The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
It certainly does look like a tale of two scenarios in Asia, but against the US dollar, the likes of SGD, MYR and CNH looks captured in this wider downtrend that has recently met its match. Locking these USD/Asian pairs in gridlock had been the bout of uncertainties over trade tensions. It appears difficult not to hear from either the US or China with regards to the development over trade differences these days.
While risk sentiment have gradually abated from last week following conciliatory remarks from leaders in both China and US, fresh comments from President Donald Trump have left their mark in the currency market this week. The President took to twitter to accuse both China and Russia for ‘playing the Currency Devaluation game’ sending the greenback moderately softer on Monday. Certainly, this had not been the first time we have heard the President’s thoughts on the matter, though it remain a jarring difference from his treasury department’s recent report that recognised no currency manipulators amongst major trading partners.
One would suspect that we may not be hearing the end of the latest trade tensions yet, as the US President’s latest words added fuel to fire. Although it had been heartening to see China’s lack of retaliation fixing onshore USD/CNY at the lowest level in two weeks while voicing their dissent. This is also set against the backdrop of works towards further financial reforms. The key question remains, in which direction we would find markets moving with all the factors on the table to consider. USD/CNH does serve as a poignant example capturing the political influences. On one hand, China’s apparent tolerance keeps the bias on the downside though the short-term US dollar bullish bias may work against further declines. Watch the breakout on either ends with key support at $6.2575.
.jpg)
