ASIA FX: USD/KRW, USD/PHP Break Higher, - Oil & JPY Weigh, CNH Outperforms
A number of USD/Asia pairs have broken above key resistance points to track at multi month highs. USD/KRW and USD/PHP are most prominent, with higher oil and a weaker yen impacting (USD/JPY getting close to multi week highs abvoe 152.50). CNH has outperformed, as the fixing bias continues to lean against USD gains. MYR is relatively steady, being a net energy export likely helping, whilst INR is relatively steady, aided by US-India trade deal hopes.
- For USD/KRW, we got to highs of 1441.45, levels last seen in late April. We sit slightly lower now, but upside focus will rest around the 1450 level. The BOK held rates as expected, but maintained an easing bias. Governor Rhee said FX volatility will be a watch point, but implied vols are only modestly higher, last near 8.08% for the 1mth. US-South Korea trade negotiations continue, with focus on the $350bn investment pledge, in terms of what time frame and how it will be made (cash versus loans etc). Spot USD/TWD is near 30.80, fresh highs back to early May. Headlines crossed that the US and Taiwan are close to a trade deal.
- USD/CNH is holding under 7.1300, the USD/CNY fix set at a fresh YTD low earlier, leaving the yuan continuing to outperform stronger USD levels. CNH/JPY got above 21.40 earlier and continues to eye a test of 21.50 (we were last 21.376).
- USD/IDR is up to 16645, off around 0.40% in IDR terms, with yesterday's surprise BI hold not giving any lasting relief to the rupiah. Late Sep highs near 16800 are an upside target if we can consolidate this break above the 20-day EMA.
- USD/PHP got to multi month highs of 58.675, before some selling interest emerged. Upside focus will rest at 58.75-59.00 region, although we might expect firmer BSP resistance to a break through these levels. Higher oil is a headwind, while domestic growth concerns linger in the background.
- USD/MYR has been very steady, holding under 4.2300 in latest dealings. Moves above this level have proved fleeting so far in Oct.
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EURGBP TECHS: Approaching Resistance
- RES 4: 0.8835 High May 3 2023
- RES 3: 0.8800 Round number resistance
- RES 2: 0.8769 High Jul 28 and the bull trigger
- RES 1: 0.8744 High Aug 7
- PRICE: 0.8735 @ 06:43 BST Sep 23
- SUP 1: 0.8650/8597 50-day EMA / Low Aug 14 and the bear trigger
- SUP 2: 0.8562 50.0% retracement May 29 - Jul 28 upleg
- SUP 3: 0.8540 Low Jun 30
- SUP 4: 0.8514 61.8% retracement May 29 - Jul 28 upleg
Recent weakness in EURGBP has been corrective and last week’s recovery confirmed the end of the latest corrective phase. Support to watch lies at 0.8597, the Aug 14 low. Clearance of this level would cancel a bull theme and reinstate a recent bearish threat. For bulls, the resumption of gains opens 0.8744, the Aug 7 high. Key resistance and the bull trigger is at 0.8769, the Jul 28 high. First support is 0.8650, the 50-day EMA.
EUROZONE T-BILL ISSUANCE: W/C September 22
Austria, Greece and Italy are still due to sell bills this week, while Germany and France came to the market yesterday. We expect issuance to be E21.6bln in first-round operations, up from E19.1bln last week.
- This morning, Austria will look to come to the market with E1bln of the 4-month Jan 29, 2026 ATB and E1.25bln of the new 6-month Mar 26, 2026 green ATB.
- Tomorrow morning, Greece will look to sell E500mln of the new 26-week Mar 27, 2027 GTB.
- Finally on Thursday morning, Italy will look to hold a BOT auction, with E6.5bln of the new 6-month Mar 31, 2026 BOT on offer.
CHINA: Country Wrap: Local Press Seeing Rates Lower
Market Summary: The Hang Seng fell yesterday on BYD news and is lower again today by -0.96%. The CSI 300 is down -1.19%, the Shanghai Comp down -1.23% and the Shenzhen Comp down -2.27%. The Yuan Reference Rate at 7.1057 Per USD; Estimate 7.1087 and the CGB 10-Yr a touch higher in yield at 1.80%
- China may have scope to lower its loan rates before the end of the year to stimulate domestic demand, following recent rate cuts by the US Federal Reserve that have eased pressure on the yuan, although any monetary easing is likely to be constrained by narrowing bank profit margins, Shanghai Securities News reports, citing analysts. The Fed’s latest rate cut has created a more accommodative global liquidity environment, potentially giving China greater flexibility in adjusting its monetary policy (source Shanghai Securities News)
- Several Chinese southern cities have implemented preventive measures, such as suspending work and schools, to prepare for the arrival of super typhoon Ragasa. Dongguan, Jiangmen, Shantou, Zhuhai, and Yangjiang in Guangdong province, as well as Haikou in Hainan province, yesterday announced they would implement the 'Five Stop' measures, which are suspending classes, halting work, ceasing production, stopping transportation services, and closing businesses. (source Yicai)
