Forex - Asia Close Highlights

 08:51 (GMT) 29 Nov

  [Forex Highlights]

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Asia Close Highlights (0101-PWVC-C01)

29 Nov 2019

Charu Chanana, Jiaxin Lu, Defa Zhao

Regional Backdrop:

Majority of the Asian currencies weakened against the dollar during the week as the dollar strengthened amid a strong Q3's GDP showing. Initial trade optimism was pared towards the end of the week, after Trump's signed the Bill in support of the Hong Kong protestors, risking possible retaliation from China. JPY was the biggest loser, down 0.80% against the dollar. Other currencies saw modest losses against the dollar as well: KRW (-0.21%), SGD (-0.19%), INR (-0.17%), THB (-0.15%), IDR (-0.15%) and MYR (-0.08%). CNH and CNY were the only winners, up 0.18% and 0.16% respectively against the greenback. TWD, PHP and HKD were relatively stable.

USD/CNH continued to be driven by trade headlines. Trade optimism at the start of the week spurred modest gains in offshore yuan, USD/CNH slipped to a low of 7.0091 on Tuesday. Market sentiment was subsequently dampened by the decision of US President Trump to sign Hong Kong Human Rights and Democracy Act, and USD/CNH edged up to 7.0350 at last look.

USD/CNY was largely range bound during the week. Pair traded mostly between 7.0217 -7.0358 amid trade jitters. 1Y NDFs tested the low of 7.0855 on Wednesday, and traded higher to 7.1050 thereafter.

USD/SGD traded with an upside bias across the week amid strength in the dollar. Pair extended its gains from around 1.3640 at the beginning of the week to 1.3671 on Friday, a fresh high since mid-October. Dollar strengthened after U.S's Q3 GDP beat expectations. Risk aversion rose as well after Trump has signed the human rights Bill in support for the Hong Kong protestors. Meanwhile, Singapore's October CPI remained weak and slipped further to 0.4% y/y from 0.5% y/y in September. However, Singapore's October industrial production beat market expectations and rose to 4.0% y/y from a revised 0.7% y/y in September.

USD/IDR onshore spot started the week lower amid U.S./China trade deal optimism, and intraweek lows of 14078 were printed on Tuesday. Risk aversion however picked up later in the week following President Trump's signing of the HK bill which may likely instigate China and spoil the trade talks. Pair was however capped at 14100 initially, possibly stalled by authorities, but broke above on Friday to test the 14115 resistance as we had expected.

USD/INR onshore spot traded in v-shaped pattern on Tuesday, seeing a bearish bias first to slip to 3-week lows of 71.295 amid expectations of reforms from the Modi government following announcements of divestments. U.S/China trade talks however still kept investors jittery and the slowdown expected in Q3 GDP data on Friday boosted risk aversion and brought the pair back to 71.800 levels at last look on Friday.

Market Psychology

USD/CNH - Quiet markets still mean no change to our view that the pair will remain within 7.0000-7.1000 near-term. For USD/CNY, Further gains is likely to be capped, the pair may target support at 7.0197.

USD/SGD - Eyes will be on the 1.3700 big figure as dollar continues to strength. If broken, we will turn our attention to the 1.3721 resistance.

USD/IDR - Gains above 14115 will be tough unless trade talks see a real deterioration, in which case 14150 is likely to cap.

USD/INR - Pair is likely to face continued upside pressures amid domestic and external volatilities, and the 72 level may be eyed again.

Forex - Indonesia Flows: USD/IDR still capped at 14100

 02:41 (GMT) 29 Nov

 [Forex Flows]

USD/IDR onshore spot gapped a notch lower to open at 14090 from previous close of 14093 but moved towards 14100 again, and was possibly capped by authorities again. US/China trade talks are at risk again after President Trump signed the HK bill, and fiscal deficit at home is also seeing risks of slippage as government attempts to support growth. No risk is seen to 14050 support and upside pressures are likely to return. We continue to see a risk of another move towards 14110 resistance, but expect BI to limit gains above that. 1M NDFs meanwhile continued to trade in consolidation around 14140 this morning again. JKSE up by nearly 0.5% at last check.

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