SGD: USD/SGD - Finds Support Below 1.3000 As Risk Turns Sour

• RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
• RES 2: 96.685 - 1.000 proj of the Sep 3 - 12 - 15 price swing 
• RES 1: 96.615 - High Sep 12  
• PRICE: 96.505 @ 16:24 BST Oct 14
• SUP 1: 96.280 - Low May 15 (cont.)  
• SUP 2: 95.900 - Low Jan 14 (cont.)
• SUP 3: 95.760 - Low 14 Nov ‘24

Aussie 3-yr futures surged on the resumption of trade after the weekend, returning focus higher after the break of support last week. While prices appear more stable, the recent break of Sep 3 low of 96.435 negates the recent short-term bullish theme. This breach signals scope for an extension towards 96.280, the May 15 low on the continuation chart. The short-term resistance to watch is 96.615, the Sep 12 high. Clearance of this level is required to reinstate a bullish theme.  

USD/JPY tracks under 152.00 in early Wednesday dealings, after posting a modest gain for Tuesday's session. Bullish technical conditions persist, with the recent correction lower considered corrective for now. The next important support lies at 149.72, the 20-day EMA. On the upside, clearance of last Friday’s 153.27 high, would resume the uptrend and open 154.39, a Fibonacci retracement point. 

• This backdrop didn't shift as Tuesday's session unfolded, with focus elsewhere, as EUR recovered some ground, while AUD/USD moved up from lows as the USTR said US-China talks were still continuing. AUD/JPY is near 98.40 in latest dealings, remaining supported on dips sub 98.00 for now.
• Despite the bullish technical set up, more broadly, USD/JPY looks too high relative to US-JP yield differentials, see the chart below. Fed Chair Powell largely maintained status quo in terms of signaling another 25bp rate cut at the end of October, without a significant market reaction. Intervention risks also lurk in the background for USD/JPY.
• Some offset is coming from continued domestic political uncertainty. The chairpersons of the House of Councillors' Diet Affairs Committees from the governing Liberal Democratic Party (LDP) and main opposition Constitutional Democratic Party (CDP) met yesterday and agreed on the convening of an extraordinary session of the National Diet on 21 October (likely to elect a new PM). LDP leader Takaichi is seeking meetings with the three main opposition parties today (see this link).
• On the data front today we have Aug final IP, while a 20yr debt auction is in focus on the JGB side.
• In the option expiry space, note the following for NY cut later: Y143.00($1.8bln), Y150.00($1.1bln), Y151.55($956mln), Y151.95-00($500mln). 

Fig 1: USD/JPY Versus US-JP Yield Differentials 

Source: Bloomberg Finance L.P./MNI 

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