ASIA FX: USD/PHP Back Under 58.00, Military Chief Pushes Back On Marcos Removal
Asian currencies have been mixed in the first part of Friday trade. Note China and South Korea are out until late next week, which has impacted liquidity throughout the region. Data flow has been light other than the Singapore PMI, and retail sales. Equity sentiment has been positive, but South East Asia has lagged stronger tech led gains in North Asia.
- USD/CNH has drifted a little higher, last above 7.1370, but is likely to remain range bound with no onshore anchor (absent a sharp broader USD move). USD/TWD is a little lower, last under 30.40, but remains within recent ranges. The currency continues to lag the stronger local/globally led tech equity tone.
- In South East Asia, USD/PHP is back under 58.00, fresh multi week lows. We have seen resistance above 58.30 in recent sessions. Domestic politics remains in focus, with earlier headlines that the head of the military rejected calls to unset President Marcos (via BBG). "The Philippines’ military chief said he rejected calls by some retired officers for the armed forces to remove President Ferdinand Marcos Jr." This comes amid on-going corruption concerns around projects in flood impacted areas.
- USD/IDR has edged a little higher, but remains close to 16600. USD/THB is firmer, but at 32.45/50 remains under recent highs (32.52). USD/MYR is also higher, last around 4.2150.
- USD/SGD is firmer, last around 1.2900. Earlier the PMI rose to 56.4 from 51.2 in Aug. Retail sales also just printed, slightly better than expected at 5.2%y/y, versus 4.8% forecast. This follows a softer run of data since mid Sep, when exports, IP and CPI were below expectations.
- The MAS policy announcement is scheduled soon, with BBG noting the release window from the start of next week to the 14th of Oct.
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BUND TECHS: (U5) Approaching The Bear Trigger
- RES 4: 130.26 High Aug 8
- RES 3: 130.06 High Aug 14
- RES 2: 129.71/90 50-day EMA / High Aug 28
- RES 1: 129.42 20-day EMA
- PRICE: 128.71 @ 05:50 BST Sep 3
- SUP 1: 128.64 Low Aug 15 and the bear trigger
- SUP 2: 128.40 Low Apr 9
- SUP 3: 128.19 Low Mar 27 (cont)
- SUP 4: 127.83 76.4% retracement of the Mar 11 - Apr 7 bull leg (cont)
Bund futures are trading lower this week. The move down undermines a recent bullish theme and the contract is approaching support at 128.64, the Aug 15 low and a bear trigger. A break of this level would confirm a resumption of the downtrend and highlight a range breakout - the contract has traded in a range since April. This would open 128.40 next, the Apr 9 low. Key short-term resistance is at 129.90, the Aug 28 high.
ASIA STOCKS: Weak Day for China as Others Trend Sideways
The NIKKEI in Japan declined today as political uncertainty increased after Prime Minister Shigeru Ishiba’s key power broker announced his intention to resign with local media suggesting other key power brokers within the LDP are intending to quit. The move higher in developed market bond yields has seen a cautious day in Asia with China down across major bourses, whilst the bounce back in Jakarta continues.
- The NIKKEI is down in the Tokyo trading day by -0.80%, after yesterday's gains of +0.29%
- The major bourses in China are all down with the Hang Seng down -0.40%, CSI 300 down -0.88%, Shanghai down -0.96% and Shenzhen down -0.93%.
- The TAIEX in Taiwan is up marginally by +0.10%.
- The KOSPI has done very little today with gains of +0.08%
- In Malaysia, the FTSE Malay KLCI rose a mere +0.09%
- The Jakarta Composite is up +0.90% today after yesterday's gains of +0.85%.
- The Straits Times in Singapore is down -0.25% whilst the PSEi in the Philippines is down -0.80%
- The NIFT 50 has had a quiet start up just +0.08% after yesterday's losses of -0.18%
JGBS: Back End Yields Higher, But Away From Best Levels, 30yr Auction Tomorrow
JGB futures have maintained a negative bias, with the Sep future last near 137.34, -.18 versus settlement levels. We haven't tested sub 137.20 so far (session lows rest at 137.23). Broader trends have been skewed towards weaker futures with US 10yr futures back to flat after initially opening firmer. Aussie bond futures are down sharply, aided by a better Q2 GDP outcome.
- The initial impetus in the cash JGB space was for steeper curves, led by the 20-40yr tenors. We sit away from session extremes though. The 10yr outright yield was last near 1.63%, little changed for the session.
- The 30yr was close to 3.26%, earlier highs were around 3.29%. The 2/30s JGB curve was last around +240bps (sessions highs were at +242bps). The 40yr was last up 3bps, near 3.50%, the 20yr around 2.67%, up 3bps.
- BOJ Governor Ueda met with PMI Ishiba to discuss the economy/markets. Ueda reiterated they will raise rates if the economy, prices move in line with forecasts.
- Domestic politics will remain in focus as well: "JAPAN LDP'S ASO SET TO CALL FOR EARLY PARTY ELECTION: MAINICHI" - BBG.
- The strong focus for tomorrow will be on the 30yr debt auction.
