Forex - Philippines Flows: USD/PHP still in consolidation ahead of Jackson Hole

 02:52 (GMT) 23 Aug

  [Forex Flows]

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Philippines Flows: USD/PHP still in consolidation ahead of Jackson Hole (0101-NLQZ-C01)

USD/PHP traded in a tight range between 52.300 -52.400 at last look. Peso eked out modest gains of 0.2% against dollar during the week. Markets are on the sidelines ahead of Jackson Hole symposium and Fed Chairman Powell's speech on Friday. The pair is seen in consolidation between support at 52.070 and resistance at 52.450 for now, waiting for catalysts. 1M NDFs were steady at 52.400 at last look. PSEi extended drop, down by 1.15% at last look.

Forex - Asia Open - Overnight Highlights

 00:00 (GMT) 20 Aug

 [Forex Highlights]

Asia Overnight Highlights - 20 Aug 2019

The USD was net little changed through the European morning, but there was some cross movement, with the EUR making gains against the JPY and GBP initially although GBP was later back to flat too. Some euro support at least still lingering from German government statement last week indicating a willingness to increase Budget spending in the case of a recession. Slight late dollar lift from Rosengren comments however, although nothing new from this current hawk. JPY weakness looks based on a generally better risk tone with equities up and yields up helped by hopes of stimulus from China and Germany. Initial GBP weakness had no clear trigger but after a strong recovery in the second half of last week, the lack of progress from opposition parties in preventing a no-deal Brexit has reduced optimism.

Data Overnight:
Eurozone CPI was slightly weaker than expected in July, up 1.0% y/y against a market expectation of a 1.1% rise. The current account was also below expectations, at EUR18.4bn in June, down from 30.2bn in May.

Data Ahead:
RBA minutes of August policy meeting due, in which RBA stayed pat. In Canada, we expect a 2.0% decline in Jun manufacturing shipments.

- VIX index: 16.88 (-8.61%)

- Gold Spot: $1,495.69/oz (-0.02%)

- ICE Brent front contract: $59.74 (+$1.10)

- Nymex WTI front contract: $56.11 ($-0.10)

- Reuters/Jefferies Commodities Index: 170.78 (+0.22%)

- 10y UST: 1.606% (+5bp) (Asia morning)

- DJI: 26,135.79 (+0.96%); S&P: 2,923.65 (+1.21%); Nasdaq: 8,002.81 (+1.35%)


FX Highlights:

A mixed day for Asian currencies, and sentiment continued to be driven by trade headlines. The U.S. decision to extend temporary sales permit to Huawei for 90 days provided some relief, and next deadline will be Nov 19. President Trump continued to urge a 100 basis point rate cut by the Fed.
USD/CNH reached a high of 7.0768 overnight and further gains were capped. Pair was seen steady at around 7.0700 into early Asian hours on Tuesday. Upside pressure eased slightly on Huawei-induced trade optimism, eyes on 7.0000 level. USD/CNY traded with a modest upside bias on Monday. We think that a break of the 7.0000-7.0500 range will likely trigger further movements either way. 1Y NDFs consolidated at 7.1350.

USD/SGD pushed to a high of 1.3870 overnight and was last seen holding onto the gains into Asian hours on Tuesday. Pair may edge lower and eye the 1.3833 support next. If broken, will turn our attention to the 1.3806 support.

USD/IDR rebounded to 14240 after some sideway movements at 14200 earlier. We expect the pair to continue to be range bound ahead of key catalysts this week, the FOMC meeting minutes on Wednesday and BI decision on Thursday. Consensus is now split between a rate cut and an unchanged rate by BI. A rate cut by BI may see the pair may test further upside at 14360. 1M NDFs still held onto overnight gains, and were last seen 14350.

USD/INR traded with a bid tone on Monday. Rupee was slightly stronger on the open amid an improved risk tone from the seemingly more conciliatory tone on the US-China trade battle, but soon reversed gains. Pair closed at 71.4425. The pair is likely to consolidate on the 71 handle, with risk sentiment likely the key driver. 1M NDFs were steady at 72.000 handle as Asian session started.

Data/Events Highlights:

Hong Kong's unemployment rate edged up to 2.9% in July from 2.8% prior, while composite interest rate was at 0.94% in July, down from 0.95% prior.
Thailand's economy has slowed down as expected in Q2. GDP expanded by only 2.3% y/y in the second quarter, the lowest level since 2014. Trade tensions and strong Thai Baht have hit the country's exports, weighing down growth.

Data/Events Ahead:

A quiet data calendar in Asia in the day ahead, with only July Hong Kong composite CPI due.


- 08:30 GMT / 16:30 SGT - HK: CPI (Jul) [Mkt: 3, Prev: 3.3]

- 12:30 GMT / 20:30 SGT - CA: Manufacturing sales (Jun) 4cast:-2 % m/m [Mkt: -1.5, Prev: 1.6]


03:35 GMT / 11:35 SGT - JP: 20yr Bonds Auction

09:30 GMT / 17:30 SGT - EU: ECB Main Refinancing Operation Result

09:30 GMT / 17:30 SGT - UK: 2028 0.125% Index Linked Treasury Gilt

12:30 GMT / 20:30 SGT - US: Philly Fed issues nonmanufacturing business outlook survey for August

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