Big week in relation to the legislative landscape for BTC/Crypto in the US next week and BTC is making a weekend breakout as we speak. ”
Fig 1 : Bitcoin Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
AUSSIE BONDS: Slightly Cheaper, Narrow Ranges, Jun-54 Supply Tomorrow
ACGBs (YM -2.0 & XM -2.0) sit weaker after dealing in narrow ranges in today’s Sydney session.
- Cash US tsys are slightly cheaper, with a steepening bias, in today's Asia-Pac session after Friday's bear-steepener.
- Cash ACGBs are 2-3bps cheaper with the AU-US 10-year yield differential at -6bps. At -6bps, the differential is positioned near the middle of the +/- 30bps range that has held since November 2022.
- The bills strip is slightly cheaper, with pricing -1 to -3.
- RBA-dated OIS pricing is slightly firmer across meetings today. A 25bp rate cut in August is given an 88% probability, with a cumulative 59bps of easing priced by year-end (based on an effective cash rate of 3.84%).
- Tomorrow, the local calendar will see Westpac Consumer Confidence.
- This week, the AOFM plans to sell A$300mn of the 4.75% 21 June 2054 bond tomorrow, A$800mn of the 4.25% 21 March 2036 bond on Wednesday and A$1100mn of the 1.00% 21 November 2031 bond on Friday.
