KRW: USD/KRW Off Highs But Underperforms USD Index Falls, Kospi Surge Continued
Spot USD/KRW ended Wednesday trade at 1369.05, a won loss of 0.15%. This underperformed softer USD trends elsewhere, particularly in terms of the EU bloc of currencies (the DXY finished down 0.47% for the session session). Spot USD/KRW did move off intra-session highs above 1375, aided by the softer US CPI outcome as US Wednesday trade unfolded.
- Wednesday intra-session highs were above the downtrend channel early April highs, but closing levels near 1369 were back inside this channel. Further north we have the 20-day EMA close to 1380. Recent lows in the pair rest at 1351.8.
- In the equity space, to recap the Kospi finished up 1.23%, and above 2900, fresh multi year highs. President Lee stated in his visit to the Korea Exchange, “The most important task is to eliminate, or at least alleviate, the unfairness and lack of transparency in the market,” Lee said. “Our companies don’t really pay much dividends, and there must be reasons. So we’re preparing tax and institutional reforms to encourage dividends.” (via BBG, see this link).
- Offshore investors added $272.6mn to local stocks yesterday, bringing June to date inflows to +$1.573bn.
- The offshore lead from US tech indices is a little softer from Wednesday's session.
- The local data calendar is empty today. BoK Governor Rhee will deliver a speech to mark the 75th anniversary of the central bank, while the Finance Ministry will hold a meeting to review the housing market (4pm local time), per BBG. This comes after yesterday's further climb in bank lending to households.
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JGB TECHS: (M5) Off Highs, But Underlying Strength Persists
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 142.95 - High Apr 7
- PRICE: 139.35 @ 16:24 GMT May 12
- SUP 1: 139.28 - 1.0% 10-dma envelope
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs are holding the bulk of the recent strong bullish reversal from early April, rejecting any test of fresh cycle lows for the M5 contract. This defies the bearish momentum studies drawn on the longer-term chart, clearing moving-average resistance to print 142.40 at the new upper level. To the downside, sights are on 136.57, a Fibonacci projection. 144.48 is the medium-term target on any recovery.
NZD: Breaks 1st Support, Approaching 0.5800
The NZD had a range Overnight of 0.5847 - 0.5941, Asia is opening around 0.5855. US Stocks and risk have roared higher on a US/China agreement to a significant reduction in tariffs for 90 days.
- This has seen the USD gap higher from oversold levels, the NZD/USD has as a consequence moved lower but continues to perform well in the crosses. NZD/JPY up over 1% on the day.
- “China-proxy currencies Aussie and Kiwi should continue to outperform safe haven currencies yen and Swiss franc as the US and China have taken significant steps to de-escalate their trade war,” according to Brown Brothers Harriman.(BBG)
- The NZD tried to bounce as risk outperformed but the surge in the USD saw it fall away and then the support just below 0.5900 finally break.
- Price is now coming back to test the bigger support back towards 0.5800, this needs to hold for those who believe the USD is set to move lower.
- CFTC Data showed little movement, with Asset managers adding very slightly to their shorts and the leveraged community slightly reducing their own short.
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg
ASIA: Government Bond Issuance Today
- Bank of Thailand to Sell THB60bn of 91-Days Bills
- Hong Kong to Sell RMB1.5 Billion 5-year Bonds
- Hong Kong to Sell RMB1.5 Billion 2-year Bonds
- Hong Kong to Sell RMB1.0 Billion 10-year Bonds
- Hong Kong to Sell HK$19 Billion 182-Day Bills
- Hong Kong to Sell HK$64.295 Billion 91-Day Bills
- Taiwan to Sell NT$20 Billion 30-Year Bonds
- Philippines to Sell 3-Year Bonds
- Philippines to Sell 20-Year Bonds
- Philippines To Sell PHP 9.0Bln 364D Bills (PH0000060394)
- Philippines To Sell PHP 8.0Bln 182D Bills (PH0000059537)
- Philippines To Sell PHP 8.0Bln 91D Bills (PH0000059149
