ASIA FX: USD/CNH Modestly Higher On Tariff Headlines, THB Outperforms
Early negative USD/Asia sentiment was disrupted by headlines from US President Trump that Mexico and Canada would be hit with 25% tariffs on Feb 1. USD/Asia pairs moved up as these headlines crosses, but aggregate fallout has been limited. Indeed, pairs like USD/THB sit around session lows in latest dealings.
- USD/CNH was tracking lower to 7.2520/25 on lack of tariff headwinds from Trump's inauguration, but rebounded to 7.2939 as the Mexico/Canada headlines broke. China was mentioned in the context of BRICs and Trump reiterated tariff threats made late last year and also said if the US presented China with a good deal around TikTok but it rejected this deal, fresh tariffs could be applied Trump said. USD/CNH is back around 7.2750 around latest dealings, off around 0.15% in CNH terms versus end NY levels on Monday. Trump also noted he has been to China, suggesting talks/meetings may take place between the two sides before Trump makes a fresh China specific tariff decision.
- USD/KRW spot got to lows of 1432.8 in the first part of dealing, shrugging negative export data (although this was likely impacted by the upcoming LNY in China). We recovered though back above 1440, but sit near 1439 in latest dealings, still up a touch in won terms. Spot USD/TWD is also down modestly, last near 32.70/75 (+0.20% firmer in TWD terms).
- In SEA, THB is the standout, up close to 1%. The pair last sub 34.00. This is fresh lows lack towards the start of the year/late 2024. Yen and gold gains today have likely helped baht, while the FinMin is expecting strong Q1 growth. Baht is also generally seen less exposed to trade issues compared to NEA currencies.
- USD/MYR is down to 4.4800, but up from earlier lows, around 0.30% stronger in Ringgit terms at this stage. PHP is up 0.15% to 58.40/45. USD/IDR is down slightly to 16330.
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USDCAD TECHS: A Pullback Would Be Considered Corrective
- RES 4: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 3: 1.4537 2.0% 10-dma envelope
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4356 @ 16:56 GMT Dec 20
- SUP 1: 1.4301 Low Dec 18
- SUP 2: 1.4174/4014 20- and 50-day EMA values
- SUP 3: 1.3928 Low Nov 25 and a key support
- SUP 4: 1.3822 Low Nov 6
USDCAD bulls remain in the driver’s seat. While price faded into the Thursday close, the recent breach of 1.4178, the Nov 26 high, confirmed a resumption of the uptrend and this maintains the price sequence of higher highs and higher lows. The latest rally opens 1.4508 next, a Fibonacci projection level. Initial firm support to watch lies at 1.4174, the 20-day EMA. A pullback would be considered corrective.
AUDUSD TECHS: Bearish Trend Structure
- RES 4: 0.6550 High Nov 25
- RES 3: 0.6501 50-day EMA
- RES 2: 0.6429 High Dec 12
- RES 1: 0.6337/6396 Low Dec 11 / 20-day EMA
- PRICE: 0.6263 @ 16:55 GMT Dec 20
- SUP 1: 0.6199 Low Dec 19
- SUP 3: 0.6158 1.236 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 3: 0.6100 Round number support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
The trend needle in AUDUSD continues to point south and this week’s fresh cycle lows and Wednesday’s sell-off, reinforce a bear theme. The move down maintains the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position too, highlighting a dominant downtrend. The break lower opens 0.6158 next, a Fibonacci projection. Initial firm resistance to watch is 0.6396, the 20-day EMA.
