Forex - Asia Close Highlights

 09:02 (GMT) 13 Jun

  [Forex Highlights]

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Asia Close Highlights (0101-BHPK-C01)

13 June 2018

Regional Backdrop:

Asian currencies remained mostly in the red against the US dollar on Wednesday as the Fed rate hike was eyed. PHP (-0.58%) led the decline given the deteriorating current account deficit and BSP's unwillingness to turn hawkish. THB (-0.33%) and INR (-0.29%) also depreciated while the CNH (+0.05%) recoded mild gains on expectations of PBoC mirroring the Fed rate hike. Focus will be on China's May growth statistics due on Thursday before most Asian markets go away for the long Ramadan weekend.

USD/CNH traded up to intraday high of 6.4886 in the morning but was later seen with an offered tone, dipping to 6.3992 until last look. There are increasing expectations of a PBoC hike following the expected Fed June rate hike.

PBoC fixed mid-point at 6.4156 vs. previous close of 6.4040. USD/CNY saw a slight break above 6.4100 handle to a high of 6.4110 but reversed to consolidate around 6.4050 subsequently. 1Y NDFs also seen with a mildly offered tone, slipping to 6.5115 low at last look from a high of 6.5225 earlier in the session.

Gains in dollar as markets braced for a Fed rate hike supported USD/SGD. USD/SGD crept up, but faced strong resistance at 1.3372 area. Markets shrugged off impacts of Tuesday's Trump-Kim summit, and turned their attention to a series of central bank meetings slated for this week. With a seemingly certain hike from the Fed, markets will watch closely the Fed' narratives at its meeting.

Indonesia's onshore markets remain closed until June 20, for Ramadan.

USD/INR onshore spot gapped higher to open at 67.5950 on Wednesday vs. last close of 67.4800, and after some consolidation around 67.6000, pair was bid up to intraday high of 67.6925 at last check. A strong CPI report for May is likely to boost expectations of another RBI rate hike in August, which traditionally weighs on the rupee.

Market Psychology

USD/CNH - On the larger scale of things, pair remains range-bound, and a move beyond 6.4100 handle should test a stronger resistance at 6.4322. For USD/CNY, a move beyond the 6.3900-6.4400 range will signal further downside or upside respectively.

USD/SGD - A clearance of resistance at 1.3372 will signal a firm upside momentum, the next strong hurdle is seen at 1.3406.

USD/IDR - We expect the rupiah to strengthen in the medium-term as BI continues to support the currency.

USD/INR - We expect upside pressures to persist despite the June RBI hike, and the break of resistances at 67.2900 and 67.6000 puts the focus back on the 68 handle.

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