(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. The yuan is likely to weaken versus the U.S. dollar in the near term now that the USD/CNY Bollinger uptrend channel has been activated. Overnight, the rise of the U.S. dollar index ought to trigger another uptick in the daily USD/CNY benchmark rate set by the People's Bank of China - which will augment spot USD/CNY bullishness. The market is slightly bearish on China's 4Q Gross Domestic Product data due at 0200 GMT which could further dampen appetite for holding the yuan. The massive drop in China shares on Monday may continue to depress investor confidence and may also have an impact on the yuan in the medium term as investors shy away from exposure to Chinese assets. The crackdown on margin trading brokerages by the authorities hammered financial stocks and sent the Shanghai Composite Index down as much as 8.3% on Monday. Dow Jones technical analysis suggests immediate support for spot USD/CNY is at 6.2203 (base of daily Bollinger uptrend channel), then at 6.2102 (20-day Bollinger mid support), then at 6.2000 (round-figure trading barrier and daily Bollinger downtrend channel). Immediate resistance is at 6.2304 (top of daily Bollinger uptrend channel), then at 6.2500 (round-figure trading barrier).
USD/TWD--rebound within downtrend channel. USD/TWD could rebound slightly toward the 31.590 top of the daily Bollinger downtrend channel as the U.S. dollar index rallied overnight. The downward pressure on USD/TWD could also be alleviated by a bullish bias forming in USD/CNY which could drag proxy currency pairs slightly higher. The price difference between the benchmark 1-month USD/TWD contract and that of the spot contract remains below par, suggesting that speculative traders are bearish on the greenback. Recent dollar weakness has partly been attributed to falling U.S. government bond yields. Dow Jones technical analysis suggests immediate support is at 31.420 (base of daily Bollinger downtrend channel and psychological support), then at 31.200 (psychological support), before 31.000 (round-figure trading barrier). Immediate resistance is likely at 31.500 (psychological resistance), then at 31.590 (top of daily Bollinger uptrend channel), before 31.750 (20-day Bollinger mid resistance).
USD/KRW--downtrend. USD/KRW is inside the daily Bollinger downtrend channel and below the Ichimoku Cloud resistance zone, suggesting a bearish technical bias. If the 1,084 chart barrier - which is both the Ichimoku Cloud resistance and the top of the daily Bollinger downtrend channel - is intact at Tuesday's close, USD/KRW is likely to drift lower in the near term. But the overnight rally of the U.S. dollar index and the increasing resilience of USD/JPY to downside pressure could generate proxy support for USD/KRW. Dow Jones technical analysis suggests immediate support is at 1,080 (round-figure trading barrier), then at 1,075 (base of daily Bollinger downtrend channel), before 1,070 (round-figure trading barrier). Immediate resistance is at 1,084 (daily Ichimoku Cloud resistance and top of daily Bollinger downtrend channel), before 1,090 (round-figure trading barrier).
USD/SGD--possible uptrend. USD/SGD may climb into the daily Bollinger uptrend channel at 1.3347 as several influential factors concur that the U.S. dollar will rise in Asia. The upcoming China 4Q GDP data due at 0200 GMT could disappoint, which might spark risk-aversion and thus USD-buying. Thursday's European Central Bank meeting is expected to result in more easing measures - negative for the euro and thereby positive for the U.S. dollar. Regional lead indicator USD/JPY is showing resilience as it creeps out of its downtrend channel, thus adding to an underlying bullish tone in USD/SGD as well. USD/SGD could head back above the 1.3400 round-figure trading barrier on a Tuesday close above 1.3347. Dow Jones technical analysis shows immediate support is at 1.3300 (round-figure trading barrier), then at 1.3294 (20-day Bollinger mid support), before 1.3240 (daily Bollinger downtrend channel). Immediate resistance is at 1.3347 (daily Bollinger uptrend channel), then at 1.3400 (round-figure trading barrier), before 1.3401 (top of daily Bollinger uptrend channel).
USD/MYR--possible uptrend. USD/MYR could re-enter the daily Bollinger uptrend channel as crude oil prices remained soft overnight - a negative factor for the oil-sensitive ringgit. There is a growing fear that Malaysia's exports and thus current account balance will deteriorate sharply if oil prices stay depressed near 5.5-year lows. The six-month drop in oil prices has triggered a response from the Malaysia government - which will announce at around 0200 GMT today measures to deal with the fallout of oil's collapse. The worst-case scenario some traders are postulating, based on Prime Minister Najib Razak's hint at "interventions," is the implementation of capital control measures; the Malaysia central bank late last week dismissed this possibility. Dow Jones technical analysis suggests immediate support is at 3.5500 (psychological support), then at 3.5400 (20-day Bollinger mid support), before 3.5020 (daily Bollinger downtrend channel). Immediate resistance is at 3.5760 (daily Bollinger uptrend channel), then at 3.5800 (psychological resistance), before 3.6000 (round-figure trading barrier).
USD/THB--bearish. USD/THB has a stronger bearish technical bias now that it is within the daily Bollinger downtrend channel and also below the daily Ichimoku Cloud support zone. USD/THB may next be headed for the weekly Ichimoku Cloud support at 32.34. Factors weighing on the greenback remain the same - the depressed yield on the U.S. government bonds which makes it less attractive to hold the greenback. The yield on the 10-year U.S. Treasury note remains well under the 2.00% psychological level. A possible factor that could spark a rebound in USD/THB is Thursday's European Central Bank monetary policy decision which could spark a euro fall and thereby a bounce for the dollar. Dow Jones technical analysis suggests immediate support is at 32.50 (psychological support), before 32.34 (weekly Ichimoku Cloud support). Immediate resistance is at 32.64 (daily Ichimoku Cloud resistance), then at 32.70 (top of daily Bollinger downtrend channel), before 32.82 (20-day Bollinger mid resistance).
USD/PHP--possible downside. The Philippine financial markets reopen after the three-day closure due to the Pope's visit. USD/PHP is likely to break the base of the daily Ichimoku Cloud support zone at 44.62 - based on the overnight closing level in the offshore USD/PHP nondeliverable forwards market. A Tuesday close below 44.60 would place USD/PHP below the Cloud support zone and also inside the Bollinger downtrend channel - creating a stronger bearish forecast for the greenback in the near term. The U.S. dollar may remain depressed while yields on U.S. government bonds stay below 2.00%. Dow Jones technical analysis suggests immediate support is at 44.62 (base of daily Ichimoku Cloud support zone), then at 44.60 (daily Bollinger downtrend channel), before 44.45 (base of daily Bollinger downtrend channel). Immediate resistance is likely at 44.76 (20-day Bollinger mid resistance), then at 44.92 (daily Bollinger uptrend channel), before 44.93 (top of daily Ichimoku Cloud resistance).
USD/IDR--consolidation. USD/IDR is still in a consolidation range of 12,550-12,650 but it has veering toward the top side as risk aversion escalates after China's stock market plunge on Monday. More bad news could be at hand from China as the market awaits 4Q GDP data due at 0200 GMT. A disappointing number could trigger more risk aversion-related U.S. dollar-buying. The greenback is likely to stay up at least until Thursday when the European Central Bank is expected to announce another easing of monetary policy that would depress the euro. Fundamentally though, the rupiah could look more attractive to investors in the medium term as the government seeks to channel budgetary savings from its fuel-subsidy cut into infrastructure development. Dow Jones technical analysis suggests immediate support for spot USD/IDR is at 12,550 (20-day Bollinger mid support), then at 12,500 (psychological support), before 12,450 (daily Bollinger downtrend channel). Immediate resistance is at 12,650 (daily Bollinger uptrend channel), then at 12,750 (top of daily Bollinger uptrend channel), before 12,970 (top of monthly Bollinger uptrend channel).
USD/INR--downtrend. USD/INR has turned more bearish after Monday's closing below the daily Ichimoku Cloud support zone; the pair is also inside the daily Bollinger downtrend channel. The two bearish technical signals could motivate more USD-selling that could weigh USD/INR down toward the 61.00 round-figure trading barrier. But traders are cautious that the Reserve Bank of India is actively keeping rupee strength at bay. The RBI has been suspected of intervening intermittently in the spot market since last week to curb excessive rupee gains following the growth-boosting repo rate cut. Dow Jones technical analysis suggests immediate support is at 61.51 (base of daily Bollinger downtrend channel), then at 61.50 (psychological support), before 61.00 (round-figure trading barrier). Immediate resistance is likely at 61.71 (daily Ichimoku Cloud resistance), then at 62.00 (round-figure trading barrier), before 62.19 (top of daily Bollinger downtrend channel).
(MORE TO FOLLOW) Dow Jones Newswires
January 19, 2015 19:58 ET (00:58 GMT)
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 19, 2015 19:58 ET (00:58 GMT)
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