FX Pulse
OVERNIGHT
In G10, the U.S. dollar ended mix against its peers, with the dollar index DXY ending slightly lower to 98.887 from 99.02. Asian currencies ended mostly higher to the dollar, with ADXY higher to 105.19 from 105.06 as a firmer CNH anchored the region.
In G10, EUR/USD benefited from the pick-up in risk aversion, higher by 0.17% to 1.0877 but still chop between 1.08 and 1.09. GBP/USD declined further to 1.4407 but saw keen buying interest below 1.44 for the second straight day. A status quo BOE today may reverse a short-term technically oversold cable. USD/JPY reversed earlier gains of as high as 118.38 in Asia when equities losses bite in in the NY session to close flat at 117.68. AUD (-0.44%) and NZD (-0.37%) continued to be laggards in G10 in the current risk-off environment while CAD fell to fresh 12-yr low vs USD, at 1.4340.
Regional currencies MYR (+0.64%), IDR (+0.56%) and THB (+0.22%) were broadly higher on Wed, helped by stability in the onshore fix and RMB, together with better than expected China’s trade balance. SGD pared back most of the intra-day gains come NY session, eroded by steep equities losses to close only marginally 0.10% stronger at 1.4367.
Portfolio wise, our month-old long JPY/SGD position triggered the trailing stop at 1.2100 overnight, realizing an average gain
of 3.80%. With this, we have closed off the last cash trade of 2015, finishing at +9.99% for the year. Also we took partial profit for our short NZD/USD recommendation at 0.6490 overnight, as advised in yesterday’s publication.
TODAY’S VIEW
Today, the 2-day BI meeting concludes and there is a possibility of a 25bps rate cut to 7.75%. If delivered, that may lift USD/IDR to above 13,900 and even beyond recent range high at 14,000.
USD/MYR, currently at 4.3910, looks vulnerable to test above 4.4300 in the near term if WTI were to plunge below the psychological $30 a barrel.
In early Asia trade, the SGD NEER trades at 1.53% below the mid-point. The permissible 2% limit would imply a USD/SGD of 1.4460 according to our model, which is the level we propose to book partial profits on our existing longs. USD/THB, currently at 36.30, is within reach for our partial take-profit level of 36.40.
Today, we initiate short AUD/SGD at 0.9980 after finally closing below the strong 1.0000 support, target 0.9870 and stop 1.0105.