20180810-大华银行-FX_Insights_14页_1mb

Global Economics & Markets Research Summary (August 10, 2018)

Core Content Overview

This report provides a detailed analysis of the foreign exchange (FX) market, focusing on key currency pairs and their short-term and medium-term outlooks. It also includes economic data updates and market reactions for major economies, including the US, EU, UK, and others.

Key Economic Indicators

• US Producer Price Index (PPI):

  • Final demand PPI rose 0.0% m/m in July, below expectations, suggesting anemic inflation.
  • 12-month PPI growth was 3.3% y/y, a slight slowdown from 3.4% y/y in June.
  • Core PPI increased 0.3% m/m, matching June's rise, with 12-month growth at 2.8% y/y.

• US CPI Report:

  • Expected to report 0.2% m/m for both headline and core CPI in July, with the report due later in the week.

FX Market Analysis

USD/SGD

• Current Level: 1.3680
• 24-Hour View:
  • Pressure is on the upside, with 1.3710 as a key resistance.
  • 1.3640 is a strong support level.
  • Expected to trade within 1.3640–1.3698 range.
• 1-3 Weeks View:
  • Neutral, but upward pressure will ease unless USD moves above 1.3700.
  • Key support adjusted to 1.3620, and a break below this could signal a shift to bearish.
  • Expected range: 1.3630–1.3698.

EUR/USD

• Current Level: 1.1525
• 24-Hour View:
  • Likely to test 1.1505–1.1510 support.
  • Weakness could be limited to 1.1480.
  • Expected to trade between 1.1500–1.1570.
• 1-3 Weeks View:
  • Neutral, with a retest of 1.1500–1.1510 support expected.
  • A clear break below 1.1500 could indicate a move to 1.1365.
  • Key resistance at 1.1610, with a negative outlook unless this is broken.

GBP/USD

• Current Level: 1.2825
• 24-Hour View:
  • GBP hit a multi-month low of 1.2819.
  • Expected to consolidate and trade sideways between 1.2800–1.2880.
• 1-3 Weeks View:
  • Bearish, with a target at 1.2775.
  • A break of 1.2880 would signal the start of a bearish phase.
  • Expected range: 1.2775–1.2880.

AUD/USD

• Current Level: 0.7375
• 24-Hour View:
  • AUD declined sharply, testing 0.7320 support.
  • Expected to trade within 0.7320–0.7410 range.
• 1-3 Weeks View:
  • Neutral, with room for further weakness to 0.7310.
  • Resistance at 0.7410 and 0.7440, with a clear break unlikely.
  • Expected range: 0.7310–0.7453.

NZD/USD

• Current Level: 0.6610
• 24-Hour View:
  • Further decline is expected, but 0.6570 could act as a temporary support.
  • Expected to trade within 0.6570–0.6660 range.
• 1-3 Weeks View:
  • Shifted to bearish, with a target at 0.6540.
  • A break below 0.6570 would indicate further weakness.
  • Expected range: 0.6540–0.6700.

USD/JPY

• Current Level: 111.10
• 24-Hour View:
  • Expected to trade sideways within 110.80–111.50 range.
• 1-3 Weeks View:
  • Neutral, with a risk of breaking 110.60.
  • A break below 110.60 could signal a move to 110.25.
  • Expected range: 110.60–111.80.

EUR/SGD

• Current Level: 1.5760
• 24-Hour View:
  • EUR hit a 7-week low of 1.5751, testing 1.5750 support.
  • Expected to trade within 1.5700–1.5805 range.
• 1-3 Weeks View:
  • Neutral, with a target at 1.5700.
  • Expected range: 1.5700–1.5805.

GBP/SGD

• Current Level: 1.7540
• 24-Hour View:
  • GBP hit a fresh low of 1.7502 before recovering.
  • Expected to trade sideways between 1.7500–1.7600.
• 1-3 Weeks View:
  • Bearish, with a target at 1.7470.
  • Expected range: 1.7470–1.7670.

JPY/SGD

• Current Level: 1.2305
• 24-Hour View:
  • JPY closed at a one-month high of 1.2310, testing 1.2350 resistance.
• 1-3 Weeks View:
  • Neutral, with a choppy consolidation expected.
  • Expected range: 1.2100–1.2350.

FX Outlook for 3Q18–2Q19

Rates Outlook for 3Q18–2Q19

Key Events and Market Reactions

• US Economic Data:
  • PPI and CPI reports are expected to influence USD movement.
• Asia:
  • Malaysia, Singapore, and Indonesia will release economic data, with potential impacts on their currencies.
• Central Bank Statements:
  • RBNZ maintained a neutral stance, pushing back the first rate hike by 12 months.
• Currency Trends:
  • USD remains strong against most major currencies.
  • GBP and EUR show continued weakness, with AUD and NZD under pressure.
  • JPY shows some upward momentum but remains within a consolidation range.

Summary of Key Currencies

• USD is expected to maintain strength, with resistance at 1.3710 and support at 1.3640.
• EUR faces downward pressure, with a bearish outlook if it breaks 1.1500.
• GBP continues to weaken, with a bearish outlook if it breaks 1.2880.
• AUD and NZD are under pressure, with AUD likely to test 0.7310 and NZD at 0.6540.
• JPY shows some strength but is expected to consolidate in the 1.2100–1.2350 range.