(Ranges are calculated using recent highs and lows, information on the placement of option strikes, and technical analysis--Bollinger Bands, Fibonacci levels, trendlines and moving averages.)
USD/CNY--uptrend. Spot USD/CNY has entered the daily Bollinger uptrend channel after Monday's surge attributed to the interest rate cut by the People's Bank of China. The bullish chart signal implies the yuan could weaken versus the dollar in the near term. On a Tuesday close above the 6.1511 top of the daily Ichimoku Cloud resistance zone, the positive chart bias for USD/CNY will increase. The yuan is weaker as the market takes the rate cut as a sign that the government is worried about future economic growth. Fundamentally, the lower yield on yuan-denominated assets also reduces demand for holding the yuan. Dow Jones technical analysis suggests immediate support for spot USD/CNY is at 6.1328 (base of daily Ichimoku Cloud), then at 6.1281 (base of daily Bollinger uptrend channel), before 6.1210 (20-day Bollinger mid support). Immediate resistance is at 6.1500 (round-figure trading barrier), then at 6.1511 (daily Ichimoku Cloud resistance zone), before 6.1600 (round-figure trading barrier).
USD/TWD--uptrend. USD/TWD is likely to keep rising as the daily Bollinger uptrend channel continues to signal positive momentum for the dollar. The main driver for USD/TWD strength is USD/JPY hovering near seven-year highs. The Taiwan central bank has been suspected of actively buying U.S. dollars in the spot market to depress its currency - likely an attempt to keep the Taiwan dollar down versus regional export rivals' currencies. The price of the one-month USD/TWD nondeliverable forward contract in the offshore market has however slipped below that of the spot contract, suggesting that speculative demand for the dollar may have subsided. Dow Jones technical analysis suggests immediate support is at 30.830 (base of daily Bollinger uptrend channel), then at 30.650 (20-day Bollinger mid support), before 30.500 (psychological support). Immediate resistance is likely at 31.000 (round-figure trading barrier), then at 31.020 (top of daily Bollinger uptrend channel), before 31.200 (psychological resistance).
USD/KRW--uptrend. USD/KRW opens higher at 1,115.0 versus its last close of 1,112.3 as USD/JPY resumes its ascent after a touch of weakness Monday. The daily and weekly charts are both positive for USD/KRW, suggesting that a jaunt up to the round-figure trading barrier at 1,120 is likely. As USD/JPY lingers around levels last seen in 2007, upside pressure on proxy currency pairs such as USD/KRW has increased. The Bank of Korea is likely keeping a close watch on the JPY/KRW cross exchange rate - which indicates that the won is at its strongest versus the yen since 2008. A stronger won versus the yen makes South Korea exports' less competitively-priced versus those of Japan. Dow Jones technical analysis suggests immediate support is at 1,110 (round-figure trading barrier), then at 1,107 (base of daily Bollinger uptrend channel), before 1,100 (round-figure trading barrier). Immediate resistance is at 1,120 (round-figure trading barrier), before 1,127 (top of daily Bollinger uptrend channel).
USD/SGD--uptrend. USD/SGD is likely to keep climbing as the base of the Bollinger uptrend channel and the round-figure trading barrier of 1.3000 support the pair. The Singapore dollar is still on a path toward weakness versus the U.S. dollar despite a better-than-expected third-quarter gross domestic product report. GDP in the third-quarter rose 2.8% on-year versus the government's previous estimate of 2.4% growth. The direction of the Singapore dollar continues to be dictated by external factors such as the Japanese yen's weakness and the possibility of U.S. interest rate hikes. Dow Jones technical analysis shows immediate support is at 1.3007 (base of daily Bollinger uptrend channel), then at 1.3000 (round-figure trading barrier), before 1.2950 (psychological support). Immediate resistance is at 1.3081 (top of daily Bollinger uptrend channel), then at 1.3100 (round-figure trading barrier), before 1.3199 (3-year high).
USD/MYR--consolidation. USD/MYR ended its technical uptrend on Monday after the government's announcement of a cut in fuel subsidies boosted the ringgit. The ringgit's rally pushed USD/MYR out of the daily Bollinger uptrend channel; the ringgit might now linger within a range of 3.3340-3.3580. Malaysia's move follows a similar situation in Indonesia where the government's reduction of fuel subsidies was also seen as positive for the budget, thus lifting investor confidence. If USD/MYR ends Tuesday below the 20-day Bollinger mid support line at 3.3340, more ringgit strength versus the dollar could be coming. Dow Jones technical analysis suggests immediate support is at 3.3345 (monthly Ichimoku Cloud support), then at 3.3340 (20-day Bollinger mid support), before 3.3100 (daily Bollinger downtrend channel). Immediate resistance is at 3.3580 (daily Bollinger uptrend channel), then at 3.3830 (top of daily Bollinger uptrend channel), before 3.4000 (round-figure trading barrier).
USD/THB--possible uptrend. USD/THB could re-enter the daily Bollinger uptrend channel on a Tuesday close above 32.85. USD/JPY's buoyancy is slowly but surely luring USD/THB higher via secondary effects. The prolonged rally of regional pairs such as USD/MYR and USD/SGD due to USD/JPY's winning streak has been influencing USD/THB. If the USD/THB uptrend channel is activated, the baht is likely to slip past the 33.00 round-figure trading barrier - a level last seen in January. Dow Jones technical analysis suggests immediate support is at 32.74 (20-day Bollinger mid support), then at 32.64 (daily Bollinger downtrend channel), before 32.50 (psychological support). Immediate resistance is at 32.85 (daily Bollinger uptrend channel), then at 32.95 (top of daily Bollinger uptrend channel), before 33.00 (round-figure trading barrier).
USD/PHP--supported. USD/PHP has once again dropped out of the daily Bollinger uptrend channel but may find support at the October trendline at 44.90. The peso has been resilient to the broad U.S. dollar rise possibly due to the Philippine central bank selling dollars in the spot market to deter speculative bets against the peso. USD/PHP last Thursday set a new 8-month high when USD/JPY hit a fresh seven-year peak. Volatility has started to increase for regional laggard USD/PHP but short-term direction for the pair remains unclear. Dow Jones technical analysis suggests immediate support is at 44.90 (October trendline support), then at 44.84 (daily Bollinger uptrend channel), before 44.80 (psychological support). Immediate resistance is likely at then at 44.92 (20-day Bollinger mid resistance), then at 45.00 (round-figure trading barrier), before 45.01 (daily Bollinger uptrend channel).
USD/IDR--supported. USD/IDR has rebounded off the daily Ichimoku Cloud support at 12,080 and could now range between the Cloud support and the entrance to the daily Bollinger uptrend channel at 12,190. A Tuesday close above 12,190 could impart bullish momentum to the pair. The rupiah has struggled to rally despite economists and credit rating agencies lauding the central bank's preemptive move to raise interest rates right after fuel prices were hiked. The overall rise of the U.S. dollar in Asia - mainly due to the Japanese yen falling sharply for a prolonged period - has hampered rupiah appreciation. Dow Jones technical analysis suggests immediate support for spot USD/IDR is at 12,110 (daily Bollinger downtrend channel), then at 12,080 (daily Ichimoku Cloud support), then at 12,070 (base of daily Bollinger downtrend channel), before 12,000 (round-figure trading barrier). Immediate resistance is at 12,190 (daily Bollinger uptrend channel), before 12,230 (top of daily Bollinger uptrend channel).
USD/INR--uptrend. USD/INR maintains its bullish bias inside the daily Bollinger uptrend channel and may re-test the new 9-month peak of 62.22 notched last Thursday. The base of the uptrend channel supports the U.S. dollar at 61.77 but may cap USD/INR at around 62.00 on an intraday basis. In the medium term, the rupee is likely to weaken versus the U.S. dollar due to inevitable U.S. interest rate hikes, but analysts expect it to stay strong versus other emerging market currencies due to positive fundamentals. Dow Jones technical analysis suggests immediate support is at 61.77 (base of daily Bollinger uptrend channel), then at 61.55 (20-day Bollinger mid support), before 61.50 (psychological support). Immediate resistance is likely at 62.00 (round-figure trading barrier and top of daily Bollinger uptrend channel), then at 62.22 (9-month high), before 62.55 (top of weekly Ichimoku Cloud resistance zone).
Write to Ewen Chew at ewen.chew@wsj.com
(This article is general financial information, not personalized investment advice, as it does not consider the unique circumstances affecting an individual reader's decision to buy or sell a specific security. Dow Jones does not warrant the accuracy, completeness or timeliness of the information in this article, and any errors will not be made the basis for any claim against Dow Jones. The author does not invest in the instruments or markets cited in this article.)
(END) Dow Jones Newswires
November 24, 2014 20:04 ET (01:04 GMT)
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