Forex - Chart USD/MYR Update: Upmove showing no signs of abating

 00:55 (GMT) 15 May

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Chart USD/MYR Update: Upmove showing no signs of abating (0101-KZLP-C01)

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Forex - Asia Open - Overnight Highlights

 23:50 (GMT) 09 May

 [Forex Highlights]

Asia Overnight Highlights - 10 May 2019

Majors FX Highlights

Risk aversion ahead of the US/China trade talks saw the USD take a hit with equities, EUR/USD advancing to 1.1251 and USD/JPY falling to 109.46. A correction, followed an equity bounce after Trump said he had received a letter from China's Xi and saw a deal as possible this week. EUR/USD however remained above 1.12 and USD/JPY remained below 110.00.

AUD/USD bounced higher with the help of Trump's comments while USD/CAD slipped back to the day's lows (still above 1.3450) after having touched above 1.35 earlier.

BoE MPC member Michael Saunders said the BoE is unlikely to raise rates far, or fast. GBP/USD came under some pressure but erased most of its losses versus the USD and the EUR.

Data highlights:

There were no major surprises in the latest US data, though PPI looks subdued, initial claims are hinting at a modest slowing in job growth, and the trade deficit is being contained by weak imports from China. Apr PPI was lower than expected at +0.2%, +0.1% ex food and energy, but firm at +0.4% ex food energy and trade. Trade prices fell by 0.5% after a 1.1% rise in Mar but transportation and warehousing rose by 1.0% after 2 straight sharp falls. The ex food, energy and trade rise comes after a flat Mar leaving trend at 0.2%. Overall Mar services were soft at +0.1%.

The US trade deficit was in line while jobless claims were higher than expected.

- US Apr PPI +0.2% vs 0.3% exp., ex food and energy +0.1% vs 0.2% exp.

- US Mar trade deficit $50.0bn vs $49.3bn in Feb and $50.1bn exp.

- US initial claims fell to 228k from 230k vs 220k exp.

- US Mar wholesale inventories -0.1% vs 0.0% exp., sales +2.3% vs 0.6% exp.

- VIX index: 19.10 (-1.55%)

- Gold Spot: $1,284.16/oz (+0.01%)

- ICE Brent front contract: $70.39 (+$0.02)

- Nymex WTI front contract: $61.69 ($-0.01)

- Reuters/Jefferies Commodities Index: 179.01 (-0.41%)

- 10y UST: 2.442% (-4bp) (Asia morning)

- DJI: 25,828.36 (-0.54%); S&P: 2,870.72 (-0.30%); Nasdaq: 7,910.59 (-0.41%)

Data Ahead:

Data on Friday is likely to take a back seat, but there is plenty of it, with US CPI the highlight. We see risks to the upside, even though the market expectation is for a rise in the y/y rate to 2.1% in April from 1.9% in March. This is likely to be ignored if risky assets continue to sell off, but would be USD supportive if a degree of risk appetite returns.

Emerging Asia FX Highlights

All Asian currencies edged higher initially before paring gains after trade talks resumed in Washington. Uncertainty in the trade talks were fuelled by Trump's comments that he received a "beautiful letter" from Xi Jing Ping. He hinted at a possibility of a deal by this week, but admitted that he had no idea what would happen. USD/CNH climbed to a new 4-month high at 6.8636, before retreating to around 6.8374 at last look. 1Y NDFs ticked higher to just below 6.9100 overnight, before reversing to 6.8857. USD/SGD climbed to a 1.3657 high since early January, before slipping and traded around the 1.3647 level. USD/IDR 1M NDFs edged higher as well to 14546, before falling to 14500 at last look. USD/INR 1M NDFs climbed higher to around 70.65, before retreating to 70.38. Pair has since bounced slightly up to 70.47 during Friday's Asian hours.

Emerging Asia Data Highlights

China's CPI rose slightly to 2.5% y/y in April from 2.3% prior, primarily driven by rising food prices. PPI recovered to 0.9% y/y in April from 0.4% prior, supported by base effects. At that rate, it is only marginally positive for manufacturing and growth. Bangko Sentral ng Pilipinas (BSP) cut its policy rate by 25 bps on Thursday, as expected. This marked the start of an easing cycle from the central bank, which has delivered an aggressive round of monetary policy tightening totalling 175 bps last year. Philippines' GDP also growth slowed to a four-year low of 5.6% y/y in Q1 from a revised 6.3% y/y in Q4 2018. The main drag came from a sharp slowdown in government spending, caused by a recent delay in approval for the budget. This was in line with our view that the support from strong government spending may fade this year. China's Aggregate Financing and New Yuan Loans for April slipped to 1360 CNY bn and 1020 CNY bn from a revised 2859.3 CNY bn and 1690 CNY bn respectively in March. While Money Supply M2 saw a slight fall to 8.5% y/y from 8.6% y/y in April.

Malaysia's March Industrial Production will be released on Friday and we are expecting it to pick up to 2.4% y/y in March from 1.7% y/y in February. This will be followed by Singapore's retail sales. We are expecting an improvement to -2.2% y/y in March from -10.0% y/y in February. The week will end off with India's industrial production for March, markets are expecting it to pick up to 1.2% y/y in March from 0.1% y/y in February.


- 04:00 GMT - MY: Industrial Production (Mar) 4cast: 2.4% y/y (Mkt: 2.1 Prev: 1.7)

- 05:00 GMT - SG: Retail Sales (Mar) 4cast: -2.2% y/y (Mkt: -0.6 Prev: -10)

- 08:30 GMT - UK: Construction Output (sa) (Mar) 4cast:-0.5 % m/m [Mkt: -0.9, Prev: 0.4]

- 08:30 GMT - UK: Construction Output (sa) (Mar) 4cast: 4.9% y/y (Mkt: 4.5 Prev: 3.3)

- 08:30 GMT - UK: GDP (Mar) 4cast: unch% m/m (Mkt: 0 Prev: 0.2)

- 08:30 GMT - UK: GDP (1Q P) 4cast: 1.9% q/q (Mkt: 0.5 Prev: 0.2)

- 08:30 GMT - UK: Index of Services (Mar) 4cast: % 3m/3m (Mkt: 0.4 Prev: 0.4)

- 08:30 GMT - UK: Index of Services (Mar) 4cast:0.1 % m/m [Mkt: 0.1, Prev: 0.1]

- 08:30 GMT - UK: Industrial Production (Mar) 4cast: -1% m/m (Mkt: 0.1 Prev: 0.6)

- 08:30 GMT - UK: Industrial Production (Mar) 4cast: -0.6% y/y (Mkt: 0.5 Prev: 0.1)

- 08:30 GMT - UK: Manufacturing Production (Mar) 4cast: -0.5% m/m (Mkt: 0 Prev: 0.9)

- 08:30 GMT - UK: Manufacturing Production (Mar) 4cast: 0.6% y/y (Mkt: 1.1 Prev: 0.6)

- 08:30 GMT - UK: Trade Balance (Non-EU) (Mar) 4cast: GBP bn (Mkt: -5.4 Prev: -5.841)

- 08:30 GMT - UK: Visible Trade Balance (Mar) 4cast: GBP bn (Mkt: -13.7 Prev: -14.112)

- 12:00 GMT - IN: Industrial Production (Mar) 4cast: 1%y/y (Mkt: Prev: 0.1)

- 12:30 GMT - US: CPI (Apr) 4cast: 0.5% m/m (Mkt: 0.4 Prev: 0.4)

- 12:30 GMT - US: CPI (ex Food & Energy) (Apr) 4cast: 0.2% m/m (Mkt: 0.2 Prev: 0.1)

- 12:30 GMT - CA: Building permits (Mar) 4cast: % m/m (Mkt: 2.3 Prev: -5.7)

- 12:30 GMT - CA: Net Change in Employment (Apr) 4cast:15 k [Mkt: 11.6, Prev: -7.2]

- 12:30 GMT - CA: Unemployment (Apr) 4cast: 5.8% (Mkt: 5.8 Prev: 5.8)

- 18:00 GMT - US: Monthly Budget Statement (Apr) [Mkt: 160.5, Prev: -146.9]


- 03:00 GMT - JP: 3mth Bills Auction

- 03:35 GMT - JP: 10yr CPI-Linked Bonds Auctions

- 07:30 GMT - EU: ECB's Lautenschlaeger speaks in Paris

- 07:30 GMT - EU: ECB's Villeroy speaks in Paris

- 09:30 GMT - EU: ECB's Visco speaks in Paris

- 10:00 GMT - UK: 182-Day Bills Auction (GBP 2.5bn)

- 10:00 GMT - UK: 28-Day Bills Auction (GBP 0.5bn)

- 10:00 GMT - UK: 91-Day Bills Auction (GBP 1bn)

- 12:30 GMT - US: Fed's Brainard speaks in Washington

- 13:08 GMT - US: Fed's Bostic speaks

- 14:00 GMT - US: Fed's Williams speaks in Bronx, N.Y.

- 14:30 GMT - EU: ECB's Coeure speaks in Paris

Forex - Asia Open - Overnight Highlights

 00:10 (GMT) 09 May

 [Forex Highlights]

Asia Overnight Highlights - 9 May 2019

Majors FX Highlights

FX trade was fairly quiet, the USD getting only marginal support from rising equities (on a Trump tweet saying China sought a deal) and rising UST yields (after a weak 10 year auction). USD/JPY saw only a brief bounce above 110.25 on the Trump tweet though EUR/USD ended on the low side of a tight range centered around 1.12.

Mar German industrial production proved stronger than expected, rising 0.5% against expectations of a 0.5% decline. The data provided some support to the EUR in the European morning, offsetting Tuesday's downgrade to EU Commission growth forecasts.

GBP weakened through the European morning, without an obvious trigger, though it has become increasingly clear that there is little prospect of a common Brexit position being agreed between the government and Labour by the informal deadline of the end of this week. UK data was minor but on the strong side of expectations with Halifax house prices rising 5.0% y/y.
USD/CAD failed to sustain a dip below 1.3450 but CAD outperformed AUD, AUD/USD back below .70. AUD/NZD erased most of its post-RBNZ bounce.
Data Ahead:

US PPI may garner a little more attention than usual given the current focus on inflation, while a speech from the Fed's Bostic on monetary policy may add something to our understanding of the Fed's thinking. That being said, these will likely be subservient to any news on trade developments for the FX market.

Data highlights:

- Trump tweeted that China coming to the US to make a deal.

- US 10yr auction tails by 1.4bp with 2.17 b/c, lowest since 2009.

- VIX index: 19.40 (+0.41%)

- Gold Spot: $1,281.23/oz (+0.03%)

- ICE Brent front contract: $70.37 (+$0.49)

- Nymex WTI front contract: $62.05 ($-0.07)

- Reuters/Jefferies Commodities Index: 179.75 (+0.14%)

- 10y UST: 2.484% (+3bp) (Asia morning)

- DJI: 25,967.33 (+0.01%); S&P: 2,879.42 (-0.16%); Nasdaq: 7,943.32 (-0.26%)

Data Ahead:

Thursday should see U.S. weekly initial claims move back towards trend after some volatile recent moves surrounding Easter. We also expect a 0.3% increase in Apr U.S. PPI with a 0.2% rise ex food and energy. Mar U.S. trade and wholesale data also due on Thursday should have a limited impact assuming similar messages to the advance data on May 3. Thursday's Fed speakers are moderate non-voter Bostic and dovish voter Evans. European Central Bank (ECB)'s Hakkarainen will speak in Basle.

Emerging Asia FX Highlights

Asian currencies mostly weakened slightly against USD during the overnight session. USD/CNH climbed up to 6.8103 overnight before retreating to around 6.8051 at last look. 1Y NDFs ticked higher to around 6.8400 overnight. USD/SGD edged higher to 1.3630 during the overnight session, before slipping slightly to 1.3622 at last look. USD/IDR 1M NDFs edged lower overnight, before holding steady around 14444. USD/INR 1M NDFs climbed higher to around 70.05 overnight and held steady as well during the early Asian hours.

Emerging Asia Data Highlights

China's exports fell 2.7% y/y in April, down from a 14.3% increase prior. Imports registered a small 4% y/y increase, rebounding after a 7.6% y/y contraction a month earlier. Hence, the trade balance faded to USD 13.84bn from a revised USD 32.42bn a month ago. The data highlighted at the still-weak external demand among China's major trading partners. Q2 should see some weaknesses in external demand due to trade uncertainty. Philippines's exports saw a -2.5% y/y decline in March from a revised -0.1% y/y in February. Imports registered a 7.8% y/y increase in March from 2.6% y/y in February. Trade balance remained in contraction at -3138 USD mn from a revised -2744 USD mn in February. The Bank of Thailand left its benchmark interest rate unchanged at 1.75% in a unanimous decision. The Bank maintained its cautious stance amid downside risks to growth, seeing that "the economy would expand at a slower pace than the previous assessment". Weakening external demand and uncertainties from local elections pose some downside risk to Thailand's export-reliant economy.

Thursday will see the release of China's CPI and PPI data for April and we are expecting slight rises to 2.5% y/y and 0.6% y/y respectively. This will be followed by Philippines' Q1 GDP and monetary policy meeting. We expect Philippines GDP to slow down to 6.1% y/y in Q1 from 6.3% y/y in Q4 2018 due to softening in the manufacturing sector and export growth. A further cool down in inflationary pressures provides Bangko Sentral ng Pilipinas (BSP) with room to start unwinding its aggressive round of monetary policy tightening, beginning with a 25-bp cut at the May meeting.


-01:30 GMT - CN: CPI (Apr) 4cast:2.5 % y/y [Mkt: 2.5, Prev: 2.3]

-01:30 GMT - CN: PPI (Apr) 4cast: 0.6% y/y (Mkt: 0.6 Prev: 0.4)

-02:00 GMT - PH: GDP (Q1) 4cast: 6.1%y/y (Mkt: 6.0 Prev: 6.3)

-05:00 GMT - JP: Consumer Confidence (Apr) 4cast: index (Mkt: 40.3 Prev: 40.5)

-08:00 GMT - PH: BSP - Overnight Reverse Repo Rate (May 9) 4cast: 4.5% (Mkt: 4.5 Prev: 4.75)

-12:30 GMT - US: Initial Claims (May 4) [Prev: 230]

-12:30 GMT - US: PPI (Apr) 4cast: 0.3% m/m (Mkt: 0.2 Prev: 0.6)

-12:30 GMT - US: PPI (ex Food & Energy) (Apr) 4cast: 0.2% m/m (Mkt: 0.2 Prev: 0.3)

-12:30 GMT - US: Trade Balance (Mar) 4cast: USD bn (Mkt: -54.0 Prev: -49.4)

-12:30 GMT - CA: House Price Index (Mar) 4cast: % m/m (Mkt: 0 Prev: 0)

-12:30 GMT - CA: Trade Balance (Mar) 4cast: CAD bn (Mkt: -2.4 Prev: -2.9)

-14:00 GMT - US: Wholesale Inventories (Mar F) 4cast: % m/m (Mkt: Prev: 0)


- 03:30 GMT - JP: 6mth Bills Auction

- 07:00 GMT - EU: ECB's Hakkarainen speaks in Basel

- 09:30 GMT - UK: 1% Treasury Gilt 2024 (GBP 3bn)

- 12:30 GMT - US: Fed's Powell speaks in Washington

- 13:45 GMT - US: Fed's Bostic speaks

- 15:30 GMT - US: 4wk Bills Auction

- 15:30 GMT - US: 8wk Bills Auction

- 17:00 GMT - US: 30yr Bonds Auction (USD 19bn)

- 17:15 GMT - US: Fed's Evans speaks in Washington

- 23:50 GMT - JP: BoJ Summary of Opinions

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