USD/JPY: 108.05 Next significant support at 106.10. · * Shift in outlook. * Percentage difference between the closing price and the last price 1-period ago. ** Percentage difference

FX Insights Friday, 29 April 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, 29 April 2016 FX Insights

Chart Of The Day – USD/JPY: 108.05 Next significant support at 106.10.

USD suffered its largest single day loss since August 2015 when BOJ’s inaction sent it plummeting to a low 107.84. The key

level to watch is obviously at 107.60/65, the low seen earlier this month. While a break below this level would not be surprising,

the sharp and rapid drop from just below 112.00 appears to be running ahead of itself and any further decline would likely be at

a slower pace (note that daily MACD is still in positive territory). That said, the next significant mid-term support is another 200

pips lower at 106.10 and a clear break below 107.60/65 could sent USD accelerating lower. Overall, the outlook for USD for

the next couple of weeks has shifted to bearish and only a move back above 109.70 would indicate that the downward

pressure has eased (109.20 is already a strong short-term resistance).

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* 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.

29-Apr-16 Summary of Views

FX Pairs Spot Outlook Since/ Rate

Target Trailing-Stop Support Resistance

USD/SGD 1.3450 Neutral 20 Apr 16

1.3395 - -

S1: 1.3400 S2: 1.3350

R1: 1.3480 R2: 1.3520

EUR/SGD 1.5270 Neutral 11 Apr 16

1.5380 - -

S1: 1.5215 S2: 1.5100

R1: 1.5325 R2: 1.5355

GBP/SGD 1.9640 Bullish 25 Apr 16

1.9565 1.9800 1.9695

1.9500 1.9400

S1: 1.9550 S2: 1.9500

R1: 1.9720 R2: 1.9800

AUD/SGD 1.0250 Bearish 28 Apr 16

1.0240 1.0120 1.0350

S1: 1.0190 S2: 1.0120

R1: 1.0300 R2: 1.0350

JPY/SGD 1.2445 *Bullish 29 Apr 16

1.2455 1.2530 1.2300

S1: 1.2350 S2: 1.2300

R1: 1.2530 R2: 1.2610

USD/MYR 3.8850 Neutral 08 Apr 16

3.9400 - -

S1: 3.8700 S2: 3.8430

R1: 3.9000 R2: 3.9200

USD/THB 34.94 Neutral 22 Apr 16

35.08 - -

S1: 34.90 S2: 34.82

R1: 35.00 R2: 35.10

USD/CNH 6.4760 *Neutral 29 Apr 16

6.4780 - -

S1: 6.4675 S2: 6.4600

R1: 6.4950 R2: 6.5055

CNH/SGD 0.2071 Neutral 20 Apr 16

0.2070 - -

S1: 0.2067 S2: 0.2063

R1: 0.2077 R2: 0.2080

EUR/USD 1.1360 Neutral 27 Apr 16

1.1295 - -

S1: 1.1310 S2: 1.1290

R1: 1.1400 R2: 1.1465

GBP/USD 1.4605 Bullish 26 Mar 16

1.4485 1.4670

1.4470 1.4420

S1: 1.4540 S2: 1.4470

R1: 1.4670 R2: 1.4815

AUD/USD 0.7625 Bearish 28 Apr 16

0.7600 0.7520 0.7690

S1: 0.7595 S2: 0.7520

R1: 0.7675 R2: 0.7690

NZD/USD 0.6960 Neutral 22 Apr 16

0.6915 - -

S1: 0.6925 S2: 0.6875

R1: 0.7000 R2: 0.7055

USD/JPY 108.05 *Bearish 29 Apr 16

108.05 106.10 109.70

S1: 107.00 S2: 106.10

R1: 109.20 R2: 109.70

FX Pairs Ranges for 28-Apr-16 Performance*

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

USD/SGD 1.3488 1.3501 1.3416 1.3451 -0.29% -0.34% -0.70% -5.12%

EUR/SGD 1.5263 1.5290 1.5215 1.5267 +0.01% +0.28% -0.10% -0.98%

GBP/SGD 1.9609 1.9679 1.9548 1.9648 +0.21% +1.70% +0.92% -6.00%

AUD/SGD 1.0232 1.0297 1.0198 1.0256 +0.29% -1.72% -0.64% -0.58%

JPY/SGD 1.2094 1.2462 1.2050 1.2436 +2.80% +0.92% +3.53% +5.53%

USD/MYR 3.9050 3.9150 3.8850 3.8900 -0.51% +0.05% -2.64% -9.32%

USD/THB 35.11 35.15 34.96 34.99 -0.37% -0.22% -0.93% -2.94%

USD/CNH 6.5050 6.5154 6.4810 6.4853 -0.28% -0.06% -0.11% -1.23%

EUR/USD 1.1318 1.1368 1.1294 1.1351 +0.28% +0.57% +0.54% +4.40%

GBP/USD 1.4545 1.4623 1.4525 1.4606 +0.41% +1.96% +1.56% -0.83%

AUD/USD 0.7600 0.7659 0.7570 0.7622 +0.48% -1.47% -0.11% +4.68%

NZD/USD 0.6874 0.6990 0.6869 0.6961 +2.15% +0.70% +1.62% +1.93%

USD/JPY 111.47 111.88 107.84 108.08 -3.02% -1.24% -4.08% -10.1%


USD/SGD: 1.3450

24-HOUR VIEW: 1-3 WEEKS VIEW:

USD moved below the 1.3440 support (low of 1.3416) before

rebounding quickly to end the day at 1.3451. While the

undertone still appears weak, downward momentum is far

from impulsive and a sustained move below 1.3400 appears

unlikely for now. From here, allow for a rebound to 1.3480

but 1.3520 is expected to cap for a move lower to 1.3400/05.

Neutral: Daily close below 1.3440 would shift outlook to

bearish.

As mentioned in recent updates, downward momentum is

improving and from here, a daily closing below 1.3440 would

shift the outlook for USD to bearish. This appears to be a

likely scenario unless this pair can move and stay above

1.3520 within the next 1 to 2 days.


EUR/SGD: 1.5270


EUR is starting off the day at the same level as yesterday

after trading within a narrow 1.5215/1.5290 range. Neutral

indicators continue to suggest further range trading, albeit

likely at a slightly higher range of 1.5230/1.5325.

Neutral: In a broad 1.5100/1.5355 range [No change in view, see previous update below]

There is not much to add; the outlook for EUR is still viewed

as neutral and we continue to expect this pair to trade within

a 1.5100/1.5355 range for now.

GBP/SGD: 1.9640


In line with expectations, GBP moved lower to 1.9550 (low of

1.9548) before rebounding quickly. While the recovery could

extend higher to 1.9720, a sustained move above this level is

unlikely (next resistance is at 1.9775, high earlier in the

week). The overnight low of 1.9545/50 is acting as a strong

support now ahead of 1.9500.

Bullish: To take partial profit at 1.9800.

While there is no change to our bullish GBP view (see Chart

of the Day update), short-term momentum is showing early

signs of slowing and those who are long should look to take

partial profit at 1.9800. Stop-loss is still at 1.9500 but in

order for GBP to extend its recent strength, any short-term

pull-back should ideally stay above 1.9545/50.

AUD/SGD: 1.0250


The actual trading range of 1.0198/1.0297 was close to our

expected range of 1.0190/1.0290. The consolidation phase

appears incomplete and further sideway trading is expected

for today, likely holding roughly between 1.0200 and 1.0300.

Bearish: Down-move to extend lower to 1.0120.

We just turned bearish AUD yesterday and there is no

change our view. The immediate target is for a move

towards 1.0120, the low seen in early April. Resistance is at

1.0300 but only a move above the stop-loss at 1.0350

would indicate that our bearish expectation is wrong.

JPY/SGD: 1.2445


The spectacular rally in JPY yesterday is clearly overbought

and while further up-move will not be surprising, any further

advance is not expected to move significantly above

1.2500/05. Support is at 1.2400 ahead of 1.2350.

Shift from bearish to bullish: Target 1.2530.

While we were aware that the 1.2040 target level was a

strong support, the subsequent spectacular rally from a low of

1.2050 was clearly unexpected. The strong and impulsive

upward momentum suggests that further JPY strength is

likely from here. In other words, the outlook for JPY has

shifted from bearish to bullish. Overbought conditions would

likely lead to a slower pace of up-move but the 1.2530 target

appears achievable (next resistance is at 1.2610). Stop-loss

is at 1.2300 even though 1.2350 is already a strong support.

http://www.uobgroup.com/assets/pdfs/research/FXI_160427.pdf



USD/MYR: 3.8850

1-3 WEEKS VIEW:

Neutral: Daily close below 3.8700 would shift outlook to bearish.

Downward momentum is improving rapidly and a daily closing below the strong 3.8700 support would indicate the start of a

bearish phase in USD (target a move to the recent low of 3.8430). This appears to be a likely scenario unless this pair can

move back above 3.9200 within the next 1 to 2 days.

USD/THB: 34.94

1-3 WEEKS VIEW:

Neutral: Daily close below 34.90 would shift outlook to bearish.

The sudden and rapid pick-up in downward momentum was unexpected. From here, a daily close below 34.90 would indicate

the start of a sustained down-move in USD (towards the recent low of 34.82). This appears likely unless USD can surmount and

stay above 35.10 by end of today.

USD/CNH: 6.4760

1-3 WEEKS VIEW:

Shift from bullish to neutral: In a broad 6.4600/6.5055 range.

USD touched a high of 6.5154 yesterday before dropping rapidly to take out the stop-loss for our bullish view at 6.4835. The

sudden pick-up in volatility was unexpected (yesterday’s range was the largest for this month) and has resulted in a mixed

outlook for this pair. We are neutral now and expect this pair to trade in a broad 6.4600/6.5055 range even though the odds are

higher for a move to 6.4600 first instead of 6.5055.

CNH/SGD: 0.2069

1-3 WEEKS VIEW:

Neutral: In a broad 0.2067/0.2088 range. [No change in view, see previous update below]

CNH is pressuring the 0.2067 support and a clear break below this would increase the odds for move below the recent low of

0.2063. While the outlook is viewed as neutral, the downward pressure will continue to grow unless CNH can reclaim 0.2080

within the next few days.


EUR/USD: 1.1360


In line with expectations, EUR retested the 1.1360 resistance

(high of 1.1368) before easing off. The upward momentum is

not strong but the current underlying EUR strength could

lead to a move higher to test the rather crucial resistance at

1.1390/95 (last week’s high). At this stage, the odds for a

sustained break above this level are not high. Support is at

1.1320 but only a move back below 1.1290 would indicate

that a short-term top is in place.

Neutral: Daily close above 1.1400 would target 1.1460/65

and beyond.

As mentioned yesterday, while the outlook for this pair is

deemed as neutral (between 1.1200 and 1.1400), the odds

for a break above 1.1400 are higher than for a break below

1.1200. Upward momentum has improved considerably and

a daily closing above 1.1400 would indicate the start of a

move to and likely beyond the month-to-date high of

1.1460/65. Overall, this pair is expected to remain

underpinned unless there is a move back below 1.1290.

eur=


GBP/USD: 1.4605


GBP traded sideways as expected, albeit at a higher and

narrower range than anticipated. While the short-term

outlook has improved, any further GBP strength is expected

to struggle to move beyond the major 1.4670 resistance. The

overnight low at 1.4540 is acting as a strong support ahead

of 1.4500.

Bullish: To take partial profit at 1.4670.

The bullish GBP phase that started earlier this week (see

Chart of the Day on 26 April when spot was at 1.4485) is still

clearly intact. However, as mentioned previously, 1.4670 is a

strong resistance and those who are long should look to take

partial profit here. A clear break above this level would shift

the focus towards the year-to-date high of 1.4815. Stop-loss

is adjusted higher to 1.4470 from 1.4420.



AUD/USD: 0.7625


Yesterday’s range of 0.7570/0.7659 was close to our

expected sideway trading range of 0.7570/0.7655. The sharp

drop that started two days has likely made a temporary

bottom and the current price action is viewed as part of a

consolidation phase (further AUD weakness still likely but

only at a later stage). In other words, continue to expect

range trading for today, albeit at higher range of

0.7595/0.7675.

Bearish: Pull-back to extend lower to 0.7475/0.7520.

We turned bearish AUD yesterday (see Chart of the Day

update) and expect the current pull-back to extend lower to

test the major 0.7475/0.7520 support. As highlighted, in

order to maintain the impulsive downward momentum, any

short-term rebound should not move back above 0.7690.



NZD/USD: 0.6960


Against our expectation, NZD extended its gains above

0.6980 (high of 0.6990) before easing off. The current up-

move appears to have scope to extend further but 0.7000 is

a very strong resistance and a sustained move above this

level appears unlikely. On the downside, only a move back

below 0.6925 would indicate that a short-term top is in place.

Neutral: In a 0.6800/0.7000 range.

The upward momentum is more resilient than expected and

a break above the top end of our expected 0.6800/0.7000

sideway range would not be surprising. That said, the

current up-move appears to be running ahead of itself and a

move beyond the month’s high of 0.7055 appears unlikely at

this stage. Overall, this pair is expected to stay firmed in the

next few days with solid support at 0.6875.


USD/JPY: 108.05


While the sharp drop yesterday is extremely over-extended,

there are no signs of stabilization just yet. However, any

further USD decline is likely going to be at a slower pace and

even a break below the recent low of 107.60/65 is not

expected to move significantly below 107.40. The overnight

high of 108.75 is acting a strong resistance from here (next

resistance at 109.20).

Shift from bullish to bearish: Next significant support is at

116.10.

[See Chart of the Day on page 1]

jpy=

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Last updated on 22 Mar 16

UOB FX & Interest Rate Outlook

FX Outlook 2Q16 3Q16 4Q16 1Q17 Rates Outlook 2Q16 3Q16 4Q16 1Q17

EUR/USD 1.11 1.11 1.12 1.13 EU 0.00% 0.00% 0.00% 0.00%

GBP/USD 1.39 1.43 1.46 1.47 UK 0.50% 0.50% 0.50% 0.75%

AUD/USD 0.77 0.79 0.80 0.80 AU 2.00% 2.00% 2.00% 2.00%

NZD/USD 0.67 0.69 0.70 0.71 NZ 2.00% 2.00% 2.00% 2.00%

USD/JPY 110 111 112 115 JP -0.10% -0.20% -0.20% -0.30%

USD/SGD 1.34 1.35 1.36 1.39 SG 1.30% 1.50% 1.65% 1.75%

USD/MYR 4.05 4.08 4.10 4.10 MY 3.25% 3.25% 3.25% 3.25%

USD/THB 36.0 36.0 36.5 37.0 TH 1.50% 1.50% 1.50% 1.75%

USD/CNY 6.47 6.50 6.45 6.44 CN 3.85% 3.85% 3.85% 3.85%

USD/IDR 13,000 13,100 13,200 13,300 ID 6.75% 6.75% 6.50% 6.50%

USD/PHP 48.0 47.0 46.0 45.0 PH 4.0% 4.0% 4.0% 4.25%

USD/INR 69.0 70.0 71.1 72.2 IN 6.75% 6.75% 6.75% 6.75%

USD/TWD 32.1 32.3 31.9 31.6 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 1180 1190 1200 1230 KR 1.25% 1.25% 1.25% 1.25%

US 0.75% 0.75% 1.00% 1.25%

Central Bank Meetings 2016

Central Bank Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Federal Reserve (FOMC) 27 - 16 27 - 15 27 - 21 - 02 14

European Central Bank (ECB) 21 - 10 21 - 02 21 - 08 20 - 08

Bank of England (BOE) 14 04 17 14 12 16 14 04 15 13 03 15

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

Reserve Bank of New Zealand (RBNZ) 28 - 10 28 - 09 - 11 22 - 10 -

Bank of Japan (BOJ) 29 - 15 28 - 16 29 -

Bank Negara Malaysia (BNM) 21 - 09 - 19 - 13 - 07 - 23 -

Bank of Thailand (BOT) - 03 23 - 11 22 - 03 14 - 09 21

Monetary Authority of Singapore (MAS) - - - 14 - - - - TBA - - -

Documents

USD/JPY: 108.05 Next significant support at 106.10. · * Shift in outlook. * Percentage difference between the closing price and the last price 1-period ago. ** Percentage difference