ASIA FX: THB & PHP Falter, MYR Outperforms
In South East Asia FX, the firm bias has been for USD gains. There has been an undercurrent of market risk aversion, with concerns around potential US strikes on Iran impacting sentiment (even if oil is relatively steady and US equity futures are only down a touch). SEA equity indices are mostly under pressure. There are also country specific factors which look to be in play for the likes of Thailand and the Philippines.
- USD/THB is up around 0.70% so far today, putting the pair back around the 32.80/85 region. This is through the 20-day EMA (near 32.71). Fresh onshore political turmoil, as the government's coalition shows signs of fracturing (see this BBG link), is weighing on baht. Local equities were off 2% at one stage, putting us close to intra-session lows from April this year. Upside targets for USD/THB are likely to be at 33.00.
- USD/PHP is up by a similar amount to USD/THB. We were last 57.30/35. Comments from BSP Governor Remolona around futile efforts to intervene in the FX market during periods of risk off, has likely given fresh ammunition for USD/PHP bulls. USD/PHP is now through all key EMA resistance points. Late March highs from this year around 57.75 could be eyed on the topside.
- USD/IDR has risen, up around 0.50%, last near 16380 for spot. Risk aversion is weighing on the IDR, although it has outperformed the likes of PHP and KRW over the past week, see the recent spike in oil prices.
- USD/MYR is firmer, but only up around 0.20% at this stage, last close to 4.2600. A strong FX reserve position and less terms of trade fallout from rising oil prices are likely aiding MYR.
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JGBS: Very Poor 20Y Auction Sparks Sharp Bear-Steepener
JGB futures are sharply weaker, -24 compared to settlement levels, but well above session cheaps seen in the aftermath of today’s very poor 20-year auction.
- The low-price underperformed dealer forecasts, according to a Bloomberg poll. Moreover, the cover ratio decreased to 2.5007x from 2.9639x in the previous auction, and the auction tail lengthened dramatically from 0.34 to 1.14 – the longest since 1987. In post-auction dealing, the 20-year JGB hascheapened 13bps.
- Cash US tsys are slightly cheaper in today’s Asia-Pac session after yesterday’s modest gains.
- (Bloomberg) -- “House Speaker Mike Johnson said “we are almost there” on passing a sweeping US tax bill. Republicans are pushing to implement Medicaid work requirements in 2027, two years earlier than planned, Majority Leader Steve Scalise told CNBC.”
- (Bloomberg) - “Washington lawmakers are risking a "fiscal disaster" if a recession hits as they continue with their package of sweeping tax cuts, according to Guggenheim Securities Co-Chair Jim Millstein.”
- Cash JGBs have bear-steepened across benchmarks, with yields 1-13bps higher. The benchmark 20-year yield is 13bps higher at 2.543%.
- Swaps have also bear-steepened, with rates 1-11bps higher.
- Tomorrow, the local calendar will see Trade Balance data.
BOBL TECHS: (M5) Recovery Extends
- RES 4: 119.960 High Apr 7 and the bull trigger
- RES 3: 119.780 High Apr 22
- RES 2: 119.600 High May 7
- RES 1: 118.880/118.950 Intraday high / High May 12
- PRICE: 118.810 @ 05:50 BST May 20
- SUP 1: 118.420 Low May 19
- SUP 2: 118.060 Low May 14 and 15 and the bear trigger
- SUP 3: 117.680 Low Apr 9 and a key support
- SUP 4: 117.600 Low Mar 28
The recovery from last week’s low in Bobl futures signals a possible reversal and the end of the corrective cycle between Apr 22 - May 15. A continuation higher would open 118.950 next, the May 12 high. Clearance of this level would strengthen a bullish theme. On the downside, a resumption of weakness would instead expose 117.680, the Apr 9 low and a key support. The bear trigger is 118.060, the May 14 / 15 low.
ASIA STOCKS: Key Bourses Positive Today
One of the key IPO's in Asia this year is EV battery marker CATL. Making its trading debut this week in Hong Kong CATL's shares jumped 14% even after its initial pricing was at the top end of expectations.
This gave a boost to the Hang Seng which had fallen for three days straight prior to CATL's first day of trading, as it delivered a strong rally.
- China's Hang Seng is up +1.29% today taking back the losses incurred over recent days. The CSI 300 was up +0.62%, the Shanghai Comp up +0.38% and the Shenzhen Composite is up +0.86%.
- The KOSPI barely moved today as it lacked direction and rose just +0.03% after yesterday's fall of -0.89%.
- The FTSE Bursa Malaysia KLCI index is lower by -0.42% as the index falls for a fourth straight day despite stronger than expected trade data today.
- Indonesia's Jakarta Composite has rallied 18 out of the last 20 trading days and is up again today by +0.36%.
- Singapore's FTSE Straits Times is up +0.19% and the PSEi in the Philippines is lower by -1.5%.
- India's NIFTY 50 continued to fall for a third straight day, down -0.20%.
