FX Insights. Chart Of The Day EUR/SGD: Increasing downward pressure but sustained decline only if daily closing below

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1 Quek Ser Leang Lee Sue Ann Global Economics & Markets Research URL: Chart Of The Day EUR/SGD: Increasing downward pressure but sustained decline only if daily closing below EUR failed to move above the major resistance last week and the subsequent decline from the high is gaining momentum rapidly. The rising trend-line connecting the lows of and was marginally breached in overnight trading but only a daily closing below the key support would indicate that the current EUR weakness could extend further to and possibly below this level (next support is at ). Overall, the current downward pressure would continue to increase unless EUR can reclaim within these 1 to 2 days. 1 P a g e

2 OVERVIEW The U.S. dollar ended mix in G10 overnight, with dollar index DXY largely confined to prior day range as investors await the BOJ and FOMC rate decisions today. EUR/USD spiked to a high of during early Europe but gains quickly evaporated with the pair back to recent range lows near by NY close. GBP/USD broke to fresh 5-week lows of after key support at 1.30 handle was taken out. USD/JPY drifted to a lower range below 102 as market prepares for possible disappointment from BOJ in the rate decision due today. AUD led G10 for a second day, higher by 0.3% to but gains were still capped by /80. USD/SGD had a quiet overnight session; trading within a tight 20 pips range between and In other regional news, Thailand s transport minister Arkhom Termpittayapaisith will head the Thai delegation at the fourteenth meeting of the Thai-Chinese steering committee for cooperation on development of the high-speed train project in Bangkok. The cabinet also gave the nod to a framework of cooperation between the Thai and Chinese governments to develop high-speed railways from Map Ta Phut to Nong Khai and Bangkok to Kaeng Khoi. Meanwhile in Malaysia, the government remains confident of achieving the MYR39bn Goods and Services Tax (GST) revenue target this year despite a 30% decline in the consumption tax collection in 2Q16. For the next 24 hours, the focus would inevitably be on central banks meetings with 3 key rate decisions lined up BOJ, FED (Thurs 2am SGT) and RBNZ (Thurs 5am SGT). Out of the three, we expect BOJ to cut rates deeper into the negative territory, from the current minus 0.1% to minus 0.2% while keeping the QE annual target at 80 trillion yen. On the other hand, FED and RBNZ are likely to keep their interest rates unchanged. 2 P a g e

3 21-Sep-16 Summary of Views FX Pairs Spot Outlook Since/ Rate Target Trailing-Stop Support Resistance USD/SGD Bullish 14 Sep S1: S2: R1: R2: EUR/SGD Neutral 19 Sep S1: S2: R1: R2: GBP/SGD Bearish 19 Sep S1: S2: R1: R2: AUD/SGD Neutral 20 Sep S1: S2: R1: R2: JPY/SGD Neutral 07 Sep S1: S2: R1: R2: USD/MYR Bullish 14 Sep S1: S2: R1: R2: USD/THB Neutral 19 Sep S1: S2: R1: R2: USD/CNH *Neutral 21 Sep S1: S2: R1: R2: CNH/SGD Neutral 20 Sep S1: S2: R1: R2: EUR/USD Bearish 19 Sep S1: S2: R1: R2: GBP/USD Bearish 14 Sep S1: S2: R1: R2: AUD/USD Neutral 20 Sep S1: S2: R1: R2: NZD/USD Bearish USD/JPY Neutral * Shift in outlook. 21 Sep Sep S1: S2: S1: S2: R1: R2: R1: R2: FX Pairs Ranges for 20-Sep-16 Performance* Open High Low Close 1-day 1-week 1-month YTD** USD/SGD % -0.35% +0.82% -3.98% EUR/SGD % -0.90% -0.58% -1.39% GBP/SGD % -1.90% -0.29% -15.3% AUD/SGD % +0.90% +0.04% -0.27% JPY/SGD % +0.48% -0.51% +13.5% USD/MYR % +0.77% +2.91% -3.56% USD/THB % -0.54% +0.28% -3.52% USD/CNH % -0.11% +0.31% +1.76% EUR/USD % -0.57% -1.44% +2.68% GBP/USD % -1.51% -1.12% -11.8% AUD/USD % +1.21% -0.95% +3.74% NZD/USD % +0.86% +0.68% +7.17% USD/JPY % -0.81% +1.36% -15.4% * Percentage difference between the closing price and the last price 1-period ago. ** Percentage difference between the closing price and the last price on 31-Dec P a g e

USD/SGD: 1.3615 Latest Flash Note: 16 Sep 16 Better August NODX Data ;Improvement Expected In Months Ahead http://bit.

4 USD/SGD: Latest Flash Note: 16 Sep 16 Better August NODX Data ;Improvement Expected In Months Ahead USD traded in a very tight 28 pips range for the whole yesterday (between and ). The undertone is slightly negative but any decline is expected to encounter solid support at ahead of the stronger level at Resistance is at but the key level is much higher up at the recent highs of /00. Bullish: Target a move to /50. [No change in view, see previous update below] USD has been oscillating roughly between and for the past few days. The outlook for USD is still viewed as bullish but in order to maintain the current momentum, we need to see a break above the strong resistance soon. A prolonged consolidation below this level would diminish the odds for a move towards the /50 target. In the meanwhile, the stop-loss for the bullish view remains unchanged at P a g e

5 EUR/SGD: EUR spiked to a high of before dropping quickly to current levels. The decline appears incomplete and further weakness towards seems likely. Resistance is at and the high is unlikely to come under serious threat for now. Neutral: Increasing downward pressure but sustained decline only if daily closing below [See Chart of the Day on page 1] GBP/SGD: Against our expectation, GBP extended its recent strong decline without rebounding first. The break of the strong support led to a quick drop to an overnight low of Further weakness is not ruled out but the drop in GBP over the past few days is clearly oversold and the pace of any further decline is expected to be slower. A retest of would not be surprising but the major support is likely out of reach, at least for today. Resistance is at followed by Bearish: Target The bearish GBP phase that started on Monday is still intact (see Chart of the Day update on 19/9/16). However, the rapid decline is rather oversold especially from a shorterterm perspective and this could slow down the pace of any further down-move. That said, the outlook for GBP is deemed as bearish until the stop-loss at (adjusted from ) is taken out. The target remains unchanged at (next support is closer to ). AUD/SGD: While AUD held below the resistance as expected (high of ), the subsequent price clearly lacks momentum and the expected decline to did not materialize. The outlook is mixed from here and this pair is expected to trade sideways for now, likely within a / range. JPY/SGD: JPY edged above the major resistance (high of ) but failed to hold on to its gain. The subsequent sideway trading has resulted in a rather mixed outlook and this pair is expected to continue to trade sideways at these higher levels. Likely range for the day; / Neutral: In a / range. We adopted a neutral stance on AUD yesterday and there is no change to the view. While the undertone has improved somewhat, it is too early to expect a break out of the anticipated sideway trading range of / Neutral: Bullish only if daily closing above There is no change to the view as highlighted in the Chart of the Day update yesterday. While the undertone for JPY is positive, only a clear break above would indicate the start of a sustained up-move towards The positive undertone will remain intact unless there is a move back below P a g e

6 USD/MYR: Latest Flash Note: 07 Sep 16 BNM Keeps Rates On Hold Bullish: Target USD traded in a tight range yesterday and for now; there is no change to our current bullish view on USD. As long as the stoploss at is intact, the prospect for another up-leg towards the target still appears to be quite high. USD/THB: Latest Flash Note: 14 Sep 16 BoT Stays On Hold Neutral: Pull-back could extend further to but a sustained decline appears unlikely. USD failed to break above the major resistance last week and the subsequent rapid pull-back from the high of is gaining momentum rapidly. While the pull-back could extend further to 34.65, a sustained drop below this level appears unlikely for now. To put it another way, the current outlook for USD is still deemed as neutral but a test of seems likely unless there is a move back above within these few days. USD/CNH: Shift from bearish to neutral: In a broad / range. The sharp recovery in USD was unexpected and the breach of yesterday indicates that our recent bearish expectation (see Chart of the Day update on 16/9/16) was wrong. The rapid drop and the subsequent equally rapid rebound have resulted in a mixed outlook. We are neutral from here and expect USD to trade within a broad / range even though the immediate bias if for a move towards first. CNH/SGD: Neutral: In a / range. We just turned neutral yesterday and there is no change to the view. The current movement is likely the early stages of a consolidation phase and CNH is expected to trade between and for now. 6 P a g e

EUR/USD: 1.1150 While the range of 1.1144/1.1213 yesterday was close to our expected consolidation range of 1.1150/1.1210, the weak daily closing suggests further downward pressure from here.

7 EUR/USD: While the range of / yesterday was close to our expected consolidation range of /1.1210, the weak daily closing suggests further downward pressure from here. That said, any EUR weakness is not expected to move significantly below the major support. Resistance is at ahead of Bearish: Expect solid support at There is not much to add as EUR spiked to a high of yesterday but eased off quickly to end near the day s low. The outlook is still bearish but as highlighted in recent updates, any decline is expected to encounter solid support at Stop-loss remains unchanged at even though is already a strong short-term resistance. 7 P a g e

GBP/USD: 1.2985 Latest Flash Note: 16 Sep 16 BoE Keeps Policy Unchanged But Hints At November Cut http://bit.

8 GBP/USD: Latest Flash Note: 16 Sep 16 BoE Keeps Policy Unchanged But Hints At November Cut The anticipated weakness in GBP exceeded our expectation by easily taking out the strong /00 support (overnight low of ). Despite being oversold, the current decline appears to have scope to extend further but is another strong support and this level may not yield so easily. On the upside, any rebound is expected to face stiff resistance at followed by the stronger level near Bearish: To take partial profit at GBP extended its decline to touch a low of yesterday. As highlighted in recent updates, while the recent drop is clearly oversold, the down-move appears to have scope to extend lower to This is a strong support level and those who are short may likely to take partial profit here. Stop-loss is adjusted lower to from P a g e

AUD/USD: 0.7555 Latest Flash Note: 07 Sep 16 RBA On Hold http://bit.ly/2cqz1uy In line with expectation, AUD traded mostly sideways albeit at a narrower range than anticipated.

9 AUD/USD: Latest Flash Note: 07 Sep 16 RBA On Hold In line with expectation, AUD traded mostly sideways albeit at a narrower range than anticipated. Further consolidation seems likely from here even though the immediate bias is tilted to the upside. That said, a sustained break out of the expected sideway consolidation range of / seems unlikely. Neutral: In a / range. We shifted from a bearish to neutral stance on AUD yesterday and there is no change to the view. The current movement is viewed as part of a consolidation phase and AUD is expected to trade within a broad / range for now. 9 P a g e

NZD/USD: 0.7315 NZD moved above the strong 0.7340 resistance (overnight high of 0.7358) but dropped sharply after the release of the weaker than expected GDT auction results.

10 NZD/USD: NZD moved above the strong resistance (overnight high of ) but dropped sharply after the release of the weaker than expected GDT auction results. The down-move appears to have scope to extend lower but any weakness is not expected to move significantly below the strong support. The overnight high is acting as a very strong intraday resistance. Shift from bearish to neutral: In a / range. The breach of the stop-loss at indicates that the recent bearish phase has ended. The outlook for NZD from here is unclear and we prefer to hold a neutral view and expect this pair to trade listlessly between and Looking further ahead, the downside appears to be more vulnerable but a sustained weakness is likely only if there is a break below the very strong /40 support zone. 10 P a g e

USD/JPY: 101.55 Latest Flash Note: 08 Sep 16 Japan s 2Q16 GDP: Better 2nd Read But Growth Still Underwhelming http://bit.ly/2chfbrr While USD held above the 101.

11 USD/JPY: Latest Flash Note: 08 Sep 16 Japan s 2Q16 GDP: Better 2nd Read But Growth Still Underwhelming While USD held above the support as expected, the subsequent rebound fell short of (high of ). Downward pressure is picking up again but at this stage, any weakness is expected to encounter solid support at Resistance is at followed by the stronger level near Neutral: In a / range. There is not much to add as USD continues to trade mostly sideways. BOJ s action later could lead to a break out of the expected sideway trading range of / but at this stage, there is no pre-indication on the likely direction of the next sustained move. 11 P a g e

12 UOB FX & Interest Rate Outlook FX Outlook 3Q16 4Q16 1Q17 2Q17 Rates Outlook 3Q16 4Q16 1Q17 2Q17 EUR/USD EU 0.00% 0.00% 0.00% 0.00% GBP/USD UK 0.25% 0.10% 0.10% 0.10% AUD/USD AU* 1.50% 1.50% 1.50% 1.50% NZD/USD NZ** 1.75% 1.75% 1.50% 1.50% USD/JPY JP -0.20% -0.20% -0.30% -0.30% USD/SGD SG 0.90% 1.10% 1.35% 1.50% USD/MYR MY 3.00% 3.00% 3.00% 3.00% USD/THB TH 1.50% 1.50% 1.75% 2.00% USD/CNY CN 4.10% 3.85% 3.85% 3.85% USD/IDR 13,200 13,200 13,300 13,400 ID 5.00% 5.00% 5.00% 5.00% USD/PHP PH 3.00% 3.00% 3.25% 3.25% USD/INR IN 6.50% 6.50% 6.75% 6.75% USD/TWD TW 1.38% 1.38% 1.38% 1.38% USD/HKD HK 0.75% 1.00% 1.00% 1.25% USD/KRW KR 1.00% 1.00% 1.00% 1.00% Last updated on 18 Jul 16 * Last updated on 03 Aug 16 ** Last updated on 11 Aug 16 US 0.50% 0.75% 0.75% 1.00% Quarterly Global Outlook: 3Q * Central Bank Meetings 2016 Central Bank Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Federal Reserve (FOMC) European Central Bank (ECB) Bank of England (BOE) Reserve Bank of Australia (RBA) Reserve Bank of New Zealand (RBNZ) Bank of Japan (BOJ) Bank Negara Malaysia (BNM) Bank of Thailand (BOT) Monetary Authority of Singapore (MAS) - 14 TBA - Disclaimer: This analysis is based on information available to the public. Although the information contained herein is believed to be reliable, UOB Group makes no representation as to the accuracy or completeness. Also, opinions and predictions contained herein reflect our opinion as of date of the analysis and are subject to change without notice. UOB Group may have positions in, and may effect transactions in, currencies and financial products mentioned herein. Prior to entering into any proposed transaction, without reliance upon UOB Group or its affiliates, the reader should determine, the economic risks and merits, as well as the legal, tax and accounting characterizations and consequences, of the transaction and that the reader is able to assume these risks. This document and its contents are proprietary information and products of UOB Group and may not be reproduced or otherwise. Singapore Company Reg No Z

FX Insights. Chart Of The Day USD/JPY: Next significant support at Friday, 29 April 2016

FX Insights. Chart Of The Day USD/JPY: Next significant support at Friday, 29 April 2016 Quek Ser Leang Quek.SerLeang@uobgroup.com Lee Sue Ann Lee.SueAnn@uobgroup.com Global Economics & Markets Research Email: GlobalEcoMktResearch@uobgroup.com URL: www.uob.com.sg/research Chart Of The Day