Forex - Asia Close Highlights

 08:47 (GMT) 09 Nov

  [Forex Highlights]

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Asia Close Highlights (0101-FVVJ-C01)

09 November 2018

Regional Backdrop:

The week's gains were erased for most Asian currencies after the FOMC meeting saw to a strengthened dollar. The biggest losses came from Asia's largest economies: CNY (-1.76%), CNH (-1.46%) and INR (-1.32%). Continued monetary policy accommodation in Malaysia, South Korea and Thailand left MYR (-0.74%), KRW (-0.63%) exposed while SGD (-0.18%) was relatively sheltered by recent policy tightening from MAS. TWD almost back to square one, with no overall change throughout the week and HKD (0.29%) managed to steal some gains. Central bank meetings in Indonesia and Philippines are due in the week ahead, and uncertainty over monetary policy tightening benefited PHP (1.20%) and IDR (1.78%).

This week, USD/CNH halted the upside momentum at the start, but the bias started to creep in again towards the end. Pair started being range bound at around the 6.9100-6.9200 handle, last up to 6.9424. USD/CNY was in a bid tone during the week as PBOC fixings came within 1 big figure of our forecasted numbers. Pair last elevated close to the 6.9500 handle.

USD/SGD consolidated on the downside throughout most of the week until the FOMC meeting brought bulls back into the fray. Pair has broken the 1.3772 resistance and is now exposed to further gains. Key drivers in the week ahead include Singapore's retail sales and non-oil domestic exports numbers due Monday and Friday respectively, as well as US CPI due Wednesday.

USD/IDR onshore spot was seen with a steady downside bias in the week, as the USD momentum faded with the US midterm election results signalling difficulties for President Trump. Pair dropped from near-15000 levels at the start of the week to near 3-month lows of 14473 on Thursday before the upbeat FOMC turned the course slightly by reaffirming expectations for a Fed rate hike in December. Pair was last seen approaching 14700, but possibly kept below through intervention.

USD/INR onshore spot had a short trading week due to the 2-day Deepavali holidays in the week. Pair traded close to the 73 handle at the start of the week as the banking sector worries continued amid the RBI-government spat. Pair caught up on Friday with a lip to 72.6550 but remained in consolidation until last check.

Market Psychology

USD/CNH - Crossing the 6.9303 resistance points towards further momentum upward, next psychological resistance at 6.9500, and then 6.9803. We look to the 6.9500 handle near-term as a key psychological resistance level.

USD/SGD - Expect a test of the 1.3800 figure, although any break above is likely to be short lived.

USD/IDR - Eyes are on the Bank Indonesia decision due in the week ahead. Upside is likely to remain limited with resistance now at 14770/800 area in the meanwhile, but a delay in rate hikes could mean a return towards 15000.

USD/INR - October CPI will be key in the week ahead, although focus remains on the government-RBI banter, which will continue to keep rupee gains in check for now. Eyes remain on the 73 handle, which possibly remains guarded.

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