News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • Gold could suffer further near-term losses due to rising U.S. Treasury yields and a weak technical picture for price action. Get your weekly gold forecast from @DColmanFX here: https://t.co/g9QvH3L4It https://t.co/Vz98E0Bl9U
  • Gold has been trending lower after failing to clear resistance in the $1835 area earlier this month. Get your $XAUUSD market update from @DColmanFX here:https://t.co/3hm1g3BHgf https://t.co/MdTQKEBCBx
  • Key break here in the 10-year #Treasury yield as it rises to the highest since late June Took out 1.4230 resistance, and the 100-day SMA Eyes now on the 38.2% Fib extension at 1.4775 Also potential falling resistance from March https://t.co/4cI6l210ui
  • The move in rates after this week’s FOMC has continued and the 10 year yield has pushed up to a fresh two-month-high. Get your market update from @JStanleyFX here:https://t.co/CRWhuZ3sxD https://t.co/svHHqN2Zz8
  • S&P 500 contending with its proverbial ‘line in the sand’ as bulls and bears battle for directional control. How we close/trade around the 50-day moving average could serve as a noteworthy bellwether for risk trends headed into next week. I remain cautious below ~4,480. $SPX $ES https://t.co/qogkjs1Sx2
  • USD/JPY trades to a fresh monthly (110.57) amid the pickup in longer-dated US Treasury yields, and the exchange rate may stage a larger advance over the coming days. Get your market update from @DavidJSong here:https://t.co/dlNXOrJnM9 https://t.co/LCQd26W1zF
  • US yields continue to climb, with the 10-year Treasury yield trading above 1.45% $ZN $ZB https://t.co/N4EDfwD3nZ
  • $USDJPY bull thesis appears quite constructive. Technicals show topside breakout above trend resistance following a period of consolidation. Bond yields providing the fundamental catalyst. Eyes on Aug/YTD highs. A broad-based deterioration in market sentiment poses downside risk. https://t.co/AazskXGjHq
  • WTI posting another session of strong gains, currently flirting with the 74 handle $CL #Oil #OOTT https://t.co/oYnm2OYRky
  • The New Zealand Dollar’s bullish breakout attempt in early-September was rebuffed. Price action at the end of the month is telling a different story. Get your market update from @CVecchioFX here:https://t.co/AquMSrssne https://t.co/DtFuFfrS7Q
ASEAN FX at Risk to US Recession Fears & Sentiment on Brexit, ECB

ASEAN FX at Risk to US Recession Fears & Sentiment on Brexit, ECB

Daniel Dubrovsky, Strategist

ASEAN Fundamental Outlook

  • A more dovish Fed sunk US Dollar, lifting ASEAN currencies
  • Rising concerns about a recession may bolster the Greenback
  • Declines in USD/IDR, USD/MYR and USD/PHP may not last

Trade all the major global economic data live and interactive at the DailyFX Webinars. We’d love to have you along.

US Dollar and ASEAN FX Recap

Most ASEAN currencies appreciated against the US dollar this past week, owing to a surprisingly more-dovish-than-expected Fed rate decision. In addition, sentiment generally recovered throughout most the week heading into the FOMC. Most notably, the S&P 500 at one point breached critical resistance before turning back lower on Friday.

USD/IDR saw most of its decline in pre-FOMC trade, with losses pausing after the Bank of Indonesia rate decision afterwards. While benchmark lending rates were left unchanged, the central bank said that it will raise loan-to-funding ratio reserve requirements as it takes on accommodative policies to push for domestic demand. After hiking rates aggressively last year, this was seen as a step away from monetary tightening.

There was a slightly different story from the Philippine central bank last week. Heading into it, USD/PHP rose on more dovish prospects after newly-appointed Governor Benjamin Diokno alluded to cuts in reserve requirement ratios (RRR). However, the Philippine Peso then regained ground after there were no mentions of cutting RRR in the statement, disappointing some dovish bets. USD/SGD was little change by the weekend.

ASEAN FX vs. US Dollar

Domestic ASEAN FX Economic Events and Risks

The regional ASEAN economic docket thins out in the week ahead following two central bank rate decisions. Singapore will be releasing February inflation and industrial production data. Regardless, USD/SGDtends to have a close relationship with DXY and its movement in the medium-term may be dictated by the Greenback. For risk trends, do keep an eye on Chinese industrial profits on Wednesday.

External ASEAN FX Event Risk

Speaking of sentiment, ASEAN currencies such as the Malaysian Ringgit could be left vulnerable if global equities turn lower ahead. Lately, there have been rising concerns about a recession in the world’s-largest economy. Looking at the chart below, a closely watched section of the US yield curve, the gap between 3-month and 10-year government bond yields, flipped negative for the first time since 2007.

US Recession Concerns

ASEAN FX at Risk to US Recession Fears & Sentiment on Brexit, ECB

Chart Created in TradingView

In times of risk aversion, the highly-liquid US Dollar can benefit from haven demand. With that in mind, attention turns to a slew of important domestic data. Next week offers US consumer confidence, GDP and PCE core (the Fed’s preferred measure of inflation). Lately, economic data has been tending to underperform relative to economists’ expectations. If more of the same fuels risk aversion, USD may rise.

As such, sentiment-linked ASEAN FX may succumb to selling pressure in such circumstances. Another risk for stocks, a wildcard perhaps, is what could happen if UK Prime Minister Theresa May fails to pass her Brexit deal in Parliament for a third time. This may increase the odds of a ‘no-deal’ divorce unless the nation participates in EU parliamentary elections.

There will also be a slew of European Central Bank speakers in the week ahead offering commentary in the aftermath of a more-dovish ECB rate decision. Rhetoric that echoes and builds on a more pessimistic outlook could scare investors. As such, treat losses in USD/IDR, USD/PHP and USD/MYR with caution.

FX Trading Resources

--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on

Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES