FX

FX: Maybank Global Markets daily views on key currency pair movements:

1) Dollar Index (DXY) - USD continued to backpedal on disappointing housing starts and initial claims data overnight. DXY has fallen for 3 consecutive sessions; overnight closed at 97.40 levels. Day ahead may continue to see consolidation with a downside bias; intra-day range of 96.30 – 98.00. Daily stochastics is falling from overbought territories; momentum is bearish bias. On technicals, the setup remains bearish with double-top formation formed near 100 levels; the support at 96.90 (50DMA) is key to watch. March CPI will be in focus tonight, for indication of sustained USD weakness in the short term. Consensus is looking for +0.3% m/m. A weaker reading should see USD weakness continues. Over the medium term, Maybank remains convicted to its USD bullish bias and reiterate its view for the first rate hike to begin in Sep ‘15, and continue to favor buying USD on dips.

2) USD/JPY - In consolidation mode around the 119-region after dipping lower yesterday. Helping to support the JPY today was news that large Japanese companies have agreed to increase monthly wages by an average 2.59% in FY15, sparking some life back into Abenomics. Intraday MACD continues to point to bullish momentum though slow stochastics is indicating little bias in either direction, suggesting that further downside could be limited. Double-top formation at 121.85 continues to act as resistance in the short term, though in the interim, intraday trades within 118.30 – 119.50 should continue to hold.

3) EUR/USD - Continued to push higher towards 1.0818 overnight high on USD weakness despite mounting concerns over Greece’s ability to meet repayment schedule. Pair trades around 1.0780 levels this morning and looks to test higher. Intra-day in Asia could see 1.0730 – 1.0850 range; watch out for US CPI numbers tonight which could see if USD managed to sustain its near term weakness. Maybank continues to maintain its bearish EUR/USD view amid structural decline in Europe fundamentals, concerns over Greece ability to meet repayment schedules, and diverging monetary policies between US and EU.

4) USD/SGD - Bears remained at the forefront, dragging the pair back below the 1.35-levels, weighed first by softer dollar and then by NODX outperformance in Mar. Mar NODX surprised on the upside, rebounding by 18.5% y/y from Feb’s -9.7% vs. expectations of -1.1%, helped by a bounce in electronics and pharmaceutical shipments (+10.4% and 65.9% y/y respectively). The pair is currently hovering around 1.3495 with intraday MACD still showing bearish momentum, though stochastics are now at oversold levels, suggesting a rebound ahead is possible. Strong support remains at 1.3470-levels and should hold in the near term. Maybank’s preference remains accumulating on dips. Any rebounds should be capped around 1.3530.