(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--consolidation. Spot USD/CNY may consolidate within a span of 6.1990-6.2199 demarcated by the daily lower and upper Bollinger bands (standard deviation 1) as the U.S. dollar index edged up again overnight due to a revival of euro weakness. The People's Bank of China is likely to shift the daily USD/CNY benchmark rate higher from Tuesday's 6.1195 as a result of the U.S. dollar index rising. USD/CNY's inability to break into the Bollinger downtrend channel at 6.1990 suggests consolidation will continue in the near term. General risk aversion is still rife after a Tuesday reversal from strength in the U.S. stock market saw the main indices close lower. Dow Jones technical analysis suggests immediate support for spot USD/CNY is at 6.1990 (daily Bollinger downtrend channel), before 6.1885 (base of daily Bollinger downtrend channel). Immediate resistance is at 6.2000 (round-figure trading barrier), then at 6.2094 (20-day Bollinger mid resistance), before 6.2199 (daily Bollinger uptrend channel).
USD/TWD--consolidation. USD/TWD is likely to bob between a range of 31.760-31.920 formed by the 20-day Bollinger mid support and the entrance to the daily Bollinger uptrend channel. Overnight dollar index strength which stemmed from EUR/USD weakness is likely to prop most USD/Asia pairs Wednesday. But upside for the greenback may be limited due to the subdued level of U.S. Treasury yields; the 10-year bond yield is still under 2.00%. In the offshore nondeliverable forward market, the price of the benchmark 1-month USD/TWD contract has risen back to par versus that of the spot contract, indicating the bearish-USD bias seen earlier in the week has diminished. Dow Jones technical analysis suggests immediate support is at 31.760 (20-day Bollinger mid support), then at 31.600 (daily Bollinger downtrend channel), before 31.500 (psychological support). Immediate resistance is likely at 31.920 (base of daily Bollinger uptrend channel), then at 32.000 (round-figure trading barrier), before 32.080 (top of daily Bollinger uptrend channel).
USD/KRW--downtrend. USD/KRW opened lower Wednesday on the back of an overnight decline in lead indicator USD/JPY. The dollar is now below the daily Ichimoku Cloud support at 1,079 - and could be poised for more weakness if it ends the day below the Cloud support. A confirmed break of the Ichimoku Cloud support zone is a bearish technical cue that would augment the Bollinger downtrend channel already in play since Friday. From there, USD/KRW could drop to the weekly Ichimoku Cloud support at 1,068. Although there is an air of risk aversion in financial markets - which ought to buoy the safe haven greenback - the depressed level of benchmark U.S. government bonds is a negative for the U.S. dollar. Dow Jones technical analysis suggests immediate support is at 1,070 (round-figure trading barrier), then at 1,068 (weekly Ichimoku Cloud support). Immediate resistance is at 1,080 (round-figure trading barrier), then at 1,090 (round-figure trading barrier and top of daily Bollinger downtrend channel), before 1,100 (round-figure trading barrier).
USD/SGD--uptrend likely. USD/SGD has been flitting in and out of the daily Bollinger uptrend channel - currently at 1.3342 - but is more likely to rise as lead indicator USD/JPY stages a recovery off its overnight 1-month lows. A Wednesday close above 1.3342 would confirm the bullish technical bias that could lead to the channel's ceiling at 1.3413 in the days ahead. But the dollar's rise could be unsustainable while the yield on the benchmark U.S. 10-year government bond remains under 2.00% - due to strong demand for safe haven assets by investors. Dow Jones technical analysis shows immediate support is at 1.3342 (base of daily Bollinger uptrend channel), then at 1.3300 (round-figure trading barrier), before 1.3270 (20-day Bollinger mid support). Immediate resistance is at 1.3400 (round-figure trading barrier), before 1.3413 (top of daily Bollinger uptrend channel).
USD/MYR--uptrend. USD/MYR has slipped from Tuesday's fresh 5.5-year high of 3.5940 but is still biased higher within the daily Bollinger uptrend channel that now supports at 3.5600. A break higher past the 3.6000 round-figure trading barrier could trigger stoploss orders to buy USD/MYR. Overnight, crude oil prices rebounded slightly, thus offering reprieve to the ringgit. But bearish forecasts for oil by global investment banks as well as oil producer Saudi Arabia may continue to plague Malaysia's ringgit. The persistent decline of oil prices has been hurting investor sentiment for the ringgit because Malaysia's trade balance - as an oil producer and exporter - will be adversely affected. Dow Jones technical analysis suggests immediate support is at 3.5600 (base of daily Bollinger uptrend channel), before 3.5210 (20-day Bollinger mid support). Immediate resistance is at 3.5990 (top of daily Bollinger uptrend channel), then at 3.6000 (round-figure trading barrier), before 3.6200 (psychological resistance).
USD/THB--mild downtrend. USD/THB has a mild bearish bias that could lead to 32.64 in the near term. The pair entered the Bollinger downtrend channel on Tuesday but is also caught inside the daily Ichimoku Cloud support zone that spans 32.64-32.91. A break of the Cloud's base at 32.64 is necessary to trigger more U.S. dollar downside. The yield on the benchmark U.S. 10-year Treasury note has remained under 2.00%, due to demand for bonds from haven-seeking investors, hence depressing the greenback in general. Dow Jones technical analysis suggests immediate support is at 32.78 (base of daily Bollinger downtrend channel), before 32.64 (base of daily Ichimoku Cloud support). Immediate resistance is at 32.84 (top of daily Bollinger downtrend channel), then at 32.87 (20-day Bollinger mid resistance), before 32.89 (top of daily Ichimoku Cloud resistance)).
USD/PHP--consolidation lower. USD/PHP is likely to slip past the 20-day Bollinger mid support at 44.75 and toward the 44.62 base of the daily Ichimoku Cloud support as appeal for the U.S. dollar dims due to persistently low yields on U.S. government bonds. The greenback is under pressure from the benchmark 10-year U.S. Treasury note yielding less than 2.00%. But a factor that could thwart U.S. dollar bears is a further fall of the euro - on expectations of quantitative easing by the European Central Bank next week. Dow Jones technical analysis suggests immediate support is at 44.75 (20-day Bollinger mid support), before 44.58 (daily Bollinger downtrend channel). Immediate resistance is likely at 44.92 (daily Bollinger uptrend channel), then at 44.96 (top of daily Ichimoku Cloud resistance), before 45.00 (round-figure trading barrier).
USD/IDR--consolidation lower. USD/IDR may subside toward the 20-day Bollinger mid support at 12,530 as the greenback loses some of its shine due to weak government bond yields. The flight to safe haven assets by investors has been lifting U.S. government bond prices and thereby depressing bond yields. If USD/IDR falls even further and closes Wednesday below 12,430, the daily Bollinger downtrend channel will be activated - which could spur more speculative dollar-selling. Dow Jones technical analysis suggests immediate support for spot USD/IDR is at 12,530 (20-day Bollinger mid support), then at 12,500 (psychological support), before 12,430 (daily Bollinger downtrend channel). Immediate resistance is at 12,640 (daily Bollinger uptrend channel), then at 12,740 (top of daily Bollinger uptrend channel), before 12,970 (top of monthly Bollinger uptrend channel).
USD/INR--consolidation lower. USD/INR is likely to test the daily Ichimoku Cloud support zone at 61.87 - and possibly the Reserve Bank of India's resolve - as the U.S. dollar settles lower in Asia Wednesday. The India central bank has been suspected of intervening in the spot market this week to prop up USD/INR so as to reduce volatility for the rupee. The market has recently been eager for rupee appreciation against the dollar after a couple of notable global investment banks highlighted bullish rupee trading ideas last week. The decline of oil prices may also be a factor helping the rupee. Cheaper oil means cheaper imported energy bills and thereby a reduced trade deficit for India. Dow Jones technical analysis suggests immediate support is at 61.87 (daily Ichimoku Cloud support), before 61.56 (base of daily Ichimoku Cloud support zone). Immediate resistance is likely at 62.00 (round-figure trading barrier), then at 62.50 (psychological resistance), before 62.65 (top of daily Bollinger downtrend channel).
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
January 13, 2015 20:08 ET (01:08 GMT)
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