Forex - Asia Close Highlights

 08:49 (GMT) 10 Oct

  [Forex Highlights]

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Asia Close Highlights (0101-PJNS-C01)

10 October 2019

Regional Backdrop:

Asian currencies were slightly up on Thursday. CNH led gains of 0.29%, alongside CNY (0.23%). THB (-0.25%) and KRW (-0.24%) fell. Market attention is on US-China trade talks. Some limited deals and currency pact being thrown on newswires as some limited cooperative measures.

USD/CNH saw a sharp move lower on Thursday. Pair was down to 7.1225 last after being as high as 7.1684. This came after news reports that US is weighing on a currency pact with China as part of a partial trade deal. Focus is on US-China trade talks where China seems open to a small trade deal if Trump eases tariff threats. PBoC fixed mid-point at 7.0730 vs. previous close of 7.1315. USD/CNY gapped lower and last at 7.1170. 1Y NDF last lower vs. Wednesday at 7.1828.

USD/SGD traded in volatile fashion at the beginning of Thursday with conflicting reports over the U.S. - China trade talks. Pair rose to an intra-day high at 1.3826 initially, following reports of the trade talks in Washington may be cut short, stoking risk aversion. However, some U.S. sources later claimed that the trade talks would proceed as planned on Thursday and Friday, which re-invited risk-on sentiments. Pair subsequently pared gains back to a 2-week low at 1.3775. There is a possibility that an interim deal may be reached ahead of the October's U.S. tariffs deadline next week, a trend from previous meetings.

USD/IDR onshore spot hit 14182 highs in early trading on Thursday as risk aversion remained rampant amid US-China trade talks and Turkey starting military operations in Syria. Reports of US considering a currency pact as part of the partial trade deal with China however supported the yuan and Asian currencies as possibility of suspension of tariff increase next week emerged. Pair dropped to 14145 and traded sideways around 14150 until last check.

USD/INR onshore spot remained close to the 71 handle earlier on Thursday amid flip-flop announcements in the ongoing US-China trade talks. Possibility of tariffs going up next week still remains high however, and pair traded higher to 71.150 in the afternoon. Eyes also on Xi-Modi meet and RCEP negotiations scheduled for this week.

Market Psychology

USD/CNH - This move turns attention to 7.0965 support, while 7.1585 for first resistance. For USD/CNY, psychological support is at 7.1000 big figure.

USD/SGD - In view of the potential risk-on sentiments, we have a slight downside bias towards the 1.3751 support. If broken, will turn our attention to the 1.3721 support next.

USD/IDR - Room above 14200 remains limited due to BI presence, but a strongly negative trade talks outcome still poses threat.

USD/INR - The break above the 71 handle still remains fragile and a firmer upside bias is likely only if 71.500 breaks. Support at 70.355 will continue to hold.

Forex - India Flows: Rupee toying with 71 as trade talks loom

 04:35 (GMT) 07 Oct

 [Forex Flows]

USD/INR onshore spot picked up some momentum to rise to 71+ levels in early trading on Monday from previous close of 70.880 as risk aversion was at play amid the looming US-China trade talks. Another round of RCEP negotiations are also scheduled for this week, which may keep investors on the edge after the RBI decision underwhelmed the markets. Only break of support at 70.355 will turn the focus to the downside. 1M NDFs traded with an upside bias, back to 71.400-levels this morning, after slipping to 71.150 overnight. SENSEX in gains of 0.4% at last check.

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