Forex - Chart USD/INR Update: Approaching strong support at 69.235 and risks rebound


 04:15 (GMT) 13 Mar

  [Forex Charts]

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Chart USD/INR Update: Approaching strong support at 69.235 and risks rebound (0101-JNKF-C01)

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Asterisk denotes strength of level

04:15 GMT - Extended decline is approaching strong support at 69.235 with daily technical tools a touch oversold as well as the bullish implication of Hammer set last session and lift above the 69.810 hurdle will inspire corrective upmove towards the stronger resistance at 70.210.


Forex - Asia Open - Overnight Highlights


 23:40 (GMT) 11 Mar

 [Forex Highlights]

Asia Overnight Highlights - 12 March 2019

ASIA OUTLOOK

The GBP saw a strong bounce on hopes for a Brexit deal as talk emerged of a trip to Strasbourg from UK PM May, later confirmed. This and strength in technology saw equities rise despite Boeing taking a hit. With US retail sales not far from consensus net of revisions, data had a limited impact.

Majors FX Highlights

The Bloomberg dollar spot index traded roughly unchanged overnight on Monday, with a slight downside bias, closing at sub-97.200 levels from 97.400+ levels at the start of the day. Mixed retail sales data, with Jan print stronger but a downward revision in the Dec print kept investors on the sidelines. Gains in the sterling also kept a lid, as PM May flew to Strasbourg for last ditch talks with the EU ahead of the Tuesday vote scheduled on the deal.

Cable having touched below 1.2950 in the European morning pushed above 1.3150 while EUR/GBP fell below .8550 from a high of .8675. Early morning newsflow confirmed that PM May and EU Juncker announced an agreement aimed at getting the U.K. Parliament to accept the Brexit deal it rejected by a historic margin in January. But they couldn't agree on what to call it. May described "legally binding changes" to the deal; Juncker instead spoke of assurances and guarantees, which is not exactly what Parliament told her to go and get. Cable seen breaking above 1.3250 on the headlines.

EUR/USD moved higher early in the session but topped out below 1.1260. After a dip back to near 1.1220 cable's surge was unable to return the pair to the day's highs. USD/JPY held above 111.00 with equities positive. USD/CAD was seen with a downside bias, slipping from 1.3440 highs to sub-1.3400 handle in late NY. AUD/USD likewise broke above 0.7070 while NZD/USD testing 0.6840.

Majors Data Highlights

Jan US retail sales were stronger than expected, with the control measure up 1.1% against a 0.6% market expectation, but offset by a downward revision to the (already very weak) Dec. Jan German industrial production data was weaker than expected, falling 0.8%, but offset by an upward revision to December. The German trade surplus was a little weaker than expected on strong January import growth.

US Feb CPI will be closely watched today. We expect to see gains of 0.2% both overall and ex food and energy, with energy stabilizing after 3 straight sharp declines. UK GDP and trade balance are also due, but expect the focus to remain on the Brexit vote.

Emerging Asia FX Highlights

USD/Asians traded mostly sideways overnight but a downside bias emerged in early trading this morning on reports of EU-UK deal. USD/CNY 1Y NDFs traded in consolidation around 6.7580 on Monday, but were last seen with a slight downside bias, touching 6.7540. USD/SGD was seen slipping from 1.3590 levels to break below 1.3575 as the news of EU-UK deal emerged this morning. USD/IDR 1M NDFs peaked at 14432 on Monday morning and traded lower to 14325 into the NY session. USD/INR 1M NDFs saw a sharp slide from 70.30+ levels to test the downside at the 70 handle, although a break below was not seen until last look.

Emerging Asia Data Highlights

After a quiet start to the week, Philippines' January trade numbers will be due in the morning followed by Singapore's January retail sales. India's Feb CPI and Jan IP are also due after the close of markets.

OVERNIGHT NEWS HIGHLIGHTS

- US Jan retail sales +0.2% vs 0.0% exp, Dec revised to -1.6% from -1.2%, ex auto +0.9% vs +0.3% exp, Dec revised to -2.1% from -1.8%, ex auto and gas +1.2% vs +0.6% exp, Dec revised to -1.6% from -1.4%.

- VIX index: 14.33 (-10.72%)

- Gold Spot: $1,293.38/oz (0.00%)

- ICE Brent front contract: $66.58 (+$0.84)

- Nymex WTI front contract: $56.87 (+$0.08)

- Reuters/Jefferies Commodities Index: 180.50 (-0.10%)

- 10y UST: 2.639% (+1bp) (Asia morning)

- DJI: 25,650.88 (+0.79%); S&P: 2,783.30 (+1.47%); Nasdaq: 7,558.06 (+2.02%)

ASIA NEWS

China: President Donald Trump hasn't set a date to meet his Chinese counterpart Xi Jinping as the world's two biggest economies continue negotiations to end a trade war, said White House spokeswoman Sarah Huckabee Sanders. - BBG

Indonesia: February retail sales rose 10.86% y/y. - BBG

India: Prime Minister Narendra Modi's ruling coalition may get close to the 272 seats needed for majority in India's parliamentary elections that begin on April 11, two latest opinion polls predict. - BBG

CURRENCIES

The GBP saw a strong bounce as shorts were covered as PM May flew to Strasbourg for last ditch talks with the EU ahead of the Tuesday vote scheduled on the deal. The GBP bounce was well under way ahead of the confirmation May was on her way, Ireland having earlier suggested that she would be making the trip. Cable having touched below 1.2950 in the European morning pushed above 1.3150 while EUR/GBP fell below .8550 from a high of .8675. A BBC tweet that a Cabinet member was not optimistic on the talks saw a late dip for the GBP, albeit a modest one.

Feb Norwegian CPI was stronger than expected with core at 2.6% against 2.1% expected and headline at 3.0% compared to a 2.8% median. EUR/NOK fell around 6 figures on the news with losses extending later in the day.

Jan German industrial production data was weaker than expected, falling 0.8%, but offset by an upward revision to December. The German trade surplus was a little weaker than expected on strong January import growth. EUR/USD moved higher early in the session but topped out below 1.1260. After a dip back to near 1.1220 cable's surge was unable to return the pair to the day's highs.

Jan US retail sales were stronger than expected, with the control measure up 1.1% against a 0.6% market expectation, but offset by a downward revision to the (already very weak) Dec. There was little impact on the USD, which (Cable excluded) was fairly steady through the session though somewhat weaker against the higher yielders. USD/JPY held above 111.00 with equities positive.

BONDS

USTs were initially heavy overnight, running into strength selling, especially on the failed breakout move. However that found better support into the US session, after brushing off a retail sales report that had a firmer headline but offsetting downward revision to the negative Dec. Firmer risk trade then leans back. 3yr auction solid enough if with slightly higher tail and dealer take. 2s +1.4bps @ 2.48%, 5s +0.8bps @ 2.44%, 10s +1.1bps @ 2.64%, 30s +1.7bps @ 3.03%.

Agency Spreads: Freddie/Fannie 5s +0.1/+0.2 bps, 10s 0.0/+0.2 bps.

Swap Spreads: 2s +0.38bps, 5s +0.03bps, 10s +0.08bps.

EQUITIES

Despite Boeing taking a sharp hit after the crash in Ethiopia equities had a positive session, technology leading after a buy recommendation for Apple, and rising hopes for a Brexit deal also in the mix.

ASIA CURRENCIES

USD/CNY: 1Y NDFs traded in consolidation around 6.7580 on Monday, but were last seen with a slight downside bias, touching 6.7540. On Monday, PBoC fixed mid-point at 6.7202 vs. previous close of 6.7200. Onshore spot USD/CNY remained near familiar levels, remaining capped below 6.7300. Focus turns to China industrial production and retail sales numbers that will be released on 14th. The 6.7600 handle is a key resistance level for USD/CNY at the moment.

USD/CNH: Pair was seen with a bearish bias this morning after trading horizontally around 6.7320 on Monday, and a break below the 6.7300 handle was seen as pair touched 6.7280. Resistance of 6.7697 should hold for now, otherwise will signify upside momentum towards the 6.8000 handle.

USD/SGD: Pair was seen slipping from 1.3590 levels to break below 1.3575 as the news of EU-UK deal emerged this morning. Eyes on the Jan retail sales print due today. Break of 1.580 support suggests downside momentum may strengthen, and we see risk of break below 1.3565 support.

USD/IDR: 1M NDFs peaked at 14432 on Monday morning and traded lower to 14325 into the NY session. Onshore spot gapped higher to open at 14339 on Monday, remaining close to last week's 2-month highs although possible central bank intervention kept further gains in check. Pair slid slightly to sub-14300 levels in the afternoon. Markets remain in a wait and see mode as details of the US-China trade deal are awaited. Break of 14230 sets the focus on further gains, but we see limited upside above the level given central bank presence. Next strong resistance is however only seen at 14610.

USD/INR: 1M NDFs saw a sharp slide from 70.30+ levels to test the downside at the 70 handle, although a break below was not seen until last look. Onshore spot gapped lower again to open at 70.0100 on Monday after erasing its losses into the close on Friday, and returned below the 70 handle again in early trading. Intraday lows of 69.8225 remained close to Friday's 2-month lows of 69.8100. Eyes remain on February inflation and January IP numbers due on Tuesday. Threat of break below 69.8000 support is seen, which may open the doors to the 69 handle.

DATA RELEASES DUE TODAY

00:30 GMT - AU: Housing Finance (Jan) % m/m (Prev: -6.1)

00:30 GMT - AU: Lending Finance (Jan) % m/m

01:30 GMT - AU: NAB Business Conditions (Feb) [Prev: 7]

01:30 GMT - AU: NAB Business Confidence (Feb) index (Prev: 4)

02:00 GMT - PH: Exports (Jan) 4cast: -6% y/y (Mkt: -5 Prev: -12.3)

02:00 GMT - PH: Imports (Jan) 4cast: 0.5% y/y (Mkt: 0.5 Prev: -9.4)

02:00 GMT - PH: Trade Balance (Jan) 4cast: -3528USD mn (Mkt: -3515 Prev: -3750)

04:30 GMT - TH: Consumer Confidence (Feb) index (Prev: 80.7)

06:00 GMT - SG: Retail Sales (Jan) 4cast: -3.4%y/y (Mkt: Prev: -3.4)

09:30 GMT - UK: Construction Output (sa) (Jan) % m/m (Mkt: 0.8 Prev: -2.8)

09:30 GMT - UK: GDP (Jan) % m/m (Mkt: 0.2 Prev: -0.4)

09:30 GMT - UK: Index of Services (Jan) % m/m (Mkt: 0.2 Prev: -0.2)

09:30 GMT - UK: Industrial Production (Jan) [Mkt: -1.4, Prev: -0.9]

09:30 GMT - UK: Manufacturing Production (Jan) % m/m (Mkt: 0.2 Prev: -0.7)

09:30 GMT - UK: Trade Balance (Non-EU) (Jan) [Mkt: -3.7, Prev: -3.642]

09:30 GMT - UK: Visible Trade Balance (Jan) [Mkt: -12.105, Prev: -12.102]

10:30 GMT - UK: Construction Output (sa) (Jan) % y/y (Mkt: -0.3 Prev: -2.4)

10:30 GMT - UK: Index of Services (Jan) % 3m/3m (Mkt: 0.5 Prev: 0.4)

10:30 GMT - UK: Industrial Production (Jan) % m/m (Mkt: 0.1 Prev: -0.5)

10:30 GMT - UK: Manufacturing Production (Jan) [Mkt: -1.8, Prev: -2.1]

11:00 GMT - US: NFIB Small Business Optimism (Feb) 4cast: 102.5 [Mkt: 102.5, Prev: 101.2]

12:00 GMT - IN: CPI (Feb) 4cast: 2.2% y/y (Mkt: 2.4 Prev: 2.05)

12:00 GMT - IN: Industrial Production (Jan) 4cast: 3% y/y (Mkt: 2 Prev: 2.4)

12:30 GMT - US: CPI (Feb) 4cast: 0.2% m/m (Mkt: 0.2 Prev: 0)

12:30 GMT - US: CPI (ex Food & Energy) (Feb) 4cast: 0.2% m/m [Mkt: 0.2, Prev: 0.2]

22:45 GMT - NZ: Food Price (Feb) [Prev: 1]

23:00 GMT - KR: Unemployment (sa) (Jan) 4cast: 4.2 % y/y [Mkt: 4.2, Prev: 4.4]

23:50 GMT - JP: PPI (Feb) [Mkt: 0.1, Prev: -0.6]

EVENTS & AUCTIONS

- EU: EU Economic and Financial Affairs council meeting

- 03:35 GMT - JP: 5yr Bond Auction

- 06:30 GMT - AU: RBA's Debelle speaks in Sydney

- 10:30 GMT - EU: ECB Main Refinancing Operation Result

- 17:00 GMT - US: 10yr Notes Reopening


Forex - Flows: Net Foreign Equity Flows on Fri


 01:09 (GMT) 11 Mar

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Forex - Asia Close Highlights


 08:46 (GMT) 08 Mar

 [Forex Highlights]

08 March 2019

Regional Backdrop:

Most Asian currencies were in the red against the USD, especially plunging on the last day of the week as the USD rode higher underpinned by a dovish ECB and 20% y/y decline in Chinese exports. The Indonesian rupiah (-1.50%) led the losses, as USD/IDR broke above key resistances at 14155 and 14230 to 2-month highs. KRW (-1.03%) and PHP (-1.01%) followed closely, the latter because of easing calls picking up with the surprise announcement of the central bank Governor this week and inflation falling back in the target range. On the other side of the board was a lone Indian rupee, which registered gains of 1.39% vs. the USD in the week, underpinned by cooling of border tensions which resulted in returning foreign flows.

During the week, USD/CNH was seen to be trending upwards. Pair was lifted up from some risk aversion. Weak export and trade balance data did not have an impact on USD/CNH on Friday, as pair consolidated at 6.7341 last. Focus remains on US-China trade talks. With US-North Korea talks abruptly ending previously, it served as a reminder that any outcome cannot be ruled out. USD/CNY moved up, with PBOC fixings following market trends and not at unexpected levels. 1Y NDFs last up at 6.7590. US-China trade talks will remain a key driver of the pair. Focus turns to China industrial production and retail sales numbers that will be released on 14th.

USD/SGD was on an uptrend throughout the week, largely driven by the strengthening USD amid the weakening EUR and GBP. Pair rallied to a 3 week high at 1.3614 during Friday's Asian session after ECB made a dovish turn causing EUR to tumble and USD to strengthen. Pair saw a slight reversal after approaching the strong 1.3615 resistance level, which saw 2 failed attempts to break above it since mid-January. Focus for the week will be Singapore's retail sales data for January.

USD/IDR onshore spot was restrained below the key 14155 resistance for a good part of the week, although the level was tested regularly underpinned by a mild upside bias in the USD as China lowered its growth targets for 2019. Pair further rode on an ECB-driven USD rally on Friday, and broke key resistances at 14155 and 14230, printing fresh over 2-month highs of 14335 at last look.

USD/INR onshore spot defied the broad upmove in the USD and traded with a downside bias in the week. Some softening of the India-Pakistan border tensions saw foreign investors return to the Indian markets. Pair broke below the key 70 handle, and printed 2-month lows of 69.9100 until last look. Eyes on the inflation report for February due in the week ahead.

Market Psychology

USD/CNH - Resistance of 6.7697 should hold for now, otherwise will signify upside momentum towards the 6.8000 handle. The 6.7600 handle is a key resistance level for USD/CNY at the moment.

USD/SGD - We expect the reversal to continue towards the 1.3565 support. If broken, eyes will be on the 1.3550 level next.

USD/IDR - We see risk to the strong resistance at 14330, and any break above risks a deeper correction from the early February lows of 13898.

USD/INR - We however do not see significant potential on the downside below 69.8000 support. Upside pressures to return amid election uncertainty and the USD strength.


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