(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. The USD/CNY daily chart lacks directional momentum while the pair is still trapped in the consolidation zone between the lower and upper Bollinger bands (standard deviation 1) that spans 6.1977-6.2113. Overnight, the U.S. dollar index rose, which might influence the daily USD/CNY parity rate higher, as the yield on the benchmark 10-year U.S. Treasury climbed to its highest in five months following a continuation of the recent global bond selloff. Stocks on the Shanghai exchange rallied Monday on the tailwind of the monetary easing measures announced by China on Sunday, but the yuan was stable. Analysts think the authorities are actively keeping the yuan steady and said that lower onshore interest rates have less effect on the yuan than they ought to due to the weak transmission mechanism--an effect of China's closed capital account. But with Sunday's move to allow banks more leeway in setting deposit rates, there is renewed hope for a sooner currency liberalization that might generate more speculative demand for the yuan. Dow Jones technical analysis suggests immediate support for spot USD/CNY is at 6.2045 (20-day Bollinger mid support), then at 6.2000 (round-figure trading barrier), before 6.1977 (daily Bollinger downtrend channel). Immediate resistance is at 6.2113 (daily Bollinger uptrend channel), then at 6.2160 (daily Ichimoku Cloud resistance zone), before 6.2179 (top of daily Bollinger uptrend channel).
USD/TWD--downtrend may end. USD/TWD is testing the ceiling of the daily Bollinger downtrend channel at 30.770--a daily close above which would end the bearish chart signal that has been in effect since mid-April. If the downtrend channel is nullified, it might trigger short-covering that could send USD/TWD to 30.990 where the 20-day Bollinger mid resistance line awaits. The U.S. dollar firmed up overnight as yields on benchmark U.S. government bonds rose following a continuation of the recent global bond selloff. Risk aversion may resume--a day after China's unexpected announcement of monetary easing--as stocks on Wall Street fell. The stock and bond selloff has raised fears of a global deleveraging of assets, which ought to drive the safe haven U.S. dollar higher. Dow Jones technical analysis suggests immediate support is at 30.540 (base of daily Bollinger downtrend channel), then at 30.500 (psychological support and weekly Ichimoku Cloud support), before 30.200 (psychological support). Immediate resistance is likely at 30.770 (top of daily Bollinger downtrend channel), then at 30.990 (20-day Bollinger mid resistance), before 31.000 (round-figure trading barrier).
USD/KRW--uptrend. USD/KRW gapped higher Tuesday on the back of U.S. government bond yields rising to five-month highs. The USD/KRW pair is now inside the daily Bollinger uptrend channel, which if confirmed by a Tuesday close above 1,092 could signal more greenback strength ahead. The U.S. dollar is broadly higher as the yield on the benchmark 10-year Treasury yield rose to 2.28%. Another factor propelling USD/KRW higher could be expectations of another Bank of Korea interest rate cut as some analysts suggest. The unexpected monetary policy easing by China on Sunday might make it more likely that South Korea's central bank could follow suit. The Bank of Korea last cut interest rates in March and meets Friday to decide again on monetary policy. If interest rates are cut, the South Korea won will fall due to diminished returns for yield-seeking investors. Dow Jones technical analysis suggests immediate support is at 1,092 (base of daily Bollinger uptrend channel), then at 1,090 (round-figure trading barrier), before 1,084 (20-day Bollinger mid support). Immediate resistance is 1,100 (round-figure trading barrier), then at 1,101 (top of daily Bollinger uptrend channel), before 1,105 (daily Ichimoku Cloud resistance zone).
USD/SGD--consolidation higher. USD/SGD may consolidate higher as the pair crosses above the 20-day Bollinger mid resistance line at 1.3354. The pair could adopt a bullish stance if it ends Tuesday above 1.3463 and thus inside the Bollinger uptrend channel. The catalyst for the stronger U.S. dollar was the overnight rise of U.S. Treasury yields coupled with an equity selloff that has stirred up fears of investor deleveraging. If investors were to trim their assets in favor of holding cash, the U.S. dollar would rally. However, the Singapore dollar could hold its own against other currencies in the region due to its relative safe haven status. Dow Jones technical analysis shows immediate support is at 1.3354 (20-day Bollinger mid support), then at 1.3350 (psychological support), before 1.3300 (round-figure trading barrier). Immediate resistance is 1.3400 (round-figure trading barrier), then at 1.3450 (psychological resistance), before 1.3463 (daily Bollinger uptrend channel).
USD/MYR--consolidation higher. USD/MYR is gravitating toward the daily Ichimoku Cloud resistance zone at 3.6340 as the greenback rallies broadly on the back of an overnight rise in U.S. Treasury yields to a five-month high. The pair could stall temporarily at the Cloud resistance, but if it ends the day above 3.6370 it would be inside the Bollinger uptrend channel, increasing the likelihood of a continued rally toward the ceiling of the Cloud at 3.6700. A clean break of the Cloud top would greatly increase the odds for USD/MYR to rally even higher. The Malaysia ringgit and other high-yielding currencies are likely to be particularly threatened by rising U.S. yields. Investors tend to favor these currencies as part of a carry trade that entails being short the cheaply funded U.S. dollar and long the high-yielders. Foreign investors hold nearly half of Malaysia's government bonds. Dow Jones technical analysis suggests immediate support is at 3.6000 (round-figure trading barrier and 20-day Bollinger mid resistance), then at 3.5800 (psychological support), before 3.5620 (daily Bollinger downtrend channel). Immediate resistance is at 3.6340 (daily Ichimoku Cloud resistance zone), then at 3.6370 (daily Bollinger uptrend channel), before 3.6700 (top of daily Ichimoku Cloud resistance zone).
USD/THB--uptrend. USD/THB has marked a new 5.5-year high of 33.78, fuelled by another overnight rally of the benchmark U.S. dollar index. USD/THB may soon break the 34.00 round-figure trading barrier, but it may first pause for breath at the 33.90 top of the daily Bollinger uptrend channel. The bullish chart signal currently supports the pair at 33.40. The baht continues to weaken as the Bank of Thailand projects a dovish stance and the government encourages investment outflows. The military government has blatantly expressed that it prefers a weaker currency for greater export competitiveness. Dow Jones technical analysis suggests immediate support is at 33.80 (psychological support), then at 33.50 (psychological support), before 33.40 (base of daily Bollinger uptrend channel). Immediate resistance is at 33.90 (top of daily Bollinger uptrend channel), then at 34.00 (round-figure trading resistance), before 34.20 (psychological resistance).
USD/PHP--uptrend. USD/PHP resumes its bullish chart bias, aided by the overnight rise of the U.S. dollar index. USD/PHP is now back inside the daily Bollinger uptrend channel and also above the Ichimoku Cloud resistance zone, making it more likely that it could rally toward the 45.00 round-figure trading barrier in the days ahead. The greenback is rising broadly after U.S. bond yields rallied to a five-month high overnight. The underlying cause for the bond market selloff --a possible global deleveraging by investors--could significantly dampen the Philippine peso because it has been one of the favorite currencies for emerging market investors, due to the country's strong growth potential and stable financial systems. Dow Jones technical analysis suggests immediate support is at 44.61 (base of daily Bollinger uptrend channel), then at 44.58 (daily Ichimoku Cloud support), before 44.44 (base of daily Ichimoku Cloud consolidation zone and 20-day Bollinger mid support). Immediate resistance is likely at 44.79 (top of daily Bollinger uptrend channel), then at 44.80 (psychological resistance), before 45.00 (round-figure trading barrier).
USD/IDR--uptrend. USD/IDR may head back up to its two-month high of 13,190 notched Friday as the U.S. dollar rallies broadly on an overnight rise in U.S. Treasury yields. USD/IDR, which has been well-supported since last week when Indonesia's vice-president said that interest rates should be lowered, could hit a 17-year high if it surpasses February's peak of 13,245. Although the Bank Indonesia governor contradicted the vice-president by saying that monetary policy may still be on hold for some time, the recent easing of monetary policy by China may have made a more convincing case for another rate cut in Indonesia. Dow Jones technical analysis suggests immediate support for spot USD/IDR is at 13,060 (base of daily Bollinger uptrend channel), then at 13,020 (daily Ichimoku Cloud support), before 13,000 (round-figure trading barrier). Immediate resistance is at 13,200 (psychological resistance), then at 13,245 (two-month high), before 13,290 (top of weekly Bollinger uptrend channel).
(MORE TO FOLLOW) Dow Jones Newswires
May 11, 2015 21:08 ET (01:08 GMT)
USD/INR--uptrend. USD/INR is likely to keep climbing within the Bollinger uptrend channel that now supports at 63.82. The immediate target is the 64.33 top of the daily Bollinger uptrend channel. The pair is likely to be propelled higher by the overnight rise of the U.S. dollar index on the back of the 10-year Treasury yield hitting a five-month high. The India rupee may be particularly susceptible to U.S. yield movements due to the prevalence of investors who like the rupee for its greater interest rate disparity with the U.S. dollar. Investors who put on carry trades typically borrow in the currency that has lower interest rates, such as the U.S. dollar, and then invest in bonds of a currency that has interest rates. The possibility of a global deleveraging trend taking root has recently depressed the rupee and other high-yielding emerging market currencies, as traders pre-empt the outflows from foreign investors that might be coming. Dow Jones technical analysis suggests immediate support is at 63.82 (base of daily Bollinger uptrend channel), then at 63.50 (psychological support), before 63.32 (20-day Bollinger mid support). Immediate resistance is likely at 64.00 (round-figure trading barrier), then at 64.33 (top of daily Bollinger uptrend channel), before 64.50 (psychological resistance).
Write to Ewen Chew at ewen.chew@dowjones.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
May 11, 2015 21:08 ET (01:08 GMT)
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