eur/usd: 1 · 2016. 12. 16. · aud/usd also fell 0.6% to 0.7358. usd/sgd took out 1.4445 to...

FX Insights Friday, 16 December 2016 1 | P a g e

Quek Ser Leang [email protected] Lee Sue Ann [email protected] Global Economics & Markets Research

Email: [email protected] URL: www.uob.com.sg/research

Friday, 16 December 2016 FX Insights

Chart Of The Day – EUR/USD: 1.0420 Bearish; target a move to monthly trend-line support at 1.0190

As noted yesterday, a breach of the major 1.0455/60 support (2015 low) would indicate that EUR has entered a bearish phase.

The decline yesterday is accompanied by strong downward momentum as we witnessed a rapid drop to an overnight low of

1.0364. Overall, the outlook for EUR appears to be bleak in the coming weeks as the next significant support is much further

down at 1.0190 (rising trend-line on the monthly chart). Any short-term rebound is expected to stay below 1.0570.

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OVERVIEW

The U.S. dollar continued to jump for a second day, still buoyed by the positive sentiments surrounding the Federal Reserve

raising interest rates by 25 bps on early Thursday. The dollar index hit a high of 103.56, level last seen in December 2002. All

G10 currencies lost ground to the greenback, led by losses in EUR and GBP, both off by 1.1%. EUR/USD cracked 2015 low to

hit 1.0364, lowest level since 2003, with strong momentum still pointing to further downside. GBP/USD also fell for a third day,

with accelerating downside momentum threatening to take out key support at 1.2400. USD/JPY hit 118.66, highest since Feb

this year. AUD/USD also fell 0.6% to 0.7358.

USD/SGD took out 1.4445 to register a fresh 2016 high of 1.4481.

Today we are expecting Thailand’s foreign reserves, Eurozone’s trade balance and CPI and U.S housing starts.


* Shift in outlook.

* 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-15.

16-Dec-16 Summary of Views

FX Pairs Spot Outlook Since/ Rate

Target Trailing-Stop Support Resistance

USD/SGD 1.4430 Bullish 15 Dec 16

1.4410 1.4500

1.4300 1.4280

S1: 1.4390 S2: 1.4300

R1: 1.4500 R2: 1.4550

EUR/SGD 1.5030 *Bearish 16 Dec 16

1.5030 1.4955 1.5120

S1: 1.4955 S2: 1.4870

R1: 1.5085 R2: 1.5120

GBP/SGD 1.7920 Neutral 12 Dec 16

1.7910 - -

S1: 1.7880 S2: 1.7825

R1: 1.8000 R2: 1.8050

AUD/SGD 1.0615 Neutral 24 Nov 16

1.0560 - -

S1: 1.0565 S2: 1.0500

R1: 1.0655 R2: 1.0700

JPY/SGD 1.2200 Bearish 02 Dec 16

1.2530 1.2050 1.2260

1.2350 1.2400

S1: 1.2140 S2: 1.2050

R1: 1.2260 R2: 1.2350

USD/MYR 4.4660 Neutral 09 Dec 16

4.4300 - -

S1: 4.4350 S2: 4.4230

R1: 4.4770 R2: 4.5000

USD/THB 35.79 *Bullish 16 Dec 16

35.79 35.90 35.67

S1: 35.73 S2: 35.67

R1: 35.85 R2: 35.90

USD/CNH 6.9390 Neutral 07 Dec 16

6.8920 - -

S1: 6.9250 S2: 6.9100

R1: 6.9500 R2: 6.9650

CNH/SGD 0.2079 *Bullish 16 Dec 16

0.2079 0.2090 0.2065

S1: 0.2072 S2: 0.2065

R1: 0.2090 R2: 0.2100

EUR/USD 1.0420 *Bearish 16 Dec 16

1.0420 1.0150 1.0570

S1: 1.0345 S2: 1.0150

R1: 1.0460 R2: 1.0570

GBP/USD 1.2425 *Bearish 16 Dec 16

1.2425 1.2300 1.2550

S1: 1.2360 S2: 1.2300

R1: 1.2500 R2: 1.2550

AUD/USD 0.7365 Neutral 24 Nov 16

0.7380 - -

S1: 0.7310 S2: 0.7250

R1: 0.7420 R2: 0.7450

NZD/USD 0.7040 Neutral 29 Nov 16

0.7085 - -

S1: 0.7000 S2: 0.6970

R1: 0.7080 R2: 0.7110

USD/JPY 118.25 Bullish 15 Dec 16

117.40 119.00 118.30

116.80 115.50

S1: 117.50 S2: 116.80

R1: 118.80 R2: 119.00

FX Pairs Ranges for 15-Dec-16 Performance*

Open High Low Close 1-day 1-week 1-month YTD**

USD/SGD 1.4374 1.4481 1.4358 1.4424 +0.37% +1.36% +2.08% +1.78%

EUR/SGD 1.5136 1.5159 1.4976 1.5016 -0.80% -0.55% -0.87% -2.38%

GBP/SGD 1.8047 1.8080 1.7883 1.7905 -0.80% +0.02% +1.75% -14.2%

AUD/SGD 1.0642 1.0686 1.0589 1.0607 -0.27% -0.02% -0.65% +3.00%

JPY/SGD 1.2273 1.2283 1.2141 1.2202 -0.60% -2.16% -5.70% +3.55%

USD/MYR 4.4460 4.4640 4.4460 4.4620 +0.40% +0.95% +2.81% +4.00%

USD/THB 35.66 35.83 35.60 35.76 +0.39% +0.42% +0.90% -0.61%

USD/CNH 6.9260 6.9500 6.9194 6.9339 +0.11% +0.29% +0.87% +5.61%

EUR/USD 1.0534 1.0542 1.0364 1.0412 -1.16% -1.91% -2.87% -4.08%

GBP/USD 1.2560 1.2567 1.2378 1.2419 -1.16% -1.32% -0.28% -15.6%

AUD/USD 0.7405 0.7430 0.7337 0.7359 -0.63% -1.39% -2.65% +1.05%

NZD/USD 0.7120 0.7122 0.7011 0.7044 -1.09% -1.79% -0.81% +3.17%

USD/JPY 117.03 118.66 116.96 118.16 +0.96% +3.64% +8.25% -1.71%


USD/SGD: 1.4430

24-HOUR VIEW: 1-3 WEEKS VIEW:

USD took out the year-to-date peak of 1.4445 and hit a fresh

high of 1.4481 before easing off. The undertone is still

positive and as long as 1.4390 is intact, a retest of 1.4480

would not be surprising but the next major resistance at

1.4500 is likely out of reach for today.

Bullish: Bullish but unfavourable reward to risk ratio.

As noted in the Chart of the Day update yesterday, while the

outlook for USD has shifted to bullish, the reward (immediate

target of 1.4500) to risk (stop-loss at 1.4280) ratio is not

favourable. USD hit a high of 1.4481 in overnight trading and

has since eased off. At this stage, we continue to expect a

higher USD in the coming days even though any up-move is

expected to face stiff resistance at 1.4500 followed by

1.4550. Stop-loss is adjusted slightly higher to 1.4300 from

1.4280.

http://www.uobgroup.com/assets/pdfs/research/FXI_161215.pdf


EUR/SGD: 1.5030


Instead of ‘testing’ the major 1.5050 support, EUR sliced

through this level and plummeted to an overnight low of

1.4976. With no signs of stabilization just yet, further

weakness seems likely even though at this stage, a

sustained move below the 1.4950/55 low seen on the day of

Italian referendum is not expected. On the upside, 1.5085 is

likely strong enough to contain any intraday rebound.

Shift from neutral to bearish: Downside likely limited to

1.4950/55.

After trading in a choppy manner for about 3 weeks, EUR

dropped sharply overnight and the accompanying strong

downward momentum suggests that the outlook for this pair

has shifted to bearish. At this stage, the immediate downside

target appears to be limited to 1.4950/55, the low seen on

the day of Italian referendum. The next support is closer to

1.4870. In order to maintain the current momentum, any

rebound should not move back above 1.5120, even though

1.5085 is already a strong short-term resistance.

GBP/SGD: 1.7920


GBP unexpectedly broke below the strong 1.7980 support

and dropped to a low of 1.7883. The decline appears

incomplete even though any further weakness is expected to

encounter solid support near the month-to-date low of

1.7825. Only a move back above 1.8000 would indicate that

the immediate downward pressure has eased.

Neutral: Sustained decline only if clearly below 1.7825.

While downward momentum has improved considerably, we

prefer to wait for a clear break below the 1.7825 low seen

earlier this month before adopting a bearish stance. A clear

breach of this strong support would indicate that a move

towards 1.7640 has started. From here, the odds for a move

below 1.7825 would continue to increase unless GBP can

recover back above 1.8000 within these 1 to 2 days.

AUD/SGD: 1.0615


While AUD breached the strong 1.0600 support (low of

1.0589), the accompanying downward momentum is not

strong. That said, barring a move back above 1.0655, this

pair is expected to ratchet lower towards the 1.0565/70

support.

Neutral: In a 1.0500/1.0700 range.

The breach of 1.0620 yesterday indicates that the recent

attempt to move clearly above 1.0700 has failed. AUD has

likely lapsed back into a sideway consolidation phase and

this pair is expected to trade between 1.0500 and 1.0700 for

now.

JPY/SGD: 1.2200


The target indicated at 1.2210/15 yesterday was exceeded

by a wide margin as JPY crashed to a low of 1.2140/45.

While downward momentum has eased with the strong

rebound, it is too early to expect a sustained recovery. JPY

is more likely to consolidate its recent sharp loss and trade

sideways at these lower levels. Expected range for today;

1.2160/1.2260.

Bearish: Next significant support is at 1.2050.

JPY continues with its relentless decline and touched an

overnight low of 1.2140/45. As noted yesterday, the next

significant support below 1.2210/15 is at 1.2050. In order

words, the next level to aim for from here is at 1.2050. Stop-

loss is adjusted lower to 1.2350 from 1.2400 previously.

*Took partial profit at 1.2380.


USD/MYR: 4.4660

1-3 WEEKS VIEW:

Neutral: Bullish only if clearly above 4.4770. [No change in view, see previous update below]

While the strong opening this morning suggests further upward pressure in the coming days, we are not convinced that the

current movement is the start of a sustained up-move. The year’s high at 4.4770 is a major resistance and only a clear break

above this level would indicate the start of a sustained up-move. That said, USD is expected to stay underpinned in the next

few days unless there is a drop back below 4.4230 (4.4350 is already a strong support).

USD/THB: 35.79

1-3 WEEKS VIEW:

Shift from neutral to bullish: Target 35.90.

After trading mostly sideways for about a month, USD broke above the strong 35.80 resistance to hit a high of 35.82 yesterday.

The up-move is accompanied by strong upward momentum and this has shifted the outlook for USD to bullish. The immediate

target is at the 35.90 high seen in October. Stop-loss is at 35.67 even though 35.73 is already a strong short-term support.

USD/CNH: 6.9390

1-3 WEEKS VIEW:

Neutral: In a higher range of 6.9100/6.9650.

USD continues to trade in a choppy manner and there is no change to our current neutral view. Shorter-term indicators appear

to be positive but any up-move is viewed as part of a broad 6.9100/6.9650 consolidation.

CNH/SGD: 0.2079

1-3 WEEKS VIEW:

Shift from neutral to bullish: Overbought but room for extension to 0.2090.

While we noted that a clear break above 0.2080 would indicate the start of a sustained up-move to 0.2089, the rapid

acceleration higher that hit 0.2088 came as a surprise. The outlook for this pair has shifted to bullish but the up-move is clearly

overbought. That said, as long as 0.2065 is not taken out, the current rally appears to have room to extend further to 0.2090

(next resistance is at 0.2100).


EUR/USD: 1.0420


The anticipated weakness in EUR exceeded our expectation

by easily taking out the major support at 1.0455/60 (low in

2015). The sharp drop to a low of 1.0364 appears incomplete

and barring a move back above 1.0460, another leg lower

towards 1.0345/50 seems likely (before a sustained recovery

can be expected).

Shift from neutral to bearish: target a move to monthly trend-

line support at 1.0190

[See Chart of the Day update on page 1]

.


GBP/USD: 1.2425


The target indicated at 1.2480 yesterday was exceeded by a

wide margin as GBP crashed to an overnight low of 1.2378.

The decline is accompanied by strong downward momentum

and further weakness seems likely even though 1.2355/60 is

expected to offer strong support (next major level at

1.2300/05). Resistance is at 1.2460 but only a move above

1.2500 would indicate that a temporary low is in place.

Shift from neutral to bearish: Target 1.2300/05.

As highlighted yesterday, a breach of 1.2480 would shift the

outlook for GBP to bearish. The immediate target is at

1.2300 followed 1.2250. Stop-loss is at 1.2550.


AUD/USD: 0.7365


The expected extension lower in AUD exceeded the strong

0.7350 support to touch a low of 0.7337. While oversold, the

current weakness appears to have scope to extend further

even though last month’s low near 0.7310 is likely out of

reach for now. On the upside, 0.7415/20 is likely strong

enough to hold any intraday rebound.

Neutral: Bearish if clearly below 0.7310.

While the strong support at 0.7350 was breached, the

downward momentum is not as strong as preferred and we

are still reluctant to adopt a bearish stance for now. Last

month’s low near 0.7310 is acting as a major support and

only a clear break below this level would shift the outlook to

bearish (with an immediate 0.7205). Overall, AUD is

expected to stay under pressure in the near term unless it

can reclaim 0.7450 within these few days.


NZD/USD: 0.7040


The decline in NZD was much stronger than expected as

successive targets were easily exceeded. The drop to an

overnight low of 0.7011 appears incomplete even though

extreme oversold conditions suggest that any further

weakness would be at a slower pace and solid support can

be expected near 0.7000 (followed by 0.6970, the low in

November). Resistance is at 0.7080 followed by the stronger

level near 0.7110.

Neutral: Bearish if clearly below 0.6970.

Similar to AUD/USD, we prefer to wait for a clear break

below last month’s 0.6970 low before adopting a bearish

NZD stance. However, this pair is expected to stay under

pressure unless it can move and stay above 0.7110.


USD/JPY: 118.25


USD continues to rocket higher as the major resistances

indicated at 118.00, 118.30 were easily taken out with a high

of 118.66. While upward momentum has waned somewhat, it

is too early to expect a significant pull-back and USD is more

likely to consolidate its strong gains and trade sideways at

these lofty levels. Expected range for today, 117.50/118.80.

Bullish: Focus on 119.00, 120.00 next.

We just shifted to a bullish USD stance yesterday and there

is no change to the view. Despite overbought conditions,

USD continues to march higher and the immediate target at

118.30 was easily exceeded. From here, the focus is at

119.00 and 120.00 Stop-loss is adjusted higher to 116.80.

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. 193500026Z

Last updated on 12 Dec 16

*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.

UOB FX & Interest Rate Outlook

FX Outlook 1Q17 2Q17 3Q17 4Q17 Rates Outlook 1Q17 2Q17 3Q17 4Q17

EUR/USD 1.04 1.03 1.02 1.02 EU 0.00% 0.00% 0.00% 0.00%

GBP/USD 1.20 1.18 1.16 1.16 UK 0.25% 0.25% 0.25% 0.25%

AUD/USD 0.73 0.73 0.72 0.72 AU 1.50% 1.50% 1.50% 1.50%

NZD/USD 0.68 0.68 0.67 0.67 NZ 1.75% 1.75% 1.75% 1.75%

USD/JPY 115 117 119 120 JP -0.20% -0.20% -0.30% -0.30%

USD/SGD 1.45 1.46 1.47 1.48 SG 0.90% 1.05% 1.15% 1.35%

USD/MYR 4.42 4.35 4.45 4.50 MY 3.00% 3.00% 3.00% 3.00%

USD/THB 36.3 36.5 36.8 37.0 TH 1.50% 1.50% 1.50% 1.50%

USD/CNY 6.95 7.02 7.09 7.16 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 49.8 50.2 50.6 50.9 PH 3.25% 3.25% 3.50% 3.50%

USD/INR 70.4 71.9 72.8 73.8 IN 6.00% 5.75% 5.50% 5.50%

USD/TWD 32.5 32.9 33.3 33.7 TW 1.38% 1.38% 1.38% 1.38%

USD/HKD 7.80 7.80 7.80 7.80 HK 1.00% 1.00% 1.25% 1.50%

USD/KRW 1190 1200 1210 1220 KR 1.00% 1.25% 1.50% 1.75%

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 16

Federal Reserve (FOMC) - 01 15* - 03 14* 26 - 20* - 01 14*

European Central Bank (ECB) 19 - 09 27 - 08 20 - 07 26 - 14

Bank of England (BOE) - 02# 16 - 11

# 15 - 03

# 14 - 02

# 14

Reserve Bank of Australia (RBA) - 07 07 04 02 06 04 01 05 03 07 05

Reserve Bank of New Zealand (RBNZ) - 09^ 23 - 11

^ 22 - 10

^ 28 - 09

^ -

Bank of Japan (BOJ) 31** - 16 27

** - 16 20

** - 21 31

** - 20

**

Bank Negara Malaysia (BNM) 19 - 02 - 12 - 13 - 07 - 09 -

Bank of Thailand (BOT) - 08 29 - 24 - 05 16 27 - 08 21

Monetary Authority of Singapore (MAS) - - - tba - - - - - tba - -

eur/usd: 1 · 2016. 12. 16. · aud/usd also fell 0.6% to 0.7358. usd/sgd took out 1.4445 to...

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