FX Pulse

The U.S dollar traded lower against most G10 peers except JPY (-0.10%) and CHF (-0.39%) as FOMC began a two-day meeting which is expected to keep rates on hold. The dollar index DXY slipped to 99.03 from 99.27 but still remained in a gradual uptrend channel in place since Dec’s FOMC. Only a drop below 98.60 would negate the uptrend.

    Commodity currencies led the charge in G10, higher by 0.70% for AUD and NZD to 0.7005 and 0.6499 respectively after biddish oil and equities, with the latter undeterred by Fitch lowering New Zealand outlook to stable from positive while affirming its AA sovereign rating. GBP staged a one and half handle short squeeze to 1.4350 despite dovish Carney reminder that conditions for rate rise in UK are not yet in place. USD/JPY saw good buying interest below 118 handle during Asia session despite a 6.4% plunge in Shanghai stocks, to position for possible BOJ easing this Friday. EUR/USD recovered slightly to 1.0870 as safe haven demand receded.

    Regional currencies continued to fare well amidst poor data prints, probably anchored by a stable RMB FX rate. SGD gained 0.25% to 1.4266/USD from 1.4302 despite Singapore’s Dec industrial production contracting 7.9% y/y (est. -7.2%) for the 11th straight down month. THB was also better to 35.85/USD from 35.90 although Thailand’s exports fell by a bigger margin in Dec, by 8.73% y/y (est. -6.87%). MYR returned from Thaipusam holiday largely unchanged around 4.2930/USD while IDR traded 200 rupiah on both side of 13900/USD.