The following are projected trading ranges and outlooks for nine secondary currency pairs in Asia today:
(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 yuan likely remains stable, as the authorities engineer stability in the spot market by direct intervention. Speculative demand for the yuan might rise toward October when the International Monetary Fund could announce its inclusion into the Special Drawing Rights currency basket. China authorities announced last week new reporting guidelines for reserve assets and foreign debt, which will make them in line with the IMF's benchmarks and thus pave the way for SDR inclusion. The Shanghai composite stock index has risen out of its daily Bollinger downtrend channel--a nullification of this bearish chart pattern could motivate buying that could rally stocks in the near term. Dow Jones technical analysis suggests immediate support for spot USD/CNY is at 6.2080 (20-day Bollinger mid support), then at 6.2054 (daily Bollinger downtrend channel), before 6.2043 (daily Ichimoku Cloud support). Immediate resistance is at 6.2107 (daily Bollinger uptrend channel), then at 6.2133 (top of daily Bollinger uptrend channel), before 6.2355 (weekly Bollinger uptrend channel).
USD/TWD--consolidation within uptrend. USD/TWD might have found its way back into the daily Bollinger uptrend channel, which would be affirmed by a Thursday close above 31.310. Overnight, the U.S. dollar index rose slightly as the euro slipped, giving reason for Asia traders to be bullish on the greenback on an intraday basis. The change in short-term speculative sentiment could see the price of the benchmark 1-month USD/TWD nondeliverable forward contract rise back above par versus the spot contract price; the 1-month contract ended just below par Wednesday. Taiwan manufacturing stocks might suffer from poorer-than-expected Apple sales, which were partially responsible for the drop in U.S. tech stocks Wednesday. Taiwan industrial output data for June is due at 0800 GMT. Dow Jones technical analysis suggests immediate support is at 31.310 (base of daily Bollinger uptrend channel), then at 31.200 (20-day Bollinger mid support), before 31.100 (daily Bollinger downtrend channel). Immediate resistance is likely at 31.410 (top of daily Bollinger uptrend channel), then at 31.420 (weekly Bollinger uptrend channel), before 31.500 (psychological resistance).
USD/KRW--uptrend. USD/KRW gapped up Thursday to open at 1,157.0 from its last close of 1,153.6 in reaction to the slight overnight bounce of the U.S. dollar index and another drop in U.S. tech stocks. Weaker-than-forecast South Korea 2Q GDP data released Thursday, which printed at 0.3% on-quarter growth versus expectations for 0.4%, added to bearishness for the won. The dollar rebounded as U.S. existing home sales beat forecasts, keeping intact the view that the U.S. Federal Reserve could raise U.S. interest rate in September. Overnight, U.S. tech stocks suffered from poorer-than-expected sales figures, which could impact South Korea's electronics export sector. The South Korea won fell briefly to a new two-year low of 1,161.0 to the U.S. dollar, lower than Tuesday's mark of 1,159.9. The benchmark South Korea stock exchange index, the Kospi, is down 0.1% in early trade. Dow Jones technical analysis suggests immediate support is at 1,150 (round-figure trading barrier), before 1,149 (base of daily Bollinger uptrend channel). Immediate resistance is at 1,160 (round-figure trading barrier), then at 1,163.5 (July 2013 peak), before 1,170 (round-figure trading barrier).
USD/SGD--uptrend. The bullish chart bias for USD/SGD has been verified with Wednesday's higher closing that keeps intact the Bollinger uptrend channel. The bullish path could lead the Singapore dollar to more weakness versus the greenback in the days ahead--with an immediate target of 1.3726 which is the ceiling of the channel. The greenback is underpinned by hawkish views from the U.S. Federal Reserve on interest rates and its rise has recently been exacerbated by sharp drops in commodity prices, which are denominated in U.S. dollars. U.S. existing home sales data surprised higher overnight, affirming the perception that the economy will continue to perform as the Fed expects, making a September U.S. rate increase more likely. Singapore will release its June consumer price index data later--analysts expect an eighth consecutive drop in the headline number. Dow Jones technical analysis shows immediate support is at 1.3643 (base of daily Bollinger uptrend channel), then at 1.3600 (round-figure trading barrier), before 1.3560 (20-day Bollinger mid support). Immediate resistance is at 1.3686 (weekly Bollinger uptrend channel), then at 1.3700 (round-figure trading barrier), before 1.3729 (top of daily Bollinger uptrend channel).
USD/MYR--uptrend may resume. The U.S. dollar has rebounded versus Malaysia's ringgit, nearly wiping out Wednesday's move lower. The driver for the greenback's bounce may have been better-than-expected U.S. existing home sales, which supports the possibility of a U.S. interest rate rise later this year. U.S. weekly jobless data due later today could augment the positive tone for the U.S. dollar. But USD/MYR may struggle to rise due to suspected central bank intervention, which has been blocking the pair's entry into the Bollinger uptrend channel at 3.8100. If this chart resistance breaks, U.S. dollar bulls might be encouraged to bet on more upside. Dow Jones technical analysis suggests immediate support is at 3.8000 (round-figure trading barrier), then at 3.7930 (20-day Bollinger mid support), before 3.7760 (daily Bollinger downtrend channel). Immediate resistance is at 3.8100 (daily Bollinger uptrend channel), before 3.8270 (top of daily Bollinger uptrend channel).
USD/THB--uptrend. Thailand's baht is likely to keep weakening versus the U.S. dollar as the market becomes more convinced that the U.S. Federal Reserve is likely to raise interest rates this year. Stronger-than-expected U.S. existing home sales on Wednesday affirmed the hawkish view. The pace of the baht's decline may be accelerating, as can be seen in the steepening trajectory of the daily USD/THB Bollinger uptrend channel which points to the round-figure trading barrier of 35.00. Traders said there was mild intervention in the spot market by the Bank of Thailand last week to slow the baht's decline, but the authorities have said in the recent past that they would like to see the baht weaker--to help struggling exporters. Analysts are bearish on Thailand's export data report due next week. Dow Jones technical analysis suggests immediate support is at 34.36 (base of daily Bollinger uptrend channel), then at 34.20 (psychological support), before 34.06 (20-day Bollinger mid support). Immediate resistance is at 34.80 (psychological resistance), then at 35.00 (round-figure trading barrier).
USD/PHP--uptrend. USD/PHP is likely to resume its climb within the Bollinger uptrend channel that now supports at 45.23, implying a weaker peso versus the U.S. unit. But the peso may depreciate less than other Asia currencies, because it is widely viewed as more resilient than its regional peers due to its better fiscal position, stronger growth prospects and smaller proportion of foreign debt, which in the event of higher U.S. interest rates, could be a risk factor due to foreign investment outflows. Bullish U.S. dollar pressure has returned after the better-than-expected U.S. existing home sales report released overnight. U.S. weekly jobless claims data due later today could add to expectations that the U.S. Federal Reserve is on track toward raising interest rates later this year. Dow Jones technical analysis suggests immediate support is at 45.23 (base of daily Bollinger uptrend channel), then at 45.16 (20-day Bollinger mid support), before 45.10 (daily Bollinger downtrend channel). Immediate resistance is likely at 45.29 (top of daily Bollinger uptrend channel), then at 45.40 (top of weekly Bollinger uptrend channel), before 45.50 (psychological resistance).
(MORE TO FOLLOW) Dow Jones Newswires
July 22, 2015 21:14 ET (01:14 GMT)
USD/IDR--uptrend. USD/IDR has reinstated a bullish technical bias on the daily chart after Wednesday's spike, which came after four days of market closure due to public holidays. Pent-up demand for U.S. dollars from importers, as well as the delayed reaction to last week's hints from the U.S. Federal Reserve on raising interest rates were factors that drove USD/IDR up. The rupiah could notch a new 16.5-year low versus the greenback if it falls past June's trough of 13,384 to the dollar. But a positive factor for the rupiah is the persistent weakness in crude oil prices, which fell again overnight, that benefits Indonesia's current-account balance. Concerns over Indonesia's chronic current-account deficit--partly due to costly energy imports-- have in the past weighed on the rupiah. Dow Jones technical analysis suggests immediate support for spot USD/IDR is at 13,350 (base of daily Bollinger uptrend channel), then at 13,330 (20-day Bollinger mid support), before 13,310 (daily Bollinger downtrend channel). Immediate resistance is at 13,384 (June 16.5-year peak), then at 13,480 (top of weekly Bollinger uptrend channel), before 13,500 (psychological resistance).
USD/INR--uptrend. USD/INR is likely to pop back into the daily Bollinger uptrend channel following the overnight rebound of the U.S. dollar index on a forecast-beating U.S. existing home sales report. The data supports the view that the U.S. Federal Reserve needs to raise interest rates this year. U.S. weekly jobless claims data due later today could further convince U.S. interest rate hawks that September could be when the Fed lifts rates from near-zero. If USD/INR ends Thursday above 63.59 the bullish chart signal of the Bollinger uptrend channel will be confirmed and the pair could rally to 63.88. If that resistance level breaks, a much stronger rally can be expected in the near term. Dow Jones technical analysis suggests immediate support is at 63.47 (20-day Bollinger mid support), then at 63.34 (daily Bollinger downtrend channel), before 63.25 (base of daily Ichimoku Cloud support zone). Immediate resistance is likely at 63.59 (daily Bollinger uptrend channel), then at 63.72 (top of daily Bollinger uptrend channel), before 63.88 (top of daily Ichimoku Cloud 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
July 22, 2015 21:14 ET (01:14 GMT)
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