FX Insights. Chart Of The Day AUD/SGD: Took partial profit at /00, focus on next. Friday, 13 January 2017

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Alyson Berry
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1 Quek Ser Leang Lee Sue Ann Global Economics & Markets Research URL: Chart Of The Day AUD/SGD: Took partial profit at /00, focus on next. The bullish phase that started on Wednesday (see Chart of the Day update, spot at ) is still clearly intact as the partial profit-taking level of /95 indicated yesterday was exceeded when AUD hit a high of This level was just below the /15 peak seen last month and while the rally appears to be running too fast, a move above this level would shift the focus towards (next significant resistance is more than 100 pips higher at , the high in 2016). Overall, only a move back below would indicate that the bullish phase has ended. On a shorter-term note, /35 is already a strong support. 1 P a g e

2 OVERVIEW Financial markets have largely continued to trade off the back of Wednesday s press conference by US President-elect Donald Trump, which failed to provide the positive reinforcement of the post-election market price action that market participants had hoped for. The US dollar s slide against the major currencies worsened on Thursday, with the DXY falling to levels not seen since mid-december. Ahead of the big US bank earnings reports financials, US equities were lower. US Treasuries strengthened further, so did commodity markets, with crude oil rebounding for a second day to take WTI back over $53/bbl. The US data calendar will received some attention today with the key releases being the December advance retail sales & the prelim January University of Michigan consumer confidence sentiment. Other data include US December PPI and November business inventories. Attention will also be on the corporate earnings calendar, with several big financial institutions reporting on Friday including JP Morgan, Wells Fargo, Bank of America ML, and BlackRock. Philadelphia Fed President Patrick Harker (voter in 2017 FOMC) is the only senior Fed speaker in public forum today and he will speak on the topic of economic mobility in Philadelphia. 2 P a g e

3 13-Jan-17 Summary of Views FX Pairs Spot Outlook Since/ Rate Target Trailing-Stop Support Resistance USD/SGD Neutral 05 Jan S1: S2: R1: R2: EUR/SGD Neutral 20 Dec S1: S2: R1: R2: GBP/SGD Bearish 10 Jan S1: S2: R1: R2: AUD/SGD Bullish 11 Jan S1: S2: R1: R2: JPY/SGD Neutral 20 Dec S1: S2: R1: R2: USD/MYR Neutral 09 Jan S1: S2: R1: R2: USD/THB Bearish 12 Jan S1: S2: R1: R2: USD/CNH Neutral 11 Jan S1: S2: R1: R2: CNH/SGD Neutral 10 Jan S1: S2: R1: R2: EUR/USD Neutral 02 Jan S1: S2: R1: R2: GBP/USD *Neutral 13 Jan S1: S2: R1: R2: AUD/USD Bullish 10 Jan S1: S2: R1: R2: NZD/USD *Bullish USD/JPY Neutral * Shift in outlook. 13 Jan Dec S1: S2: S1: S2: R1: R2: R1: R2: FX Pairs Ranges for 12-Jan-17 Performance* Open High Low Close 1-day 1-week 1-month YTD** USD/SGD % -0.08% +0.25% -1.66% EUR/SGD % -0.04% +0.04% -0.21% GBP/SGD % -2.18% -3.74% -2.63% AUD/SGD % +1.87% -0.05% +2.40% JPY/SGD % +0.45% +0.61% +0.71% USD/MYR % -0.60% +0.49% -0.63% USD/THB % -0.86% -0.53% -1.25% USD/CNH % +1.07% -0.89% -1.64% EUR/USD % +0.06% -0.14% +1.50% GBP/USD % -2.02% -3.87% -1.00% AUD/USD % +1.96% -0.21% +4.13% NZD/USD % +1.02% -1.47% +2.49% USD/JPY % -0.55% -0.39% -2.39% * 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: 1.4265 USD/SGD broke the 1.4220 support to touch a session low of 1.4217 but rebounded to end little-changed at 1.4273 on Thursday. SGD NEER is trading at 0.

4 USD/SGD: USD/SGD broke the support to touch a session low of but rebounded to end little-changed at on Thursday. SGD NEER is trading at 0.25% above the mid-point this morning. We expect the SGD NEER to remain within the 0.0% to +0.5% range for today which implies USD/SGD range of based on current FX levels. Latest Flash Note: 03 Jan 17 Singapore: 4Q GDP Surprises On The Upside With Manufacturing Providing The Boost : We highlighted yesterday that the major support is unlikely to yield so easily. USD dipped below this level to hit but rebounded quickly to close almost unchanged for the day. While downward momentum has considerably, it is too early to expect a sustained recovery for now. This pair is more likely to consolidate its sharp loss over the past several days and trade sideways at these lower levels. Expected range; / Neutral: Monitoring for signs of stabilization. In line with expectation, the corrective pull-back extended lower to as USD hit a low of yesterday before recovering quickly. Downward momentum has eased somewhat with the rebound but only a move back above would indicate that the current weakness has stabilized. In the event of an unlikely clear break below /20, USD could drop rapidly towards the next support at P a g e

5 EUR/SGD: Against our expectation, EUR rebounded strongly from the low seen on Wednesday to touch an overnight high of However, the current movement is viewed as part of a broader consolidation phase and further sustained upmove is not expected. Overall, expect range trading for today, likely between and Neutral: In a / range. EUR continues to trade in a choppy manner and at this stage, there is no pre-indication that it is ready to break out of the expected / range. While the undertone is slightly positive, even a move above is expected to struggle near the next major level of GBP/SGD: GBP rose initially but dropped quickly to take out the Wednesday s low of (overnight low near ). The down-move appears incomplete and another leg lower towards seems likely. Resistance is at followed by Bearish: Lower odds for further GBP weakness. GBP held just below the key resistance (high of ) before plunging to exceed the partial profit-taking level of indicated yesterday (low near ). Despite the sharp drop from the high, downward momentum is patchy at best and the odds for further weakness towards the next major support at are not high. That said, the bearish phase that started on Tuesday (see Chart of the Day on 10 Jan) is viewed as intact until the stop-loss at is taken out (adjusted lower from ). *Took partial profit at AUD/SGD: Instead of trading sideways as expected, AUD tried but failed to move above the major resistance at /15 (high in December). The quick pull-back from the top indicates waning upward momentum but the current movement is likely the early stages of a consolidation phase. Expect range trading for today, but the immediate bias is tilted to the downside even though a sustained drop below the expected / consolidation range seems highly unlikely. JPY/SGD: JPY surged to a high of but dropped rapidly from the high. A short-term top is likely in place even though any weakness is expected to encounter solid support near From here, allow for a bounce to but is expected to cap for a move lower to Bullish: Took partial profit at /00, focus on next. [See Chart of the Day on page 1] *Took partial profit at /00. Neutral: In a / range. JPY moved above the expected sideway consolidation range of / but dropped rapidly after hitting a high of The failure to move above in a sustained manner reinforces our current neutral view even though upward momentum has improved somewhat and further attempts to move clearly above would not be surprising. On the downside, is a strong support followed by the major level of P a g e

6 USD/MYR: Second Finance Ministed Johari Abdul Ghani told reporters that Malaysia should benefit from exports given projected growth of global economy. Neutral: In a / range. While downward momentum continues improve, we still view the current movement as part of a broader / consolidation range and not the start of major reversal. That said, a move below is not ruled out but any USD decline is expected to struggle to move below the low seen in December. On the upside, only a move back above would indicate that the immediate downward pressure has eased. USD/THB: Deputy Prime Minister Somkid Jatusripitak said Thailand's economy could grow by more than the general consensus of 3-4% this year, thanks to the reforms and shoring up of the country's fundamentals in The government had also set a budget for integration at the provincial level, and the key was to speed the build-up of confidence in growing the economy. If projects could achieve their goals, there would be new engines to drive the Thai economy. Bearish: Lower odds for extension to We turned bearish USD yesterday and were of the view that despite oversold conditions, the decline could extend lower towards the rising trend-line support at USD hit an exact low of before rebounding to current level. The price action suggests that this pair is trying to form a short-term base but only a move back above would indicate that the current bearish phase has ended. Until then, despite the low odds, another leg lower to cannot be ruled out just yet. USD/CNH: The Chinese currency rose along with broad gains in the rest of the Asian currencies. Offshore CNH gained 0.4% to /USD and CNY was up 0.6% to /USD on Thursday. Former China s SAFE official, Guan Tao, said that the yuan s roller-coaster moves last week was due to government s policies and market expectations and not the PBoC s FX intervention. He said the yuan rate may become focus of China-U.S. trade conflicts again this year and the USD strength is a significant challenge facing yuan s stability. On the data front, China s credit growth in December came in stronger than expectations, with bank lending up CNY1040bn (CNY442bn more than in December 2015) and aggregate financing up CNY1630bn. M2 grew 11.3% y/y, down from November. Neutral: Pull-back to retest the recent low near /35. The sudden and sharp drop over the past couple of days that easily took out the support (overnight low of ) was unexpected. The pull-back appears to have scope to extend lower and retest the recent low near /35. This level is close to the rising trend-line support on the daily chart and at this stage, a sustained move below seems unlikely. Overall, USD is expected to stay under pressure in the coming days unless it can move and stay above CNH/SGD: Neutral: Pull-back has room to extend lower to The pull-back that started late last week is gaining momentum quickly and from here, there appears to be room for extension lower towards This level is near the rising trend-line on the daily chart and at this stage; a clear break below this support seems unlikely. Overall, CNH is expected to stay under pressure in the coming days unless it can move and stay above P a g e

EUR/USD: 1.0615 The run of mostly better-than-expected industrial production reports continued, with Italy reporting a 0.7% m/m, 3.2% y/y gain. Overall euro area industrial production rose 1.

7 EUR/USD: The run of mostly better-than-expected industrial production reports continued, with Italy reporting a 0.7% m/m, 3.2% y/y gain. Overall euro area industrial production rose 1.5% m/m and 3.2% y/y. Separately, Spanish house sales rose 17.3% y/y in November; and Germany s economy grew 1.9% y/y in 2016, slightly ahead of expectations and up from 1.7% y/y in The minutes from the ECB s December Council meeting revealed that a number of policy options were debated, with a few members of the Council preferring a six-month extension of QE at a EUR80bn pace, rather than the nine-month extension at a EUR60bn pace that was eventually the consensus decision. A few members supported neither option. In the end the minutes note that the final decision was seen as striking the right balance between providing a signal of confidence and the need to preserve stability in an uncertain environment, while having clear merits in terms of flexibility to respond to adverse circumstances and safeguarding operational feasibility,. EUR edged above the major /70 resistance zone to touch before easing off quickly. Upward momentum is showing of waning but at this stage, any further pull-back is expected to encounter solid support near /70. Resistance is at and in the event of an unlikely clear break above the high, EUR could accelerate higher to /30. Neutral: Positive outlook as long as above EUR exceeded the major resistance indicated at /70 yesterday to hit a high of but the up-move was shortlived. Despite the pull-back from the high, the outlook for EUR is still positive but at this stage, it is unclear if it can continue to move higher in a sustained manner (even though technically the next significant resistance is at the high seen in early December). In view of the recent choppy price actions, it may be more prudent to approach this pair from a shorter-term perspective and be nimble and quick with entry and exit. We deem the short-term outlook as positive and expect the support to hold, at least for the next few days. 7 P a g e

GBP/USD: 1.2155 GBP turned weaker after news broke that UK PM Theresa May is preparing a speech on Tuesday (17 January) to detail her Brexit vision. The pair traded to a low of 1.

8 GBP/USD: GBP turned weaker after news broke that UK PM Theresa May is preparing a speech on Tuesday (17 January) to detail her Brexit vision. The pair traded to a low of and eventually closed near the low at at the end of the NY session (from on 11 January). Today, the BoE will release its latest surveys of credit conditions and bank liabilities. Against our expectation, GBP took out the major resistance to hit a high of but the up-move was shortlived. The rapid and sharp decline from the high appears to have scope to extend lower but at this stage, a sustained move below is not expected (the next support is near Wednesday s low of /40). On the upside, resistance is at followed by The high is unlikely to come into the picture. Shift from bearish to neutral: In a / range. GBP spiked above to touch a high of before dropping sharply to current level. The recent bearish phase has ended and the outlook for this pair is viewed as neutral for now. Further volatile trading is expected in the coming days, likely within a broad / range. 8 P a g e

AUD/USD: 0.7485 After trying over 0.750, gains have stalled but the AUD still looks to have further upside for now amid broad USD weakness in the wake of the fallout from Trump s press conference.

9 AUD/USD: After trying over 0.750, gains have stalled but the AUD still looks to have further upside for now amid broad USD weakness in the wake of the fallout from Trump s press conference. The anticipated AUD strength exceeded our expectation by taking out the resistance to hit a high of While upward momentum has eased somewhat with the pull-back from the high, the current movement is viewed as part of consolidation phase and it is premature to expect a sustained down-move. Overall, sideways trading seems likely for today even though the immediate bias is for a probe lower towards the expected / consolidation range. Bullish: Took partial profit at /05, next level to focus on is at The partial profit-taking level highlighted in the Chart of the Day update yesterday at /05 was exceeded as AUD hit a high of This level was just below peak seen in December. While the rally appears to be running ahead of itself, a move above would shift focus towards Overall, only a move below the stop-loss at (adjusted from ) would indicate that the bullish phase has ended. *Took partial profit at /05. 9 P a g e

NZD/USD: 0.7105 NZD is still somewhat on the sidelines, hovering around the 0.7105 region.

10 NZD/USD: NZD is still somewhat on the sidelines, hovering around the region. Earlier today, figures showed the total value of overall credit card spending in New Zealand was roughly flat on a seasonally adjusted basis in December. That followed the 0.3% contraction in November. Retail credit card spending was up 0.1% on month, missing forecasts for an increase of 1.0% but up from the 0.1% decline in the previous month. NZD surged to a high of but the up-move was shortlived. Despite the pull-back from the high, the undertone for this pair is still positive. From here, a move above the high would not be surprising but the strong resistance is likely out of reach for now. Support is at but only a move below would indicate that a temporary top is in place. Shift from neutral to bullish: Overbought but room to extend to As noted yesterday, a break above /05 would shift the neutral outlook for NZD to bullish. Shorter-term indicators are overbought but there appears to be room for extension to (with a stop-loss at ). At current level, the reward to risk does not appear to be that attractive and those looking to go long may like to wait for a dip closer to / P a g e

USD/JPY: 114.65 JPY has retreated on profit-taking ahead of the long US weekend after seeing its best four-day rally in four months as Treasury yields slip on unwinding of Trump trade.

11 USD/JPY: JPY has retreated on profit-taking ahead of the long US weekend after seeing its best four-day rally in four months as Treasury yields slip on unwinding of Trump trade. Yesterday, a measure of peoples' assessment of the Japanese economy held steady at the end of the year, survey figures from the Cabinet Office showed. The current index of Economy Watchers' survey came in at 51.4 in December, the same reading as in the previous month. In October, the score was At the same time, the outlook index dropped to 50.9 in December from 51.3 in November. USD had another volatile day by plunging below (low of ) before rebounding strongly. Downward momentum is waning and further sustained decline seems unlikely for now. From here, allow for a dip to but is expected to hold for a stronger recovery to /10. Neutral: Stabilization only if above USD plummeted below to touch but rebounded quickly and strongly. While the immediate downward pressure has eased somewhat, only a move above would indicate that a short-term low is in place. In the meanwhile, another leg lower below /75 (next support at /15) is not ruled out but the odds for such a move does not appear to be high. 11 P a g e

12 UOB FX & Interest Rate Outlook FX Outlook 1Q17 2Q17 3Q17 4Q17 Rates Outlook 1Q17 2Q17 3Q17 4Q17 EUR/USD EU 0.00% 0.00% 0.00% 0.00% GBP/USD UK 0.25% 0.25% 0.25% 0.25% AUD/USD AU 1.50% 1.50% 1.50% 1.50% NZD/USD NZ 1.75% 1.75% 1.75% 1.75% USD/JPY JP -0.20% -0.20% -0.30% -0.30% USD/SGD SG 0.90% 1.05% 1.15% 1.35% USD/MYR MY 3.00% 3.00% 3.00% 3.00% USD/THB TH 1.50% 1.50% 1.50% 1.50% USD/CNY CN 4.35% 4.35% 4.35% 4.35% USD/IDR 13,800 13,900 14,100 14,300 ID 4.75% 4.75% 4.75% 5.00% USD/PHP PH 3.25% 3.25% 3.50% 3.50% USD/INR IN 6.00% 5.75% 5.50% 5.50% USD/TWD TW 1.38% 1.38% 1.38% 1.38% USD/HKD HK 1.00% 1.00% 1.25% 1.50% USD/KRW KR 1.00% 1.25% 1.50% 1.75% Last updated on 12 Dec 16 US 0.75% 1.00% 1.25% 1.50% Central Bank Meetings 2016/2017 Central Bank Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Federal Reserve (FOMC) * * 26-20* * European Central Bank (ECB) Bank of England (BOE) - 02 # # # # 14 Reserve Bank of Australia (RBA) Reserve Bank of New Zealand (RBNZ) - 09^ 23-11^ *Meetings associated with a Summary of Economic Projections and a press conference. # Meetings associated with release of Inflation Report. ^Meetings associated with release of Monetary Policy Statement. **Meetings associated with release of Outlook Report ^ 28-09^ Bank of Japan (BOJ) 31 ** ** ** ** - 20 ** Bank Negara Malaysia (BNM) Bank of Thailand (BOT) Monetary Authority of Singapore (MAS) - tba - 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