Chart Of The Day GBP/USD: Key resistance at but waning momentum suggests limited downside risk for now.

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Scott Nicholson
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1 Quek Ser Leang Lee Sue Ann Global Economics & Markets Research URL: Chart Of The Day GBP/USD: Key resistance at but waning momentum suggests limited downside risk for now. Despite the sharp drop to a low of earlier this month, there has been no follow-through. However, most indicators are still suggesting a lower GBP but at this stage, any down-move is expected to encounter solid support near the rising trend-line at A move above the key resistance at would indicate that a short-term low is in place.

2 OVERVIEW There were plenty of US data to watch on Tuesday, though none of it was too impressive on the headline. USD was mixed as EUR weakened and CAD and AUD strengthened. WTI crude was down another 2.3% to $40.77/barrel and Brent fell below $43.70/barrel. US equities ended the session essentially flat after a mid-afternoon reversal. Both the 10-year and 2-year Treasury yields are unchanged 2.27% and 0.85% respectively. All eyes will now turn to the minutes of the FOMC s October 17-18th meeting, though they may be somewhat discounted as stale, particularly given October s standout nonfarm payrolls figure. US housing starts and building permits will also be released. Fed s Dudley, Mester and Lockhart will be on a Panel on Payments System. Fed Funds Rate: % Last Change: -0.75% in Dec 08 Next FOMC Meeting: 17-Dec-15 GDP QoQ: +3.9% in 2Q % in 3Q15 3Q15 Release: (2 nd print): 24-Nov-15 PCE Price Index YoY: +0.3% in Aug +0.2% in Sep Oct Release: 25-Nov-15 Core PCE Price Index YoY: +1.3% in Aug +1.3% in Sep Oct Release: 25-Nov-15 Unemployment: +5.1% in Sep +5.0% in Oct Nov Release: 04-Dec-15 Nonfarm payroll: +137k in Sep +271k in Oct Nov Release: 04-Dec-15 Retail Sales: +0.0% in Sep +0.1% in Oct Nov Release: 11-Dec-15 Retail Sales ex autos: -0.4% in Sep +0.2% in Oct Nov Release: 11-Dec-15 Durable Goods: -3.0% in Aug -1.2% in Sep Oct Release: 25-Nov-15 Durable Goods ex autos: -0.9% in Aug -0.4% in Sep Oct Release: 25-Nov-15 Housing Starts: +1132k in Aug +1206k in Sep Oct Release: 18-Nov-15 exp: +1160k Case Shiller 20-City Index: +5.0% in Jul +5.1% in Aug Sep Release: 24-Nov-15 UoM Consumer Confidence: 90.0 in Oct 93.1 in Nov Dec Release: 11-Dec-15 UOB Fed Funds Rate Forecast: end 4Q15: 0.50% end 1Q16: 0.75% end 2Q16: 1.00% end 3Q16: 1.25% 2 P a g e

3 USD/SGD: USD/SGD consolidated in a range of on Tuesday. SGD NEER is currently at around 0.55% below the mid-point with +/-1.0% from mid-point implying USD/SGD in a range of based on current FX levels. Singapore s final 3Q15 GDP (advance est: 1.4% y/y) will be coming due next week. Based on September industrial output, we see some downside risk to the 3Q15 growth rate and we could also see fears of technical recession being re-visited. USD traded in a tight 37 pips range for the whole of yesterday but the undertone is positive with the strong daily closing. That said, any up-move from here is expected to encounter stiff resistance on approach to last week s peak at Overall, this pair is expected to grind here with solid support at Bullish: Expect a slow grind higher to break above for a move to While the outlook for USD is still bullish, upward momentum is clearly not impulsive and this pair is expected to grind higher and break above last week s peak near The target remains unchanged at with stop-loss at (even though is already a strong support). S$NEER Last Change: Reduce the rate of modest and gradual appreciation of S$NEER band slightly. (Oct 2015) Next MAS Meeting: April 2016 (date not fixed) GDP YoY: +1.8% in 2Q % in 3Q15 3Q15 Release (final): 25-Nov-15 CPI YoY: -0.8% in Aug -0.6% in Sep Oct Release: 23-Nov-15 NODX YoY: +0.3% in Sep -0.5% in Oct Nov Release: 17-Dec-15 Industrial Production: -7.1% in Aug -4.8% in Sep Oct Release: 26-Nov-15 UOB FX Forecast: end 4Q15: 1.43 end 1Q16: 1.45 end 2Q16: 1.46 end 3Q16: 1.44 UOB 3M SIBOR Forecast: end 4Q15: 1.15% end 1Q16: 1.20% end 2Q16: 1.25% end 3Q16: 1.35% UOB 3M SOR Forecast: end 4Q15: 1.25% end 1Q16: 1.35% end 2Q16: 1.35% end 3Q16: 1.45% 3 P a g e

4 EUR/SGD: The anticipated EUR weakness exceeded our expectation by breaking below the support to touch a low of /23. Downward momentum appears to be struggling and the current movement is likely the early stages of a basing process. From here, allow for a test of /40 but is expected to hold for a rebound to Neutral: Improving downward momentum but too early to expect a sustained down-move. [No change in view, see previous update below] While short-term downward momentum is improving, a move below the major support appears unlikely at this stage. That said, EUR has to reclaim in the next 1 to 2 days or the downward pressure will continue to increase. GBP/SGD: GBP traded sideways as expected but the positive daily closing suggests further upward pressure. That said, any upmove is not expected to move above the recent high near /40. Strong support is at ahead of the /70 low yesterday. Neutral: Likely in a consolidation phase now. [No change in view, see previous update below] The recent GBP strength appears to have fizzled out but the pull-back from /05 high yesterday is likely part of a consolidation phase and not the start of a bearish reversal. In other words, there is no change to the current neutral view. Strong support is at with equally strong resistance at the level mentioned yesterday. AUD/SGD: The expectation for a short-term top was wrong as AUD broke above the resistance to touch a high of The up-move appears to have scope to extend higher to barring an unexpected move below Bullish: Continue to target a move to The strong rebound from the low of /65 is likely the early stages of sustained rally that could extend higher in the coming days. That said, is a strong resistance and this level has to crack before a move to our target at can be expected. Stop-loss remains at for now /65 is already a very strong support. JPY/SGD: The low of /15 did not reach the target indicated at /00 yesterday. The rebound from the low is likely part of a basing process for a short-term recovery. From here allow for a retest of /15 but is expected to hold for a move to /65. Neutral: No change in neutral view. Short-term pressure appears to be easing but any recovery from here is likely part of a broader consolidation phase and not the start of a bullish reversal. In other words, there is no change to the current neutral outlook. Strong support remains at ahead of P a g e

5 USD/MYR: After having touched lows of on Tuesday, USD/MYR looks comfortably supported above the region for now. Malaysia s Second Finance Minister said there are no plans to increase GST next even when oil price expected to fall. Separately, according to the MITI Minister, a total of MYR113.5bn in investments were approved in the first six months. Bullish: Continue to target a move to This pair has been trading quietly the last couple of days but the undertone remains positive and we continue to expect a move to (possibly extending to ). Stop-loss remains unchanged at but is already a strong short-term support. Overnight Policy Rate: 3.25% Last Change: +0.25% in Jul 2014 Next BNM Meeting: 21-Jan-16 GDP YoY: +4.9% in 2Q % in 3Q15 4Q15 Release: - CPI YoY: +3.1% in Aug +2.6% in Sep Oct Release: 20-Nov-15 exp: +2.6% Trade Balance: b in Aug +9.69b in Sep Oct Release: 04-Dec-15 Export: +4.1% in Aug +8.8% in Sep Oct Release: 04-Dec-15 Import: -6.1% in Aug +9.6% in Sep Oct Release: 04-Dec-15 Industrial Production: +2.3% in Aug +5.1% in Sep Oct Release: 10-Dec-15 UOB FX Forecast: end 4Q15: 4.40 end 1Q16: 4.18 end 2Q16: 4.15 end 3Q16: 4.06 UOB Overnight Policy Rate Forecast: end 4Q15: 3.25% end 1Q16: 3.25% end 2Q16: 3.25% end 3Q16: 3.25% USD/THB: The Tourism Authority of Thailand (TAT) governor said the deadly attacks in Paris have worsened worries about terrorism, making it a major challenge for tourism in the long term. However, the immediate impact of the attacks is likely to be short term, as people may panic and want to wait and see if the situation really is under control. He added that it was still too early to assess the effects of the Paris attacks solely in numbers. This year the TAT estimates the total number of tourists from France will grow by 4.0% from last year to 628,000, generating 43.5 billion baht in total revenue. For 2016, the TAT expects the number of French tourist arrivals will rise slightly to 659,000, generating 48.2 billion baht in revenue. Bullish: Likely close to making a top; take profit near [No change in view, see previous update below] While USD touched a fresh high of yesterday, upward momentum is showing signs of waning and this pair appears to be close to making a top. Those who are long may consider taking some profit near the target. Stop-loss has been moved higher to from Day Repo Rate: 1.50% Last Change: -0.25% in Apr 2015 Next BOT Meeting: 16-Dec-15 GDP YoY: +2.8% in 2Q % in 3Q15 4Q15 Release: - CPI YoY: -1.07% in Sep -0.77% in Oct Nov Release: 01-Dec-15 UOB FX Forecast: end 4Q15: 35.5 end 1Q16: 35.8 end 2Q16: 36.0 end 3Q16: 36.0 UOB 1-Day Repo Rate Forecast: end 4Q15: 1.50% end 1Q16: 1.50% end 2Q16: 1.75% end 3Q16: 2.00% 5 P a g e

6 USD/CNH: USD/CNY and offshore USD/CNH ended firmer at and on Tuesday from and respectively on Monday. Offshore CNH was still around 0.5% weaker than onshore spot. Ahead of the IMF s Executive Board s meeting on 30 November to decide whether the CNY should be included in the SDR basket, the offshore-onshore spread could narrow as the PBoC seeks to bolster sentiment. Separately, China s holdings of U.S. Treasury securities fell to the lowest level since February at US$1.258 tn in September, down US$12.5 bn from a month earlier. Despite the swift recovery after the sharp drop two days ago, the current up-move is expected to encounter strong resistance near the week s high near /05. Strong support is at Bullish: Has to break above /05 for a move to the target at While the short-term downward pressure has clearly eased with the strong rebound yesterday, USD still has to break above the recent high near /05 before a move to our target at can be expected. Stop-loss for the bullish view remains unchanged at but is already a strong support. Benchmark Deposit Rate: 1.50% Last Change: -0.25% in Oct 2015 Benchmark Lending Rate: 4.35% Last Change: -0.25% in Oct 2015 Reserve Requirement Ratio: 17.50% Last Change: -0.50% in Oct 2015 GDP YoY: +7.0% in 2Q % in 3Q15 4Q15 Release: 19-Jan-16 Caixin Manufacturing PMI: 47.2 in Sep 48.3 in Oct Nov Release: 01-Dec-15 NBS Manufacturing PMI: 49.8 in Sep 49.8 in Oct Nov Release: 01-Dec-15 PPI YoY: -5.9% in Sep -5.9% in Oct Oct Release: 09-Dec-15 CPI YoY: +1.6% in Sep +1.3% in Oct Oct Release: 09-Dec-15 Trade Balance: +60.3b in Sep +61.6b in Oct Nov Release: 08-Dec-15 Export: -3.7% in Sep -6.9% in Oct Nov Release: 08-Dec-15 Import: -20.4% in Sep -18.8% in Oct Nov Release: 08-Dec-15 UOB FX (USD/CNY) Forecast: end 4Q15: 6.40 end 1Q16: 6.45 end 2Q16: end 3Q16: 6.47 UOB Benchmark Lending Rate Forecast: end 4Q15: 4.35% end 1Q16: 4.35% end 2Q16: 4.35% end 3Q16: 4.35% 6 P a g e

7 EUR/USD: EUR slid to lows of on Tuesday. A busy US data docket had little impact with the overall firmer USD tone remaining intact. ECB's Praet in an interview with Bloomberg said that the ECB is concerned over losing credibility if they keep extending the timeframe to reach inflation goal, making the central bank to consider further action. Today, a number of ECB policymakers will speak, including Mersch (4:00pm), Coene (10:35pm), and Lautenschlaeger (2:30am). The target indicated yesterday was exceeded with a low of While the down-move is not impulsive, the current weakness still appears incomplete and another leg lower to is expected. Only a move back above /90 would indicate that a temporary low is in place. Bearish: Bearish phase is intact but look to book some profit nearer to While the outlook for EUR is still bearish, we continue to expect an interim low nearer to In other words, those who are shorts may like to book some profit near and look to resell at a better level. Stop-loss has been moved lower gain to from INDICATORS Refinancing Rate: 0.05% Last Change: -0.10% in Sep 2014 Next ECB Meeting: 03-Dec-15 Deposit Rate: -0.2% Last Change: -0.10% in Sep 2014 Lending Rate: 0.3% Last Change: -0.10% in Sep 2014 GDP QoQ: +0.4% in 2Q % in 3Q15 3Q15 Release (2 nd release): 04-Dec-15 CPI YoY: -0.1% in Sep 0.0% in Oct Nov Release: 02-Dec-15 Unemployment: 11.0% in Aug 10.8% in Sep Oct Release: 01-Dec-15 UOB FX Forecast: end 4Q15: 1.12 end 1Q16: 1.13 end 2Q16: 1.13 end 3Q16: 1.14 UOB Refinancing Rate Forecast: end 4Q15: 0.00% end 1Q16: 0.00% end 2Q16: 0.00% end 3Q16: 0.00% 7 P a g e

8 GBP/USD: GBP was little changed as inflation proved mixed. The annual rate of CPI continued to remain at a record low of -0.1% and in its longest run at below zero. Meanwhile, m/m CPI rose above zero by 0.1%. The accompanying producer price report also showed a lack of price pressures in the pipeline, with the output PPI flat on the month and down -1.3% y/y. With inflationary pressures still low in the UK, there is little pressure on the BoE to tighten monetary policy any time soon. As expected, GBP traded sideways yesterday but at a wider range than anticipated. Mixed indicators continue to suggest range trading albeit with a positive bias. Any pull-back from here is unlikely to threaten yesterday s low at but a sustained move above /55 appears unlikely as well. Bearish: Key resistance at but waning momentum suggests limited downside risk for now. [See Chart of the Day on page 1] Bank Rate: 0.50% Last Change: -0.50% in Mar 2009 Next BOE Meeting: 10-Dec-15 GDP QoQ: +0.7% in 2Q % in 3Q15 3Q15 Release ( 2 nd release): 27-Nov-15 CPI YoY: -0.1% in Sep -0.1% in Oct Nov Release: 15-Dec-15 Unemployment: 5.4% in Aug 5.3% in Sep Oct Release: 16-Dec-15 Services PMI: 53.3 in Sep 54.9 in Oct Nov Release: 03-Dec-15 UOB FX Forecast: end 4Q15: 1.58 end 1Q16: 1.60 end 2Q16: 1.61 end 3Q16: 1.62 UOB Bank Rate Forecast: end 4Q15: 0.5% end 1Q16: 0.75% end 2Q16: 0.75% end 3Q16: 0.75% 8 P a g e

9 AUD/USD: AUD is seen a tad heavy this morning, reversing the gains from Tuesday after the RBA minutes simply confirmed that the central bank sees scope to ease policy further if needed a function of a weaker than expected Q3 CPI report but sees little need to use that that scope at present given the robustness of the recent data flow. Released earlier this morning, Australia s October Westpac leading index held steady at 0.1% for the second straight month. AUD touched a low of (holding just above the strong support at ) before rebounding strongly. The up-move is likely part a consolidation phase that appears to have scope to extend above the overnight near but a sustained above /65 is not expected for now. Strong support remains at Neutral: In a / range for now. [No change in view, see previous update below] The recent movement in AUD lack impulsiveness and at this stage, this pair is expected to continue to trade between and Cash Rate: 2.00% Last Change: -0.25% in May 2015 Next RBA Meeting: 01-Dec % in Feb 2015 Next RBA Meeting (minutes): 15-Dec-15 GDP QoQ: +0.9% in 1Q % in 2Q15 3Q15 Release: 02-Dec-15 CPI YoY: +1.5% in 2Q % in 3Q15 4Q15 Release: 27-Jan-16 Unemployment: 6.2% in Sep 5.9% in Oct Nov Release: 11-Dec-15 Capex: -4.7% 1Q15-4.0% 2Q15 3Q15 Release: 26-Nov-15 UOB FX Forecast: end 4Q15: 0.71 end 1Q16: 0.71 end 2Q16: 0.70 end 3Q16: 0.69 UOB Cash Rate Forecast: end 4Q15: 2.00% end 1Q16: 2.00% end 2Q16: 2.00% end 3Q16: 2.00% NZD/USD: NZD hit the lowest levels since the beginning of October following the latest dairy auction at Fonterra which saw the thirdconsecutive drop in dairy prices. The GDT dairy index tumbled 7.9% after sliding 7.4% at the previous auction and 3.1% at the auction prior to that. Whole-milk powder, the most significant export earner for New Zealand, was down 11.0% at the latest auction. NZD recovered quickly after touching a low of The current price action suggests that this pair is trying to form a short-term base for recovery. From here, allow for a retest of /55 but is expected to hold for a move to Bearish: Take profit near /40. The low of did not reach our target. With early signs of a possible short-term basing, those who are shorts may like to book profit near /40 level. Stop-loss has been moved lower to Official Cash Rate: 2.75% Last Change: -0.25% in Aug 2015 Next RBNZ Meeting: 10-Dec % in Jul % in Jun 2015 GDP QoQ: +0.2% in 1Q % in 2Q15 3Q15 Release: 17-Dec-15 CPI QoQ: +0.4% in 2Q % in 3Q15 4Q15 Release: 20-Jan-16 Unemployment: 5.9% in 2Q15 6.0% in 3Q15 4Q15 Release: 03-Feb-16 UOB FX Forecast: end 4Q15: 0.62 end 1Q16: 0.61 end 2Q16: 0.60 end 3Q16: 0.60 UOB Official Cash Rate Forecast: end 4Q15: 2.50% end 1Q16: 2.50% end 2Q16: 2.50% end 3Q16: 2.50% 9 P a g e

10 USD/JPY: JPY eased a tad as bourses continued to climb. All eyes will now turn to the BoJ s policy decision on Thursday, where the central bank is expected to keep its policy stance unchanged despite recent evidence that the economy is back in recession. Most in the markets are expecting the bank will wait until January before adding further stimulus. While the overnight high near /50 did not reach the target highlighted at , the current USD strength still appears incomplete. Barring an unexpected move back below /15, another leg higher to /75 is likely before a pull-back can be expected. Bullish: Break above would shift the focus to As pointed out in the Chart of the Day update yesterday, the current movement is likely the early stages of a sustained up-move. A break above the immediate target at would shift the focus to Stop-loss has been moved higher to from Overnight Call Rate: % Last Change: -0.20% in Dec 2008 Next BOJ Meeting: 19-Nov-15 GDP QoQ Annualized: -0.7% in 2Q15-0.8% in 3Q15 3Q15 Release (2 nd reading): 07-Dec-15 CPI Core YoY: -0.1% in Aug -0.1% in Sep Sep Release: 27-Nov-15 Industrial Production MoM: -1.2% in Aug +1.0% in Sep Oct Release: 30-Nov-15 Household Spending: +2.9% in Aug -0.4% in Sep Aug Release: 27-Nov-15 UOB FX forecast: end 4Q15: 124 end 1Q16: 126 end 2Q16: 127 end 3Q16: 128 UOB Overnight Call Rate Forecast: end 4Q15: % end 1Q16: % end 2Q16: % end 3Q16: % UOB FX & Interest Rate Outlook FX Outlook 4Q15 1Q16 2Q16 3Q16 Rates Outlook 4Q15 1Q16 2Q16 3Q16 EUR/USD *EU 0.00% 0.00% 0.00% 0.00% GBP/USD UK 0.5% 0.75% 0.75% 0.75% AUD/USD AU 2.00% 2.00% 2.00% 2.00% NZD/USD NZ 2.50% 2.50% 2.50% 2.50% USD/JPY JP 0.1% 0.1% 0.1% 0.1% USD/SGD SG 1.15% 1.20% 1.25% 1.35% USD/MYR MY 3.25% 3.25% 3.25% 3.25% USD/THB TH 1.50% 1.50% 1.50% 1.50% USD/CNY CN 4.35% 4.35% 4.35% 4.35% USD/IDR ID 7.5% 7.5% 7.5% 7.5% USD/PHP PH 4.0% 4.0% 4.0% 4.0% USD/INR IN 7.25% 7.25% 7.25% 7.25% USD/TWD TW 1.63% 1.63% 1.63% 1.63% USD/HKD HK 0.75% 1.00% 1.25% 1.50% USD/KRW KR 1.50% 1.50% 1.50% 1.75% US 0.5% 0.75% 1.00% 1.25% *Last Updated on 23 Oct P a g e

11 18-Nov-15 FX Pairs Spot Outlook Since Rate Summary of Views Target Trailing-Stop Support Resistance USD/SGD Bullish EUR/SGD Neutral GBP/SGD Neutral AUD/SGD Bullish JPY/SGD Neutral USD/MYR Bullish USD/THB Bullish USD/CNH Bullish EUR/USD Bearish GBP/USD Bearish AUD/USD Neutral NZD/USD Bearish USD/JPY Bullish 12 Nov Nov Oct Nov Oct Nov Nov Nov Nov Nov Nov Nov Nov S1: S2: S1: S2: S1: S2: S1: S2: S1: S2: S1: S2: S1: S2: S1: S2: S1: S2: S1: S2: S1: S2: S1: S2: S1: S2: R1: R2: R1: R2: R1: R2: R1: R2: R1: R2: R1: R2: R1: R2: R1: R2: R1: R2: R1: R2: R1: R2: R1: R2: R1: R2: *Change in outlook. FX Pairs Ranges for 17-Nov-15 Performance* Open High Low Close 1-day 1-week 1-month YTD** USD/SGD % +0.16% +2.61% +7.41% EUR/SGD % -0.62% -3.63% -5.51% GBP/SGD % +0.77% +0.89% +4.92% AUD/SGD % +1.28% +0.56% -6.52% JPY/SGD % -0.09% -0.74% +4.13% USD/MYR % +0.53% +4.42% +25.6% USD/THB % +0.27% +1.58% +9.36% USD/CNH % +0.24% +0.34% +3.12% EUR/USD % -0.76% -6.03% -12.0% GBP/USD % +0.62% -1.62% -2.33% AUD/USD % +1.13% -1.88% -12.8% NZD/USD % -0.91% -4.76% -17.0% USD/JPY % +0.25% +3.30% +3.13% * 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-14. 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