Forex - Asia Close Highlights

 08:54 (GMT) 18 Jul

  [Forex Highlights]

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Asia Close Highlights (0100-QWMQ-C01)

18 July 2017

Regional Backdrop:

The USD saw another extended fall on the day. Significantly, the DXY broke 95.00, and it was no surprise to see most Asian currencies climbing higher against the USD. KRW saw another day of outperformance, up 0.45%. CNY and CNH also posted considerable advances on the day, up 0.18% and 0.14% respectively as stop losses were flushed out below the midpoint in the former. PHP and THB were the two outliers on the day, down 0.10% and 0.14% respectively, against the USD. The former was sold off on talk of fund sales, as foreigners unloaded real money bonds.

For the first time in recent days, USD/CNY traded below its midpoint of 6.7611 on the day, with stop losses below conclusively flushed out. Onshore spot fell to a low of 6.7487 from 6.7685, before trading close to the 6.7600 handle again. 1Y NDFs fell to a low of 6.8868 frim 6.9141, which meant that 1Y NDF points were barely at 13 big figures.

USD/SGD recovered slightly to 1.3700+ levels in the morning from the overnight lows, but saw selling pressures pick up again in the day sending the pair to a fresh 9-month low of 1.3660 as the US dollar was weighed after the defeat of the second healthcare bill.

USD/IDR gapped lower again to open at 13315 vs. last close of 13328 following a weaker US dollar due to the failure of the second healthcare bill. Pair saw further weakness in the day and slipped to trade sideways around 13310 in the afternoon, although the support at 13300 continued to hold strong just as we had expected.

USD/INR remained supported above 64.3000 until last look, and printed a fresh 1-month low of 64.3100 in the day. The intraday high was capped at 64.3650 until last check, leading to some consolidation in the day.

Market Psychology

USD/CNY - We expect 1Y NDF points to continue trading heavily, though it would be a stretch to say expect the 10 big figure mark to be challenged ahead of the ECB/BOJ meetings in the latter half of the week.

USD/SGD - Some risk is now seen as bears target 1.3650 ahead of the ECB meeting, but we are unlikely to see a frim break below the level given the outlook for Singapore economy is dwindling again.

USD/IDR - Some risk to 13300 is seen given the dollar weakness, but we expect 13275 to continue to hold ahead of the Bank Indonesia decision on Thursday

USD/INR - Downside pressures are likely to persist as SENSEX continues its upward trajectory, but we expect 64.1650 to support ahead of the August RBI meeting.

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