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 continues to tread water, even as China's government took another step closer toward getting the renminbi into the reserve currency basket of the International Monetary Fund. The authorities announced Friday new guidelines for reporting of reserve assets and foreign debt, which will make them in line with the IMF's standards. The revised data reporting will show more clearly China's debt obligations and allow easy comparison with other nations' debt burdens. USD/CNY needs to escape the 6.2052-6.2104 range in order to enter the Bollinger downtrend or uptrend channel and thereby trigger more technical momentum. Stocks rallied slightly Monday, making it a third consecutive gain for the benchmark Shanghai composite index. The index is attempting to break out of the daily Bollinger downtrend channel and could rebound higher in the near term if the bearish technical signal is nullified. Dow Jones technical analysis suggests immediate support for spot USD/CNY is at 6.2078 (20-day Bollinger mid support), then at 6.2052 (daily Bollinger downtrend channel), before 6.2043 (daily Ichimoku Cloud support). Immediate resistance is at 6.2104 (daily Bollinger uptrend channel), then at 6.2130 (top of daily Bollinger uptrend channel), before 6.2355 (weekly Bollinger uptrend channel).
USD/TWD--uptrend. The Taiwan dollar may weaken versus the U.S. unit in the days ahead, as the daily USD/TWD chart appears bullish. The U.S. dollar has been rising steadily on growing expectations that U.S. interest rates will rise later this year, possibly by September. Last week, Fed chief Janet Yellen hinted that an interest rate increase this year might be appropriate if the economy performs as expected. Bullishness for the greenback can be seen in the offshore market - composed mainly of speculators - where the price of the benchmark 1-month USD/TWD nondeliverable forward contract has risen to above par versus the spot contract price. Dow Jones technical analysis suggests immediate support is at 31.270 (base of daily Bollinger uptrend channel), then at 31.170 (20-day Bollinger mid support), before 31.060 (daily Bollinger downtrend channel). Immediate resistance is likely at 31.380 (top of daily Bollinger uptrend channel), then at 31.410 (weekly Bollinger uptrend channel), before 31.500 (psychological resistance).
USD/KRW--uptrend. Continuation of U.S. dollar short-covering on fears of U.S. interest rates rising has sent USD/KRW to a new two-year high of 1,157.8. Tuesday's third consecutive rally has steepened the trajectory of the USD/KRW Bollinger uptrend channel, suggesting that the pace of won weakening may increase. The Bollinger uptrend channel now supports the pair at 1,142 and could lead to the July 2013 peak of 1,163.5. If this barrier is breached, the won will be at its weakest versus the U.S. dollar in 3 years. The hawkish comments from the U.S. Federal Reserve last week continue to reverberate through financial markets, with Monday's plummet in gold prices the latest sign that U.S. dollar bullishness has not abated. Dow Jones technical analysis suggests immediate support is at 1,150 (round-figure trading barrier), then at 1,142 (base of daily Bollinger uptrend channel), before 1,140 (round-figure trading barrier). 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. USD/SGD continues to climb on forecasts that the U.S. Federal Reserve could lift interest rates in September - provided the U.S. economy continues to improve and global financial markets are stable. As the greenback rallies across the board, the Singapore dollar has depreciated to a three-month low. More weakness may come as traders price in the possibility of additional monetary easing in Singapore. Some analysts are considering that the Monetary Authority of Singapore may do the opposite of the U.S. Federal Reserve and ease policy - by weakening its currency - at its October meeting to prop up a slowing economy that has already experienced seven months of deflation. Dow Jones technical analysis shows immediate support is at 1.3700 (round-figure trading barrier), then at 1.3689 (base of weekly Bollinger uptrend channel), before 1.3633 (base of daily Bollinger uptrend channel). Immediate resistance is at 1.3724 (top of daily Bollinger uptrend channel), then at 1.3750 (psychological resistance), before 1.3800 (round-figure trading barrier).
USD/MYR--consolidation. While the USD/MYR pair has tentatively dropped out of the Bollinger uptrend channel, indicating that the bullish chart bias has ended, the U.S. dollar ought to remain well-supported. The greenback has been rising across the board on expectations that U.S. interest rates are set to rise this year, but it has struggled to climb versus the ringgit due to suspected spot-market intervention by the Malaysia central bank. The greenback has curiously been flat against the Malaysia ringgit in recent days, whereas other USD/Asia pairs have been climbing steadily. Aside from USD-strength due to interest rate expectations, additional pressure on the ringgit may come from the recent drop in crude oil prices - due to the Iran nuclear sanctions deal - which threatens Malaysia's oil export revenues. This could have a negative impact on Malaysia's economy and its trade balance in the medium to long term. Dow Jones technical analysis suggests immediate support is at 3.8000 (round-figure trading barrier), before 3.7880 (20-day Bollinger mid support). Immediate resistance is at 3.8090 (daily Bollinger uptrend channel), then at 3.8300 (top of daily Bollinger uptrend channel), before 3.8500 (psychological resistance).
USD/THB--pullback within uptrend. The baht hit a new 6-year low of 34.49 versus the U.S. dollar in overnight trade, but could recoup slightly due to a technical pullback. USD/THB has overshot the ceiling of the Bollinger uptrend channel, suggesting that the move has exceeded a statistical norm, and may hence retrace briefly before continuing. But the bullish USD/THB chart bias will remain as long as the pair stays above 34.18 by Tuesday's close. The U.S. dollar has been rising since last week when the U.S. Federal Reserve chief hinted that a rate increase this year is on the cards. Market participants said that the Bank of Thailand intervened intermittently in the spot market last week to slow the baht's decline, but the BOT appears to be more tolerant of baht weakness than its regional counterpart Bank Negara Malaysia - who seems to have drawn a line in the sand for its ringgit. Dow Jones technical analysis suggests immediate support is at 34.18 (base of daily Bollinger uptrend channel), then at 34.00 (round-figure trading barrier), before 33.96 (20-day Bollinger mid support). Immediate resistance is at 34.50 (round-figure trading barrier), then at 34.59 (top of weekly Bollinger uptrend channel), before 35.00 (round-figure trading barrier).
USD/PHP--uptrend. Monday's fourth consecutive rise of the U.S. dollar index, coupled with the plunge in gold prices, will keep the U.S. dollar buoyant against the Philippine peso. USD/PHP is hence likely to keep rising toward the 45.40 top of the weekly Bollinger uptrend channel - the immediate technical target. The greenback has been fuelled by comments last Wednesday from the U.S. Federal Reserve that interest rates may rise later this year. Riskier emerging market currencies are especially vulnerable to a U.S. rate increase because a rise in USD-funding costs might spur capitulation of the short-USD carry trade. Gold prices - which are denominated in U.S. dollars - plunged as much as 4% to a 5-year low on Monday, implying that traders expect the U.S. dollar to strengthen further. Dow Jones technical analysis suggests immediate support is 45.20 (base of daily Bollinger uptrend channel), then at 45.14 (20-day Bollinger mid support), before 45.08 (daily Bollinger downtrend channel). Immediate resistance is likely at 45.26 (top of daily Bollinger uptrend channel), then at 45.40 (top of weekly Bollinger uptrend channel), before 45.50 (psychological resistance).
USD/IDR--closed.
(MORE TO FOLLOW) Dow Jones Newswires
July 20, 2015 20:49 ET (00:49 GMT)
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