US, China to Again Attempt Negotiating Over Trade Rates & FX Market Update Global Markets: The DXY was relatively unchanged overnight while increases in 2y and 10y UST yields were limited to within 1bps, as risk-taking got a lift amid a rally in the TRY, alongside positive global trade war news flow. Meanwhile, Australia July employment numbers came in disappointing (-3.9k; consensus: +15k), although the AUD was c.0.3% stronger than the Greenback overnight on renewed risk appetite, while the labour data will not change Australia s shortterm outlook. AxJ Markets: CNY and CNH got a big boost overnight after authorities appear to tighten CNH liquidity by limiting the Free Trade Zone (FTZ) from certain lending activities, which sent forward points substantially higher. CNH is also now at a stronger level than the CNY, which should limit downward pressure on the Chinese currency over the near term, with authorities increasingly apprehensive over recent movements. Daily Write-up: SGD SGD was c.0.3% stronger than the Greenback overnight prior to July export data, supported by a broad recovery in global risk appetite. July NODX expanded 11.8% y-o-y, against expectations of 7.4%, mainly driven by a sharp jump in Pharmaceuticals (+109.2% y-o-y). SGD was little changed post-data as investors cautioned against chasing the volatile sector, with market watchers likely to remain fixated on global risk conditions over the coming weeks. Chart 1: Global 10y Bond Range 1y Bond Range 1y Average UST GILT Bund OAT SPGB BTP PGB JGB ACGB -1 1 3 5 Chart 2: Asia-ex Japan 10y Bond Range SGS HKGB KTB CGB MGS ThaiGB Table 1: Key Events Today Table 2: Bond Auctions Today IndoGB US U. of Mich Sentiment CH 30y CGB 3.97 07/48 RO (CNY29bn) GolSec EU MY CPI, Core CPI GDP % 0 2 4 6 8 10 Chart 3: SGD Rates & FX Team fixed.income.research@rhbgroup.com See important disclosures at the end of this report 1
Rates & FX Trade Ideas Rates Trade Ideas Initiated Closed Entry Levels Target / Stop Loss Yield Since Initiation Tactical Long 10y UST vs Bunds 26/02/18 25/04/18 221 237 200 / 235 +16 Stop Out Note: Only outstanding positions and positions expired or closed over a rolling one week are reflected in the table; all positions unhedged *Figures denoted in bps unless otherwise stated. Status FX Trade Ideas Initiated Closed Entry Levels Target / Stop Loss Performance Since Initiation (%) Long AUDMYR 27/02/18 20/03/18 3.0642 3.0192 3.1620 / 3.0360-1.47% Stop Out Short USDTHB 02/05/18 14/05/18 31.696 31.900 31.20/31.90-0.64% Stop Loss Note: Only outstanding positions and positions expired or closed over a rolling one week are reflected in the table; all positions unhedged. Status 2
Currency Support and Resistance Levels Spot Support 2 Support 1 Resistance 1 Resistance 2 GBPUSD 1.2713 1.2000 1.2440 1.3260 1.3820 EURUSD 1.1374 1.0930 1.1240 1.1690 1.1855 USDJPY 110.96 108.00 111.00 113.30 115.40 AUDUSD 0.7260 0.7140 0.7315 0.7530 0.7835 USDSGD 1.3761 1.2970 1.3310 1.3780 1.3960 USDCNY 6.8853 6.6890 6.7940 6.9650 7.0000 USDTHB 33.183 32.230 32.690 33.590 34.550 USDIDR 14593 13,800 14,115 14,500 14,735 USDMYR* 4.1027 3.9050 3.9800 4.1030 4.1870 EURMYR* 4.6458 4.5500 4.6500 4.8000 4.9000 GBPMYR* 5.2148 5.0400 5.1980 5.2960 5.4000 AUDMYR* 2.9645 2.8820 2.9420 3.0500 3.1270 SGDMYR* 2.9811 2.9000 2.9340 3.0000 3.0780 Note: Blue font highlights that currency is nearing support or resistance level; underlined figure denotes a change in support or resistance level. *MYR crosses as per previous day closing Daily Sovereign Rates and FX s Country Closing Yield (%) 2y Yield Closing Yield 10y vs 2/10y Spread US 2.616 0.8 2.562 2.866 0.4 2.912-4.6 25.0 Currency ** FX Rate (per USD) Last Traded Price Daily (%) DXY 96.645-0.05 ADXY 104.710 0.54 UK 0.690 0.7 0.725 1.237 1.3 1.305-6.8 54.7 GBP 1.2713 0.13 Germany -0.646 0.8-0.635 0.318 1.5 0.384-6.6 96.4 France -0.441 2.0-0.481 0.673 0.7 0.712-3.9 111.4 Spain -0.304-1.9-0.257 1.440-0.4 1.370 7.0 174.4 EUR 1.1374 0.26 Italy 1.269-7.2 0.827 3.111-5.0 2.709 40.2 184.2 Portugal -0.190-2.7-0.117 1.843 0.7 1.825 1.8 203.3 Japan -0.118-0.7-0.124 0.102 0.1 0.057 4.5 22.0 JPY 110.96-0.23 Australia 1.992-0.2 2.041 2.556-2.3 2.685-12.9 56.4 AUD 0.7260 0.32 Singapore 1.901-2.8 1.928 2.446-1.2 2.518-7.3 54.5 SGD 1.3761 0.28 South Korea* 2.190 0.0 2.128 2.730 0.0 2.729 0.1 54.0 KRW 1,130.0 0.19 China* 3.182 2.1 3.266 3.593 0.7 3.562 3.1 41.1 CNY 6.8853 0.71 China (Offshore)* 3.623 4.9 3.763 3.980 4.9 4.088-10.8 35.8 CNH 6.8633 1.16 Malaysia* 3.532-0.5 3.618 4.065 0.2 4.150-8.5 53.3 MYR 4.1027 0.03 SGD/MYR 2.9811 0.26 Thailand 1.748-0.5 1.857 2.716-0.1 2.642 7.4 96.8 THB 33.183 0.45 Indonesia* 7.295 3.3 7.152 7.934-2.6 7.487 44.7 63.9 IDR 14,593-0.11 *3y **Against USD unless otherwise mentioned; daily change (%) reflects overnight changes in the pair denoted in market convention. 3
Disclosure & Disclaimer All research is based on material compiled from data considered to be reliable at the time of writing, but RHB does not make any representation or warranty, express or implied, as to its accuracy, completeness or correctness. No part of this report is to be construed as an offer or solicitation of an offer to transact any securities or financial instruments whether referred to herein or otherwise. This report is general in nature and has been prepared for information purposes only. It is intended for circulation to the clients of RHB and its related companies. Any recommendation contained in this report does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This report is for the information of addressees only and is not to be taken in substitution for the exercise of judgment by addressees, who should obtain separate legal or financial advice to independently evaluate the particular investments and strategies. RHB, its affiliates and related companies, their respective directors, associates, connected parties and/or employees may own or have positions in securities of the company(ies) covered in this research report or any securities related thereto, and may from time to time add to, or dispose off, or may be materially interested in any such securities. Further, RHB, its affiliates and related companies do and seek to do business with the company(ies) covered in this research report and may from time to time act as market maker or have assumed an underwriting commitment in securities of such company(ies), may sell them or buy them from customers on a principal basis and may also perform or seek to perform significant investment banking, advisory or underwriting services for or relating to such company(ies), as well as solicit such investment, advisory or other services from any entity mentioned in this research report. RHB and its employees and/or agents do not accept any liability, be it directly, indirectly or consequential losses, loss of profits or damages that may arise from any reliance based on this report or further communication given in relation to this report, including where such losses, loss of profits or damages are alleged to have arisen due to the contents of such report or communication being perceived as defamatory in nature. The term RHB shall denote where applicable, the relevant entity distributing the report in the particular jurisdiction mentioned specifically herein below and shall refer to RHB Research Institute Sdn Bhd, its holding company, affiliates, subsidiaries and related companies. All Rights Reserved. This report is for the use of intended recipients only and may not be reproduced, distributed or published for any purpose without prior consent of RHB and RHB accepts no liability whatsoever for the actions of third parties in this respect. Malaysia This report is published and distributed in Malaysia by RHB Research Institute Sdn Bhd (233327-M), Level 3A, Tower One, RHB Centre, Jalan Tun Razak, 50400 Kuala Lumpur, a wholly-owned subsidiary of RHB Investment Bank Berhad), which in turn is a wholly-owned subsidiary of RHB Bank Berhad. Singapore This report is issued and distributed in Singapore by RHB Research Institute Singapore Pte Ltd and it may only be distributed in Singapore to accredited investors, expert investors and institutional investors as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. By virtue of distribution to these categories of investors, RHB Research Institute Singapore Pte Ltd and its representatives are not required to comply with Section 36 of the Financial Advisers Act (Chapter 110) (Section 36 relates to disclosure of RHB Research Institute Singapore Pte Ltd s interest and/or its representative s interest in securities). Recipients of this report in Singapore may contact RHB Research Institute Singapore Pte Ltd in respect of any matter arising from or in connection with the report. Hong Kong This report is published and distributed in Hong Kong by RHB Securities Hong Kong Limited ( RHBSHK ), a subsidiary of RHB Investment Bank Berhad, Malaysia (RHBIB), which in turn is a wholly-owned subsidiary of RHB Bank Berhad. RHBSHK, RHBIB and/or other affiliates may beneficially own a total of 1% or more of any class of common equity securities of the subject company. RHBSHK, RHBIB and/or other affiliates may, within the past 12 months, have received compensation and/or within the next 3 months seek to obtain compensation for investment banking services from the subject company. Risk Disclosure Statements The prices of securities fluctuate, sometimes dramatically. The price of a security may move up or down, and may become valueless. It is as likely that losses will be incurred rather than profit made as a result of buying and selling securities. Past performance is not a guide to future performance. RHBSHK does not maintain a predetermined schedule for publication of research and will not necessarily update this report Indonesia This report is published and distributed in Indonesia by PT RHB Securities Indonesia a subsidiary of RHB Investment Bank Berhad, Malaysia, which in turn is a wholly-owned subsidiary of RHB Bank Berhad. Thailand This report is published and distributed in Thailand by RHB Securities (Thailand) PCL. a subsidiary of RHB Investment Bank Berhad, Malaysia, which in turn is a wholly-owned subsidiary of RHB Bank Berhad. Other Jurisdictions In any other jurisdictions, this report is intended to be distributed to qualified, accredited and professional investors, in compliance with the law and regulations of the jurisdictions. 4
Kuala Lumpur Hong Kong Singapore Malaysia Research Office RHB Research Institute Sdn Bhd Level 3A, Tower One, RHB Centre Jalan Tun Razak Kuala Lumpur Malaysia Tel : +(60) 3 9280 8888 Fax : +(60) 3 9284 8693 RHB Securities Hong Kong Limited 12th Floor World-Wide House 19 Des Voeux Road Central, Hong Kong Tel : +(852) 2525 1118 Fax : +(852) 2810 0908 RHB Research Institute Singapore Pte Ltd 10 Collyer Quay #09-08 Ocean Financial Centre Singapore 049315 Tel : +(65) 6533 1818 Fax : +(65) 6532 6211 Jakarta Shanghai Bangkok PT RHB Securities Indonesia Wisma Mulia Building, 20th Floor Jl. Jend. Gatot Subroto No.42 Jakarta 12710, Indonesia Tel : +(6221) 2783 0888 Fax : +(6221) 2783 0777 RHB (China) Investment Advisory Co., Ltd. Suite 4005, CITIC Square 1168 Nanjing West Road Shanghai 20041 China Tel : +(8621) 6288 9611 Fax : +(8621) 6288 9633 RHB Securities (Thailand) PCL. 10th Floor, Sathorn Square Office Tower 98, North Sathorn Road,Silom Bangrak, Bangkok 10500 Thailand Tel: +(66) 862 9999 Fax : +(66) 108 0999 5