ASIA FX: USD/Asia Pairs Lower, But CNH & KRW Can't Extend Wednesday Gains
Most USD/Asia pairs are down strongly, albeit away from earlier lows. CNH and the KRW 1 month NDF have struggled for further gains against the USD though. PHP has also lagged, while THB has been the strongest performer in spot terms. Regional equities are mostly higher, although China markets are lagging. Still to come today is the Philippines and Taiwan central bank decisions. Both are expected to remain on hold. Tomorrow, the main focus will be China's 1yr MLF decision and Nov activity prints.
- USD/CNH dipped below 7.1300 in early trade, as broader USD sentiment remained on the backfoot post FOMC. However, post the CNY fixing, which was within recent ranges, sentiment stabilized. The pair was last near 7.1440, so +0.10% above end Wednesday levels in NY. Local equities have struggled to post strong gains, which is also been a headwind for the local FX.
- 1 month USD/KRW wasn't able to break sub 1290 in earlier trade, and we now sit back near 1295, around 0.15% above NY closing levels. The authorities stated they will watch financial market volatility in the aftermath of the Fed. Local equities are higher, +1.2% for the Kospi.
- USD/SGD got back to late Nov lows, but couldn't get sub 1.3280. We last tracked near 1.3300. The pair is the only major SEA currency to be back close to late Nov lows. In the past week it is the third best performer in the Asia FX space behind KRW and THB.
- USD/THB threatened to break sub 35.00 in early trade, but found some support around 35.05/06, which also coincides with the simply 200-day MA. Onshore equities are +1.2% higher, but this follows a period of underperformance, where markets dropped more than 20% from recent highs.
- USD/PHP tracks at 55.76 in recent dealings, around 0.55% stronger for the session in PHP terms. This is lagging other SEA FX pairs, but the PHP NEER was at fresh highs recently, so this may reflect some pay back. The upcoming BSP meeting later should deliver no change.
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BOBL TECHS: (Z3) Pullback Appears To Be A Correction
- RES 4: 117.610 High Sep 1 and a key resistance
- RES 3: 117.230 High Sep 4
- RES 2: 116.966 76.4% retracement of the Sep 1 - Sep 28 downleg
- RES 1: 116.440/940 High Nov 10 / 3 and the bull trigger
- PRICE: 116.160 @ 05:23 GMT Nov 14
- SUP 1: 116.000 Low Nov 13
- SUP 2: 115.850 Low Oct 27
- SUP 3: 115.480/130 Low Oct 26 / 19
- SUP 4: 114.880 Low Sep 28 and the bear trigger
A bull cycle in Bobl futures remains in play and the latest pullback still appears to be a correction. Key short-term resistance at 116.500, the Oct 10 high, has recently been cleared and this signals scope for a continuation higher near-term. Scope is seen for a move towards 116.966, the 76.4% retracement of the Sep 1 - Sep 28 bear leg. 115.850 marks the next support, the Oct 27 low.
BUND TECHS: (Z3) Trading Below Its Recent Highs
- RES 4: 131.82 High Sep 2
- RES 3: 131.49 High Sep 14
- RES 2: 131.33 76.4% retracement of the Sep 1 - Oct 4 downleg
- RES 1: 130.93 High Nov 9
- PRICE: 129.77 @ 05:16 GMT Nov 14
- SUP 1: 129.35 Low Nov 13
- SUP 2: 128.31/127.18 Low Oct 27 / 23
- SUP 3: 126.62 Low Oct 4 and the bear trigger
- SUP 4: 126.00 Round number support
Bund futures continue to trade below their recent highs but - for now - a firmer short-term tone remains intact. The recent breach of key resistance at 130.20, Oct 12 high and a bull trigger, strengthens current bullish conditions and maintains a positive price sequence of higher highs and higher lows. Sights are on 131.33, 76.4% of the Sep 1 - Oct 4 downleg. Firm support to watch is 129.35, the Nov 7 low. A breach would highlight a possible reversal.
JGBS: Futures Firm As 5yr Supply Well Received & US Tsy Firmness, Q3 GDP On Tap Tomorrow
JGB futures sit near session highs in afternoon dealing, last 144.63, +.25 (session highs at 144.67). The positive catalysts coming from well digested 5yr supply and a tick higher in US Tsy futures (last 117-14).
- The 5yr auction registered a higher than expected cut-off price per BBG, while the bid to cover ratio rose to 4.17 from 4.06 prior (see this link). The last 5yr auction was held on October 11.
- Cash JGBs sit lower in yield terms, led by the 5yr. We were last at 0.40% (down nearly 3bps), while the 10yr yield was 0.86%, off a touch for the session so far.
- Swap rates are slightly weaker in yield terms, off between 2 to 3bps from the 5yr to 40yr tenors. The 10yr swap rate is back sub 1.05%.
- Tomorrow, we have Q3 GDP as the main focus data wise. The market consensus looks for a modest q/q contraction in growth.
