21 April 2017
USD traded in a mixed manner against the Asian currencies. While it rose 0.64% against PHP, due to medium term profit taking, USD fell 0.50% against KRW, due to squaring of short positions after attention shifted from tensions in the Korean Peninsula to the French elections. USD was almost unchanged against CNY.
1Y NDFs still seen trading sideways between 7.0656 - 0734 on the last day of the week, while onshore spot was dragged lower by a lower than expected midpoint fixing of 6.8823, seen between 6.8779 - 8850 on the day. 1Y NDFs traded in a horizontal manner through the week, seen between a general range of 7.0650 - 0800. After some initial bids, 1Y NDF points were kept below 20 big figures through the week, between 17.5-20 big figures. Interestingly, the onshore spot was the main contributor to movements in point differentials, rather than 1Y NDFs.
USD/SGD printed the week's low of 1.3928 at the start of the week as markets digested the soft US retail sales and CPI data after the Good Friday holiday. US Treasury Secretary Mnuchin's comments about tax policy however brought the pair to the week's high of 1.4000 on Tuesday, and further gains were capped at the big figure. Pair traded on either side of 1.3970 thereafter amid global uncertainties including geopolitical concerns, UK snap elections, Paris attacks and the upcoming French presidential elections.
USD/IDR traded around 13260 at the start of the week after breaking below the key 13300 level in the previous week, but US Treasury Secretary Mnuchin's comments about tax policy lifted the pair back up to 13300 levels ahead of the Jakarta elections and BI decision. A gap higher to near 2-week highs of 13338 followed by consolidation around 13320 later in the week was underpinned by weak oil prices and a loss for Ahok in Jakarta.
USD/INR maintained a sluggish upside bias in the week, having printed the week's low of 64.2850 on the first day. The topside however remained capped below 64.7500 and prices slid below 64.6000 at last look.
USD/CNY - We expect 1Y NDF points to be capped at 20 big figures through to the end of the month, with 1Y NDFs now a firm sell on rallies.
USD/SGD - We expect benign upside pressures to return in the week ahead, and gains above 1.4000 remain likely, although we expect them to be temporary. On the downside, 1.3950 should continue to present a significant hurdle.
USD/IDR - Break above 13300 is likely to strengthen upside pressures, but we see no risk to 13350.
USD/INR - A recovery in dollar may pull the pair higher, but 65 handle looks farfetched for now. Medium term downside is still likely as GST becomes a reality.