FX Insights. Chart Of The Day USD/CNH: Expect deep pull-back towards with lower odds for extension to Friday, 22 July 2016

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1 Quek Ser Leang Lee Sue Ann Global Economics & Markets Research URL: Chart Of The Day USD/CNH: Expect deep pull-back towards with lower odds for extension to The outlook for USD shifted to bearish upon the clear break of (see update from yesterday). The high seen late last week is viewed as a short-term top but considering that USD has made substantial gains over the past few months, a deep pull-back would not be surprising. The immediate target is for a move towards the low seen in late June with lower odds for further extension to the major rising trend-line support, currently residing at In order to maintain the current bearish momentum, any near term recovery should not move back above even though on a shorter-term note, is already a strong resistance. 1 P a g e

2 OVERVIEW Overnight, ECB did not announce any changes to its policy settings nor did it provide any indication on possible technical changes to QE programme. The central bank left the main refinancing rate at zero, the deposit rate at -0.4%, and asset purchases at EUR80bn a month. ECB President Draghi expects the Eurozone recovery to continue at a moderate pace, with second-quarter growth likely to be slower than in the first quarter, adding that the outlook remained tilted towards the downside, in part due to Brexit. The unchanged ECB meeting followed on from expectations management for BOJ next week as reports appeared during the Asian hours to downplay speculations over helicopter money. Investors were left more cautious and European equities ended mostly flat while the major US equity indexes slipped, snapping the Dow s nine-day winning streak, as oil prices weighed and ahead of next week s Fed meeting. The Dow Jones Industrial Average closed 77.8 points (0.42%) lower at 18, The S&P 500 closed 7.85 points (0.36%) lower at 5, The Nasdaq ended the day 16 points (0.43%) lower to 5, G20 Finance ministers and central bankers will meet in China s southwestern city of Chengdu this weekend and discussions are expected to be focused on Brexit fallout and dearth of policy options. The recent World Economic Outlook report by the IMF prescribed a 3 pronged approach; monetary, fiscal and structural, as a means to lift global growth out of stasis and provides a useful framework to evaluate outcomes if any from the G20 meeting. 2 P a g e

3 22-Jul-16 Summary of Views FX Pairs Spot Outlook Since/ Rate Target Trailing-Stop Support Resistance USD/SGD Bullish 20 Jul S1: S2: R1: R2: EUR/SGD Bearish 27 Jun S1: S2: R1: R2: GBP/SGD Neutral 13 Jul S1: S2: R1: R2: AUD/SGD Neutral 20 Jul S1: S2: R1: R2: JPY/SGD *Neutral 22 Jul S1: S2: R1: R2: USD/MYR Neutral 20 Jul S1: S2: R1: R2: USD/THB Bearish 18 Jul S1: S2: R1: R2: USD/CNH Bearish 21 Jul S1: S2: R1: R2: CNH/SGD Bullish 20 Jul S1: S2: R1: R2: EUR/USD Neutral 15 Jul S1: S2: R1: R2: GBP/USD Neutral 13 Jul S1: S2: R1: R2: AUD/USD Neutral 19 Jul S1: S2: R1: R2: NZD/USD Bearish USD/JPY *Neutral * Shift in outlook. 19 Jul Jul S1: S2: S1: S2: R1: R2: R1: R2: FX Pairs Ranges for 21-Jul-16 Performance* Open High Low Close 1-day 1-week 1-month YTD** USD/SGD % +0.91% +0.85% -4.43% EUR/SGD % +0.12% -1.07% -3.01% GBP/SGD % +0.18% -8.86% -14.2% AUD/SGD % -0.76% +1.57% -1.52% JPY/SGD % +0.55% -0.14% +8.69% USD/MYR % +2.22% +0.14% -5.87% USD/THB % -0.17% -0.71% -2.94% USD/CNH % -0.25% +1.23% +1.66% EUR/USD % -0.85% -1.93% +1.49% GBP/USD % -0.84% -9.70% -10.2% AUD/USD % -1.80% +0.63% +2.96% NZD/USD % -2.77% -1.75% +2.62% USD/JPY % +0.45% +1.02% -12.0% * 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: 1.3545 USD traded sideways as expected albeit at a wider range than anticipated.

4 USD/SGD: USD traded sideways as expected albeit at a wider range than anticipated. The current movement is still viewed as a consolidation phase and further sideways trading is expected for today, likely within a / range. Bullish: Immediate target of /50 We turned bullish USD yesterday and there is no change to the view. The current movement is viewed as part of a shortterm consolidation phase and a break of the strong resistance could lead to a rapid rise towards the immediate target at /50. Stop-loss remains unchanged at P a g e

5 EUR/SGD: EUR attempted but failed once again to break above the strong resistance (high of ). The subsequent choppy trading is viewed as part of a consolidation phase and this pair is expected to continue to trade within a broad / range for now. Bearish: Increasing risk of a short-term low. While the bearish phase that started about 1 month ago is still intact, EUR has been unable to make much headway on the downside. The prolonged consolidation has clearly increased the risk of a short-term low but confirmation that the bearish phase has ended is upon a break above the key resistance. Until then, another attempt to take out the recent low near cannot be ruled out just yet but the odds for such a move appear to be rather slim. GBP/SGD: Expectation for a higher GBP yesterday was wrong as we witnessed a sharp drop to a low of The rapid rebound from the low has resulted in a mixed outlook and this pair is expected to trade sideways from here, likely between and *Took partial profit at Neutral: In a / range. There is no change to the current neutral outlook for GBP. Volatility has eased off in recent days and this pair is expected to continue to trade sideways for now, likely between and AUD/SGD: AUD essentially traded between the two major levels of and yesterday. However, the undertone has improved somewhat and from here, a move towards would not be surprising. At this stage, a sustained move above this level is not expected. Support is at ahead of the major level. Neutral: Pull-back has scope to extend lower to As highlighted yesterday, the current movement in AUD is viewed as a corrective pull-back which has scope to extend lower to and possibly to Despite the smart rebound from a low of yesterday, the undertone is still weak and further weakness to cannot be ruled out just yet. Only a clear move back above would indicate that the immediate downward pressure has eased. JPY/SGD: The unexpected strong rebound took out several key resistances. The up-move appears to have scope to move above the /40 high seen yesterday but a break of seems unlikely for now. Support is at followed by and the low seen early yesterday is not expected to come under threat. Shift from bearish to neutral: Rebound has scope to extend higher to The bearish phase that started last Wednesday (see FX Insights on 13/7/16) ended abruptly when JPY surged above the stop-loss at (high of /40). A short-term low is likely in place at the seen yesterday and the current rebound is viewed as part of a correction phase that has scope to extend higher to Support is at followed by the now very strong level of P a g e

6 USD/MYR: Neutral: Bullish if daily closing above While USD exceeded the short-term rebound target of (high of ), we are not convinced that the current up-move is the start of a bullish phase. That said, the undertone is clearly positive but we prefer to see a daily closing above before turning bullish (for an immediate target of ). Overall, this pair is expected to stay underpinned with solid support at USD/THB: Bearish: Diminished odds for a lower USD. While the move below yesterday is encouraging for our bearish USD view, downward momentum is patchy at best and the odds for a sustained down-move are still not high. That said, the outlook for this pair is viewed as bearish until the stop-loss at is taken out (adjusted lower from 35.15). On the downside, the target remains unchanged at but this is a very strong level and is expected to offer very solid support. USD/CNH: Bearish: Immediate target at [See Chart of the Day on page 1] CNH/SGD: Bullish: Next target at [No change in view, see previous update below] We shifted from bearish to bullish CNH yesterday and the immediate target indicated at was quickly exceeded (high of ). The up-move appears to be too rapid and this could lead to a couple of days of consolidation first. However, as long as the stop-loss at is intact (adjusted from ), further CNH strength towards would not be surprising. 6 P a g e

EUR/USD: 1.1025 While EUR stayed below the strong 1.1060 resistance (high of 1.1058), the anticipated weakness fell short of the 1.0960 target with a low of 1.0979.

7 EUR/USD: While EUR stayed below the strong resistance (high of ), the anticipated weakness fell short of the target with a low of The subsequent rapid swing higher from the low has resulted in a rather mixed outlook and from here, sideway trading seems likely. Expected range for the day, / Neutral: Bearish if daily closing below There is no much to add to yesterday s update. As highlighted, while downward momentum has improved, only a daily closing below would indicate that a move towards /10, has started. This scenario still seems likely unless EUR can move back above from here ( is already a strong short-term resistance). 7 P a g e

GBP/USD: 1.3220 Instead of extending higher, GBP traded mostly sideways yesterday.

8 GBP/USD: Instead of extending higher, GBP traded mostly sideways yesterday. The current movement is viewed as part of a consolidation phase and further sideway trading is expected for today, likely between and Neutral: In a / range. Shorter-term volatility appears to have eased off somewhat and from here; we maintain our neutral view on GBP. We continue to expect this pair to trade sideways in the coming days, likely between and P a g e

AUD/USD: 0.7500 AUD rebounded without testing the major 0.7440/45 support indicated yesterday (low of 0.

9 AUD/USD: AUD rebounded without testing the major /45 support indicated yesterday (low of ), The recent downward pressure has eased and the this pair is expected to trade sideways from here, albeit with a bias for a probe higher towards Support is at ahead of the major /45 level. Neutral: Pull-back has room to extend lower to [No change in view, see previous update below] We shifted to a neutral stance on Tuesday and expected the current pull-back in AUD to extend lower to The price action is line with our expectation but the down-move has been more rapid than expected and a clear break below would greatly increase the odds for further decline to , possibly to Overall, this pair is expected to stay under pressure unless it can reclaim On a shorter-term note, is already a strong resistance. 9 P a g e

NZD/USD: 0.7005 NZD recovered quickly after touching a low of 0.6952. Downward pressure has clearly eased and the current rebound appears to have scope to extend higher to 0.7040. Support is at 0.

10 NZD/USD: NZD recovered quickly after touching a low of Downward pressure has clearly eased and the current rebound appears to have scope to extend higher to Support is at and the low is acting as a very strong support now. Bearish: Next target at The current movement is viewed as a short-term correction and as long as is intact, the outlook for NZD is still deemed as bearish. However, the low seen yesterday is acting as a solid support but a clear break of this level could lead to a rapid drop the next target at P a g e

USD/JPY: 105.85 USD touched a high of 107.47 before plunging to a low of 105.41 after Kuroda commented that no helicopter money is needed.

11 USD/JPY: USD touched a high of before plunging to a low of after Kuroda commented that no helicopter money is needed. The subsequent volatile movement after the low has resulted in a mixed outlook and further choppy trading is expected from here, likely within a broad / range. Shift from bullish to neutral: In a / range. While the bullish phase that started last week extended to a high of yesterday, Kuroda s comment led to a plunge in USD to a low of The breach of the stoploss indicates that the bullish phase has ended. The outlook for USD from here is viewed as neutral and the current movement is likely part of a broad consolidation phase. In other words, expect sideway trading from here, likely between and y= 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 0.00% 0.00% 0.00% 0.00% AUD/USD AU 1.75% 1.75% 1.75% 1.75% NZD/USD NZ 2.00% 2.00% 2.00% 2.00% 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 ** US 0.50% 0.75% 0.75% 1.00% 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