(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 lower. Despite the overnight rise of the U.S. dollar index, the yuan may strengthen Monday on the heels of China's latest monetary policy easing and interest rate liberalization. On Sunday, the People's Bank of China cut the benchmark 1-year lending rate by 0.25 percentage points and also lowered the benchmark deposit rate - on the back of poor trade figures Friday and weak inflation data. The PBOC also took another step toward liberalizing interest rates by raising the ceiling that caps banks' leeway with setting deposit rates - to 150% from 130% of the benchmark rate. Stocks on the Shanghai exchange are expected to rally with these latest stimulus measures, while USD/CNY may drop toward the Bollinger downtrend channel at 6.1977 on speculative demand for the yuan - on hopes for quicker currency liberalization. Dow Jones technical analysis suggests immediate support for spot USD/CNY is at 6.2044 (20-day Bollinger mid support), then at 6.2000 (round-figure trading barrier), before 6.1977 (daily Bollinger downtrend channel). Immediate resistance is at 6.2112 (daily Bollinger uptrend channel), then at 6.2150 (daily Ichimoku Cloud resistance zone), before 6.2179 (top of daily Bollinger uptrend channel).
USD/TWD--downtrend may end. USD/TWD is teetering at the ceiling of the daily Bollinger downtrend channel at 30.790. A Monday close above this mark - a possibility due to Friday's rise of the U.S. dollar index - would negate the current bearish chart bias. The U.S. dollar was firmer Friday despite an April jobs report that was below expectations; slightly fewer-than-forecast jobs were added, while wage growth underperformed as well. However, yields on U.S. government bonds declined, which ought to crimp the dollar's gains in Asia, particularly against high-yielding currencies. On Sunday, China's unexpected announcement of monetary policy easing will likely act as a risk-on catalyst for the region and ought to weigh on the safe haven U.S. dollar as well. Dow Jones technical analysis suggests immediate support is at 30.570 (base of daily Bollinger downtrend channel), then at 30.500 (psychological support and weekly Ichimoku Cloud support). Immediate resistance is likely at 30.790 (top of daily Bollinger downtrend channel), then at 31.000 (round-figure trading barrier), before 31.010 (20-day Bollinger mid resistance).
USD/KRW--consolidation lower. USD/KRW opened Monday lower despite the overnight U.S. dollar index rally, but appears well-supported on the dip. The pair is likely reacting more to Sunday's news of China announcing fresh economic stimulus measures to counter slowing economic growth. The People's Bank of China cut the base 1-year interest rate by 0.25 percentage points and also gave domestic banks more leeway to set deposit rates - a sign of further market liberalization which is positive for the yuan and could have a proxy effect of boosting other Asia currencies. USD/KRW could drop toward the Bollinger downtrend channel at 1,075 if regional stocks continue to rally - a likely outcome due to Wall Street's Friday surge, coupled with a likely spike in Chinese stocks today on the fresh stimulus measures. Dow Jones technical analysis suggests immediate support is at 1,084 (20-day Bollinger mid support), then at 1,080 (round-figure trading barrier), before 1,075 (daily Bollinger downtrend channel). Immediate resistance is 1,090 (round-figure trading barrier), then at 1,092 (daily Bollinger uptrend channel), before 1,100 (round-figure trading barrier).
USD/SGD--consolidation. USD/SGD appears firm early Monday, on the back of Friday's rally of the U.S. dollar index, but may sink in the later part of the day as markets are likely to cheer the latest move by the Chinese central bank to ease monetary policy. The greenback rose on Friday despite the U.S. April jobs report falling below expectations. But Sunday's announcement of economic stimulus measures by China - via the cutting of its benchmark 1-year lending rate, along with some liberalization of interest rate-setting for domestic banks - ought to spur risk-taking and thereby depress the U.S. dollar broadly. USD/SGD may reinstate a bearish chart bias if it ends the day below 1.3239. Dow Jones technical analysis shows immediate support is at 1.3250 (psychological support), then at 1.3239 (daily Bollinger downtrend channel), before 1.3200 (round-figure trading barrier). Immediate resistance is 1.3300 (round-figure trading barrier), then at 1.3350 (psychological resistance), before 1.3361 (20-day Bollinger mid resistance).
USD/MYR--consolidation. USD/MYR is supported for now but may sink toward the Bollinger downtrend channel at 3.5600 later as risk appetite ratchets up on U.S. jobs data Friday indicating job growth remains anemic, while China takes further steps to pump up its slowing economy. The below-expectations U.S. jobs report gave hope to investors that the U.S. Federal Reserve won't be in a rush to raise interest rates. On Sunday, China announced a cut in its 1-year lending rate, along with a drop in the benchmark deposit rate, while allowing banks more leeway to set their own deposit rates. The U.S. dollar may soften in Asia as stocks in Japan and South Korea - a lead indicator for the region - rally significantly on the positive news. If USD/MYR closes Monday below 3.5600 the daily chart will turn bearish, suggesting that the ringgit will add to gains in the near term. The market may be awaiting Malaysia's March industrial production data due later for another trading cue for USD/MYR. Dow Jones technical analysis suggests immediate support is at 3.5800 (psychological support), then at 3.5600 (daily Bollinger downtrend channel), before 3.5500 (psychological support). Immediate resistance is at 3.6000 (round-figure trading barrier), then at 3.6030 (20-day Bollinger mid resistance), before 3.6340 (daily Ichimoku Cloud resistance zone).
USD/THB--uptrend. USD/THB lingers near its 5.5-year peak of 33.61 despite a risk-positive market tone arising from U.S. jobs data released Friday and Sunday's unexpected announcement of another round of monetary policy easing by China. The U.S. dollar ought to be subdued on the weaker-than-expected U.S. jobs report Friday - which makes it less likely that the Federal Reserve will raise interest rates soon. China's move to support the economy with another cut in its 1-year lending rate, coupled with a cut in banks' deposit rates, may rally regional stocks and thereby currencies. USD/THB could hence slip lower toward the base of its Bollinger uptrend channel, implying a stronger baht. However, the medium-term outlook for the baht remains somber due to the dovish stance of the Bank of Thailand and the government's efforts to ease investment outflows so as to weaken the currency for greater export competitiveness. Dow Jones technical analysis suggests immediate support is at 33.50 (psychological support), then at 33.27 (base of daily Bollinger uptrend channel), before 33.20 (psychological support). Immediate resistance is at 33.72 (top of daily Bollinger uptrend channel), then at 33.80 (psychological resistance), before 34.00 (round-figure trading resistance).
USD/PHP--consolidation. USD/PHP could stabilize near 44.58-44.60 where the daily Ichimoku Cloud support zone coincides with the base of the daily Bollinger uptrend channel. The overnight rise of the U.S. dollar index might be mitigated by the risk-positive connotations of China's rate-cut announcement announced Sunday. The U.S. dollar is trading with a supportive tone even though U.S. jobs data on Friday was weak, making it less likely that the Federal Reserve will raise interest rates soon. But the effect of China's rate-cut announcement on Sunday could have more a more immediate impact on regional currencies than expectations of the Fed lifting interest rates. Once China markets open Monday, general risk-taking could be boosted by a likely surge in Shanghai stocks. Dow Jones technical analysis suggests immediate support is at 44.60 (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 44.77 (top of daily Bollinger uptrend channel), then at 44.80 (psychological resistance), before 45.00 (round-figure trading barrier).
USD/IDR--consolidation lower. USD/IDR is likely to come off from its two-month high notched Friday as risk-taking may be boosted by China's unexpected monetary policy easing on Sunday. The news of another cut in China's base lending rate, coupled with Friday's weaker-than-expected U.S. jobs forecast, is already rallying stocks in Asia. If risk-taking appetite continues to rise and Indonesia shares also rally later, USD/IDR may drop toward the 13,040 base of the daily Bollinger uptrend channel as the rupiah recovers from its recent rate-cut expectations-induced slide. The rupiah slumped against the U.S. dollar last week after Indonesia's vice-president said that interest rates should be eased - though Bank Indonesia governor at the same conference suggested that monetary policy will on hold for now. The recent global bond selloff has also impacted the rupiah. Indonesia's high-yielding bonds are a favorite for foreign investors, but when they trim their holdings, they typically cause a large outflow that depreciates the
(MORE TO FOLLOW) Dow Jones Newswires
May 10, 2015 21:12 ET (01:12 GMT)
local currency. Dow Jones technical analysis suggests immediate support for spot USD/IDR is at 13,040 (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), before 13,270 (top of weekly Bollinger uptrend channel).
USD/INR--uptrend. USD/INR is likely to remain in the Bollinger uptrend channel even as risk-taking appetite gets a boost from monetary policy easing announced in China on Sunday. The announcement has boosted stocks in Asia markets that open earlier, and could have a similar impact on stocks in India as investors may take it as a cue that the Reserve Bank of India could also cut interest rates again soon - as they have hinted at previously. But a RBI rate cut might make the rupee less appealing to yield-seeking investors and thereby lift USD/INR higher. 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 63.73 (base of daily Bollinger uptrend channel), then at 63.50 (psychological support), before 63.22 (20-day Bollinger mid support). Immediate resistance is likely at 64.00 (round-figure trading barrier), then at 64.24 (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 10, 2015 21:12 ET (01:12 GMT)
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