IDR: USD/IDR Back Sub 16600 As Onshore Equities Bounce
USD/IDR moved above 16600 in early Wednesday dealings, but we sit slightly lower now, last near 16590/95. Yesterday's highs were at 16642, before BI intervention helped curbed dollar upside pressures. This was fresh highs in the pair back to the Asian Financial Crisis of 1998. We have some distance until meaningful downside support, with the 20-day EMA near 16455, while the 50-day is back closer to 16348.
- In early dealings today, local equities have risen around 3.4%, bringing the JCI index back above 6440. Recent dips near and sub 6000 have been supported in this index. Offshore investors were very modest buyers of local equities yesterday, but this is a positive in the sense we didn't see further large outflows.
- These moves may be aiding IDR at the margins, along with BI intervention risks. As we noted yesterday, BI FX reserves are elevated, which provides some short term buffers to FX weakness.
- Some sell-side analysts don't this preventing further IDR falls though, given concerns around fiscal spend and BI independence may not dissipate in the near term.
- 5yr CDS is a touch below recent highs last near 92bps. This is still under late 2023 highs above +100bps.
- The local data calendar is quiet until next week, when the March PMI prints.
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AUSSIE BONDS: Holding Richer On A Data-Light Session
ACGBs (YM +6.0 & XM +7.0) are stronger on a data-light session.
- There is no cash US tsy trading in the Asia-Pac session today with Japan closed for the Emperor’s Birthday holiday. TYH5 is dealing -0-05+ compared to closing levels at 109-17.
- Cash ACGBs are 6-7bps richer.
- Swap rates are 6-7bps lower.
- The bills strip has bull-flattened, with pricing flat to +7.
- RBA-dated OIS pricing is flat to 6bps softer across 2025 meetings today but remains 1-3bps firmer than last Tuesday’s pre-RBA levels. A cumulative 48bps of easing priced by year-end (based on an effective cash rate of 4.09%).
- The AOFM sold A$300mn of the Jun-34 green bond, with a cover ratio of 5.38x.
- QTC launches a tap of the 5% Jul-37 bond. Orders will be accepted via the JLM's on either an outright or EFP basis only.
ASIA STOCKS: Asian Equities Drop On Soft US Data, China's Covid Study
Asian equities fell, tracking Wall Street’s worst session of the year amid weak US economic data and rising inflation expectations and concerns following new bat coronavirus study in China. The USD is trading lower, while the euro outperformed after Germany’s conservative leader signaled plans for swift government formation. Japan is out today for Emperors Day, with US tsys trading also closed.
- China & Hong Kong: Mainland and Hong Kong stocks declined after the U.S. proposed fees on Chinese commercial ships, adding to trade tensions. Diagnostic kit and vaccine stocks gained after Chinese researchers reported discovering a new coronavirus in bats. The HSI is -0.25%, while the CSI 300 is -0.20%.
- South Korea's KOSPI dropped 0.80% as auto and chip stocks led declines. Samsung Electronics fell 1.37%, SK hynix lost 3.34%, and Hyundai Motor slipped 0.49%. However, POSCO Holdings rose 0.18%, and HMM surged 13.82%. Taiwan's TAIEX is 1% lower as global semiconductor stocks struggle, TSMC is down 1.90%, following the SOX dropping 3.28% on Friday.
- Australia's ASX 200 fell 0.1%, weighed down by mining and tech stocks. Wisetech Global plummeted as much as 23% after director resignations over disagreements with its founder. New Zealand's The NZX 50 dropped 1.7%, with Summerset Group dropping 6.5%.
EUR: EUR/USD To Fresh February Highs
EUR continues to climb, the pair last near 1.0515/20. DAX futures up around 1%, as markets digest the German election results.
EUR/JPY also higher, back close to 157, with yen underperforming broader USD weakness.
Some EUR/USD resistance levels to be mindful of.
RES 4: 1.0630 High Dec 6
RES 3: 1.0594 Dec 9 ‘24
RES 2: 1.0533 High Jan 27 and a reversal trigger
(we already above the earlier Feb highs (1.0514))
