ASIA FX: North Asia Currencies Firmer, USD/CNH Back Close To 7.2800
North East Asia currencies are firmer against the USD, with the won outperforming at the margins. Broader USD weakness is evident, amid EUR and EU related currency gains. Hopes of peace in Ukraine is fueling better appetite for EU related assets.
- USD/CNH is back sub 7.2900 and close to its 50-day EMA, but hasn't been able to convincingly break lower yet. Session lows rest at 7.2827. The USD/CNY fixing was a touch above yesterday's outcome. Local equities are higher post the lunch time break, but lagging more positive trends elsewhere. The WSJ is also reporting that China is attempting to be a peace maker in relation to the Ukraine situation
- Spot USD/KRW is back under 1448, up around 0.50% in won terms. This puts the pair back under the 20-day EMA, albeit just. Onshore equities are higher, up+1.2%, which may be helping the won at the margins.
- USD/TWD is lagging the broader USD moves, last still above 32.80.
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EURUSD TECHS: Bearish Trend Sequence Remains Intact
- RES 4: 1.0630 High Dec 06
- RES 3: 1.0513 50-day EMA
- RES 2: 1.0437/58 High Jan 6 / High Dec 30
- RES 1: 1.0361 20-day EMA
- PRICE: 1.0244 @ 05:57 GMT Jan 14
- SUP 1: 1.0178 Low Jan 13
- SUP 2: 1.0138 1.764 proj of the Sep 25 - Oct 23 - Nov 5 price swing
- SUP 3: 1.0122 2.0% 10-dma envelope
- SUP 4: 1.0031 2.000 proj of the Sep 25 - Oct 23 - Nov 5 price swing
The trend condition in EURUSD remains bearish and recent short-term gains have proved to be a correction. Friday’s move lower resulted in a print below 1.0226, the Jan 2 low. The pair also traded lower Monday. The break of 1.0226 confirms a resumption of the downtrend and marks an extension of the price sequence of lower lows and lower highs. Sights are on 1.0138 next, a Fibonacci projection. Resistance to watch is 1.0458, Dec 30 high.
BUND TECHS: (H5) Bear Cycle Intact
- RES 4: 137.75 Low Dec 10
- RES 3: 135.15 High Dec 13
- RES 2: 133.03 20-day EMA
- RES 1: 131.71/132.57 High Jan 9 / 6
- PRICE: 130.89 @ 05:39 GMT Jan 14
- SUP 1: 130.58/57 Low Nov 6 ‘24 and key support (cont) / Intraday low
- SUP 2 130.44 Low Jul 5 ‘24 (cont)
- SUP 3: 130.23 Low Jul 3 ‘24 (cont)
- SUP 4: 130.00 Psychological round number
The trend in Bund futures remains bearish and last week’s extension reinforces this theme. The contract has cleared key support at 132.00, the Nov 6 low. The clear break of this level strengthens a bearish theme. Sights are on the 130.00 handle next. Key short-term resistance is at 133.03, the 20-day EMA. Gains would be considered corrective and allow an oversold condition to unwind.
FOREX: NZD Outperforms On OIS Re-Pricing, Steady Trends Elsewhere
The USD was under pressure at the NY/Asia Pac cross over, as headlines crossed from Bloomberg that Trump economic advisers were considering/studying a gradual tariff hike approach. This reportedly hasn't been present to incoming President Trump yet. The BBDXY opened at lows near 1314, not too far off pre NFP levels from last Friday, but we found some support and last track near 1317.1 (still off a little over 0.20%).
- NZD/USD has been an outperformer, rising over 0.40%, to put the pair back above 0.5605. We are still short of the 20-day EMA resistance level, which comes in around 0.5640.
- Outside of the above BBG article, which weighed on broad USD sentiment, NZD was aided by the more positive Q4 NZIER Business Opinion Survey. Whilst the survey warned of on-going recession risks, the outlook for 2025 is on the improve. RBNZ dated OIS pricing closed 3-18bps firmer across meetings, with late 2025 leading. The expected official rate for November has firmed 30bps since Friday’s close. This has aided NZ-US yield differentials.
- AUD/USD has risen, but lagged NZD moves, last near 0.6185, up around 0.15%.
- Yen has lagged NZD shifts and modest AUD gains, although GBP & EUR have given up earlier gains as well. USD/JPY spiked towards 158.00 as BoJ Deputy Governor Himino spoke. However, as Himino noted that a rate would be discussed at the upcoming meeting, along with noting real yields shouldn't stay negative when deflationary forces end, USD/JPY moved off highs. The pair was last near 157.50, little changed for the session.
- In the cross asset space, US equity futures are higher, regional equities are mostly firmer as well, led by China/HK. Japan has lagged as onshore markets return from yesterday's long weekend. US yield are down a touch.
- Looking ahead, we have US PPI in focus, along with some central bank speak.
