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Hong Kong And China

 

Both the Hong Kong dollar and Chinese yuan were relatively unchanged during the session, with little left to trade on ahead of the weekend.  However, political pressure continued to keep the underlying bid tone in the Chinese yuan as statements emerged from Senator Lindsey Graham.  Senator Graham, who led the now defunct Graham-Schumer bill placing a 27.5 percent tariff on all Chinese imported goods, is now seemingly working on another piece of legislation that may support rising protectionist sentiment.  The South Carolina Republican stated plans to work with members of the Senate Finance Committee in developing a new legislative package that would confirm with current WTO rules.  Notably, Graham was quoted as having intentions to create “pain” for Chinese officials, punishment for “when they cheat”.  The news will likely help the market to open higher on Monday as it correlates with recent more subtle suggestions of flexibility by US Treasury Secretary Henry Paulson on Wednesday.  Separately, the Hong Kong market was little changed ahead of the close as the Hang Seng Index added a mere 4 points to close at 19,179.61.  Traders took a break during the session following a wild rollercoaster of a ride over the past six sessions.  Notably, Bank of China shares added 4 cents or 1.1 percent to close at HK$3.79 as the nation’s biggest insurer, China Life, climbed 20 cents to HK$21.60.

 

USDHKD Finally Makes A Move Lower

 

The Hong Kong dollar declined on a failure to break above the 7.8180 resistance figure, dipping to as low as 7.8118 in New York.  Now, consolidating, the currency pair is looking lighter, and set for a mild pullback on profit taking.  Momentum indicators are confirming the notion, however, suggesting slightly more downside before bids take over.  As a result, buyers are looking heavy at the 7.8116 March 6th spike low with downside caps at the 7.8106 50% fib from the 7.8022-7.8191 advance.  Should the aforementioned be broken, sellers will likely control the pace till 7.8058 78.6% fib.  

 

Singapore Dollar

 

Little was left for Singapore dollar traders as well.  The benchmark was higher for the week, gaining after the tumultuous debacle over the past week.  Real estate developer and commodity manufacturers led gains throughout the week as investors saw new opportunity after shares pulled back to cheaper prices.  On the day, the index continued the sentiment, rising 21.22 points to close at 3,143.71 in the overnight.  Keppel Corp., the world’s largest rig builder, led gains on the day advancing as much as 1.2 percent at S$8.55.  The day’s advance adds to the already established 6.9 percent over the past three sessions.  The broader market increases kept the Singapore dollar higher against the US dollar counterpart, still hovering at nine-year highs.  Traders will now be looking to next week’s schedule, promising a lot more action than what has been witnessed recently.  A handful of important reports are expected including retail sales figures and exporting numbers.  Although retail sales are expected to remain supported, consensus is pitting a 4 percent advance, exports are estimated to remain in the doldrums.  Notably, the electronics component will be scrutinized as the sole figure is responsible for the lag in overall exports.  As a result, lower than expected figures may place some weight on the Singapore dollar, helping the USDSGD to bounce back on technical support.

 

Further Downside For USDSGD

 

Bouncing off of the 1.5250 in the New York session, the USDSGD upside is looking limited.  Momentum indicators are seemingly overextended, increasing the likelihood that offers surround the 1.5300 figure.  A breach of the level, however, would purport a move higher until the test at 1.5322 March 5th spike high.  Downside still remains on a trap door decline through 1.5250, with support non-existent until the 1.5100.