Forex - Asia Close Highlights

 08:39 (GMT) 16 May

  [Forex Highlights]

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Asia Close Highlights (0100-ZQGX-C01)

16 May 2018

Regional Backdrop:

Asian currencies were mostly mixed on Wednesday Asian time. INR (0.41%), SGD (0.25%), CNY (0.15%), CNH (0.13%), PHP (0.11%) registered some gains while IDR (-0.4%), KRW (-0.38%), THB (-0.37%), MYR (-0.17%), TWD (-0.08%) weakened. This comes as oil prices dipped a little, while above 3% USTs rattled Asia stock markets. Bank of Thailand kept policy rates unchanged, while we are expecting BI to hike policy rates on Thursday.

USD/CNH is seen coming off after decisively breaking an important resistance level. Pair last seen at 6.3577 after reaching a high of 6.3752 earlier. News of North Korea looking to cancel talks also possibly affecting risk sentiment. PBoC fixed mid-point at 6.3745 vs. previous close of 6.3725. USD/CNY touched a high of 6.3808 after an open of 6.3770 and was last seen at 6.3669. CNY/CNH gap close to 1 big figure. 1Y NDFs retracted slightly from close to the 6.4900 handle to 6.4727 at last check.

USD/SGD saw overnight rally lost steam during Asian session on Wednesday, as the pair was seen paring gains to 1.3410 at last look. According to our estimates, SGD NEER eased slightly, currently at +1.12% compared to the midpoint. News of North Korea calling off talks had took many by surprise, causing some jitters in the markets on Wednesday.

USD/IDR onshore spot gapped higher to open at 14070 on Wednesday vs. last close of 14037 as the UST yields surged to fresh highs and trade tensions brewed with China officials in the US. News of fresh attacks in Sumatra region also weighed on sentiment, and pair jumped to a fresh 31-month high of 14114 in the afternoon.

USD/INR onshore spot opened at Tuesday's 16-month high of 68.1400 on Wednesday and slid lower in early trading to break below the 68 handle, possibly due to intervention. Pair later consolidated around 67.8000 as the Karnataka election jitters ended. Upside pressures are however still seen from UST yields at fresh highs and US-China trade talks.

Market Psychology

USD/CNH - For USD/CNH, a break above the 6.3800 resistance level should trigger a move towards the 6.4000 handle. For the onshore pair, we believe that another breach of 6.3800 should move USD/CNY towards the 6.4000 handle.

USD/SGD - Break of 1.3400 handle put the focus on the upside, we eye on the next resistance at 1.3500 handle.

USD/IDR - Break above 14090 suggests bulls may be back in control, but we expect BI to hike interest rates on Thursday, reining in further gains, but only temporarily.

USD/INR - We eye the next strong resistance at 68.3750 although central bank intervention is likely to keep gains limited.

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