DAILY FX OUTLOOK. Friday, June 03, Asian FX. FX Themes/Strategy/Trading Ideas

Transcription

1 DAILY FX OUTLOOK Friday, June 03, 2016 FX Themes/Strategy/Trading Ideas Except against the JPY, the USD (note softer UST yields) retreated against the majors on Thursday ahead of Friday s NFP (mkts:+160 to 164k). Meanwhile, the ECB meeting was essentially a non-mover with central bank raising its inflation forecasts by a less than expected degree. Tonight s NFP readings may prove pivotal for markets with our preference to be on the side of the greenback in the near term. Elsewhere, the JPY may attempt to continue to outperform with markets in the process of re-pricing BOJ prospects. On other fronts, the FXSI (FX Sentiment Index) continued to consolidate higher within Risk-Neutral territory for the third consecutive session on Thursday, manifesting the prevailing caution across markets. Corporate FX & Structured Products Tel: / 1881 Fixed Income & Structured Products Tel: Investments & Structured Product Tel: With the EU referendum drawing near amidst increased nervousness, we square out our previous 18 May 16 idea to be tactically long GBP-USD (spot ref: ) at for an implied -0.17% loss. Asian FX The EM complex ended mixed against the USD on Thursday and the Asian Currency Index (ACI) may remain slightly heavy while awaiting the US labor market report on Friday. Going ahead, the regional pairs may remain reactive to broad dollar cues later in NY while ones to watch for the region today include the May Caixin PMIs out of China. Interest Rate Derivatives Tel: Treasury Research & Strategy Tel: This morning, the SGD NEER is relatively firmer on the day at +0.15% above its perceived parity (1.3772) with NEER-implied USD-SGD thresholds largely unchanged on the day. At current levels, the +0.50% threshold is estimated at around while the -0.50% threshold is estimated at Technically, may be expected to offer support ahead of the US labor market numbers. Emmanuel Ng ngcyemmanuel@ocbc.com

2 03/03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ June 2016 Daily FX Outlook Asian Currency Index SGD NEER % deviation USD-SGD Current % Parity % Today, the PBOC shifted the CFETS RMB Index lower to from on Thursday. This saw the USD-CNY mid-point firming to from yesterday CFETS NEER vs. USD-CNY mid-point /1/10 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 1/1/ CFETS RMB Index USD-CNY Fix, Bloomberg G7 EUR-USD The EUR-USD may remain rudderless if not top heavy post- ECB ahead of the US NFP later in the global session with little in the way of upside surprises from Draghi. Any NFP-inspired USD resilience we think risks a move towards the 200-day MA (1.1095). USD-JPY The USD-JPY may continue to smart from BOJ Sato s comments from Thursday and the pair may continue to succumb to gravity towards in the absence of a significant upside surprise in the US NFP. AUD-USD We note that the AUD-USD has relinquished GDP-inspired gains and if the 200-day MA (0.7256) is not challenged successfully, odds are for a further relapse towards if FOMC probabilities are heightened in the wake of the US NFP. GBP-USD GBP-USD may be expected to remain top heavy into the Treasury & Strategy Research 2

3 29-Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar-16 3 June 2016 Daily FX Outlook end of the week on the back of underlying Brexit concerns. Any sustained violation of would prove pivotal and may portend further deterioration towards the neighborhood. FX Sentiment Index RISK OFF RISK ON M Correlation Matrix DXY USGG10 CNY SPX MSELCA CRY JPY CL1 VIX ITRXEX CNH EUR DXY CHF JPY SGD AUD PHP IDR TWD GBP CAD CNH CNY CCN12M INR THB KRW USGG MYR NZD EUR Source: Bloomberg Treasury & Strategy Research 3

4 ARS PHP RUB GBP INR TWD NZD CNY THB SGD JPY BRL NOK CAD PLN EUR IDR SEK HUF AUD TRY CHF CLP KRW MYR MXN ZAR COP 3 June 2016 Daily FX Outlook Immediate technical support and resistance levels S2 S1 Current R1 R2 EUR-USD GBP-USD AUD-USD NZD-USD USD-CAD USD-JPY USD-SGD EUR-SGD JPY-SGD GBP-SGD AUD-SGD Gold Silver Crude FX performance: 1-month change agst USD 4.0 % Source: Bloomberg G10 FX Heat Map AUD NZD EUR GBP JPY CAD USD SGD AUD NZD EUR GBP JPY CAD USD SGD Treasury & Strategy Research 4

5 3 June 2016 Daily FX Outlook Asia FX Heat Map USD JPY CNY SGD MYR KRW TWD THB PHP INR IDR USD JPY CNY SGD MYR KRW TWD THB PHP INR IDR Treasury & Strategy Research 5

6 3 June 2016 Daily FX Outlook FX Trade Ideas Inception B/S Currency Spot Target Stop/Trailing stop Rationale 1 29-Apr-16 S AUD-USD Negativity post 1Q CPI numbers 2 09-May-16 B USD-SGD Potential for USD strength ahead of Fed-speak 3 09-May-16 B USD-CAD Weak labor market numbers, detriorating growth outlook 4 19-May-16 S EUR-USD Policy dichotomy play, especially after FOMC minutes 5 19-May-16 B USD-JPY Policy dichotomy play, especially after FOMC minutes STRUCTURAL 6 18-Feb-16 B EUR-USD Growing suspicion that the Fed will hesitate 7 01-Mar-16 S USD-JPY Mar-16 B AUD-USD Inconsequential G20, dented FOMC prospects, risk aversion, global growth worries Potential risk appetite, abating global growth concerns, static Fed expectations 9 12-Apr-16 S USD-CAD Stabilizing crude, soft USD, sanguine BOC Apr-16 B NZD-USD Recovery in cyclicals, search for yield RECENTLY CLOSED Inception Close B/S Currency Spot Close Rationale P/L (%) 1 03-Feb May-16 S GBP-USD Policy dichotomy, Brexit concerns, and space for further NEER depreciation Apr May-16 S USD-CAD Bottoming crude prices Apr May-16 B GBP-USD Moderating Brexit concerns, weak dollar, positive risk 4 04-May May-16 S USD-JPY USD vulnerability pre-nfp, potential risk aversion May May-16 B EUR-USD Rate differentials in the EUR's favor Apr May-16 S USD-SGD Potential for further broad USD decay, positive risk appetite 7 18-May Jun-16 B GBP-USD Potential for bounce postreferendum Treasury & Strategy Research 6

7 3 June 2016 Daily FX Outlook This publication is solely for information purposes only and may not be published, circulated, reproduced or distributed in whole or in part to any other person without our prior written consent. This publication should not be construed as an offer or solicitation for the subscription, purchase or sale of the securities/instruments mentioned herein. Any forecast on the economy, stock market, bond market and economic trends of the markets provided is not necessarily indicative of the future or likely performance of the securities/instruments. Whilst the information contained herein has been compiled from sources believed to be reliable and we have taken all reasonable care to ensure that the information contained in this publication is not untrue or misleading at the time of publication, we cannot guarantee and we make no representation as to its accuracy or completeness, and you should not act on it without first independently verifying its contents. The securities/instruments mentioned in this publication may not be suitable for investment by all investors. Any opinion or estimate contained in this report is subject to change without notice. We have not given any consideration to and we have not made any investigation of the investment objectives, financial situation or particular needs of the recipient or any class of persons, and accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of the recipient or any class of persons acting on such information or opinion or estimate. This publication may cover a wide range of topics and is not intended to be a comprehensive study or to provide any recommendation or advice on personal investing or financial planning. Accordingly, they should not be relied on or treated as a substitute for specific advice concerning individual situations. Please seek advice from a financial adviser regarding the suitability of any investment product taking into account your specific investment objectives, financial situation or particular needs before you make a commitment to purchase the investment product. OCBC and/or its related and affiliated corporations may at any time make markets in the securities/instruments mentioned in this publication and together with their respective directors and officers, may have or take positions in the securities/instruments mentioned in this publication and may be engaged in purchasing or selling the same for themselves or their clients, and may also perform or seek to perform broking and other investment or securities-related services for the corporations whose securities are mentioned in this publication as well as other parties generally. Co.Reg.no.: W Treasury & Strategy Research 7