ASEAN Weekly Outlook – USD/SGD, USD/MYR, Fed, Trade Wars, China, EU, Iran
- Most ASEAN currencies depreciated final week regardless of USD weak spot, SGD up although
- MYR, IDR &PHP look to US knowledge and menace of extra commerce tensions within the week forward
- USD/MYR’s dominant uptrend faces the descending development line from November 2016
We launched our 3Q forecasts for the US Dollar and equities within the DailyFX Trading Guides page
Even a pullback within the US Dollar final week led to most ASEAN bloc currencies cautiously depreciating in opposition to the dollar. USD/MYR, USD/IDR and USD/PHP discovered themselves edging barely larger. Last Friday supplied some reduction although because the markets interpreted commentary from Fed Chair Jerome Powell at Jackson Hole as comparatively disappointing for bolstering additional hikes in the future.
One notable standout was the Singapore Dollar which was on tempo to publish its largest decline in every week in opposition to its US counterpart since February. SGD’s and MYR’s respective nations obtained inflation knowledge that was principally in-line with economists’ expectations. Weakness in rising markets additionally weighed in opposition to ASEAN currencies final week as threats of US sanctions on South Africa weakened the ZAR.
An absence key home financial occasion dangers for ASEAN currencies may have them eyeing exterior information subsequent. This is the place USD’s upside momentum could possibly be reignited because the dominant uptrend since April stays intact. It will discover itself dealing with the second estimate of Q2 GDP in addition to the Fed’s most popular measure of inflation. Interestingly, Fed fee hike bets on the entire have been rising regardless of knowledge tending to disappoint relative to expectations.
Currencies such because the Indonesian Rupiah and Philippine Peso may be left weak to elevated commerce warfare threats between main nations. For one factor, final week the US and China didn’t make significant progress on this entrance, opening the door to additional tit-for-tat escalations. At this level, the previous nation imposed the remaining $16b in import tariffs on the latter and China predictably retaliated with an equal quantity.
Looking throughout the Atlantic Ocean, there could also be scope for the EU to increase efforts to retaliate against Donald Trump’s sanctions on Iran. Next week, European officers will meet to debate subjects similar to trans-Atlantic relations and the Iran Nuclear Deal. This might bode unwell for the sentiment-linked MYR and rising markets, however progress on NAFTA between the US and Mexico may provide a carry to market temper nevertheless.
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USD/MYR Technical Analysis – Will Trend Line Hold?
USD/MYR’s dominant uptrend since April nonetheless stays intact and on a weekly foundation, it has posted its longest consecutive successful streak since August 2015 which is three years in the past. Now, the pair faces a essential barrier that might finish it. This is the descending development line relationship again to November 2016. Simultaneously, destructive RSI divergence warns that upside momentum is fading.
A flip decrease would place the December 2017 horizontal line (former resistance) as near-term assist at 4.0925. On the opposite hand, getting above the development line exposes the 61.8% Fibonacci extension at 4.1293.
Chart created in TradingView
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— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com
To contact Daniel, use the feedback part beneath or @ddubrovskyFX on Twitter