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  • Daily FX View: EM Asia FX Weighed By Fed Taper 0 comments
    Dec 19, 2013 7:20 AM

    Represent six of eight worst performers among 24 major currencies, JPY higher as market unwinds carry trades, Bloomberg strategist TJ Marta writes.

    • KRW, NZD, MYR, THB, PHP, SGD underperform


    • KRW underperforms 23 peers

    - USD/KRW 1-mo. forward +0.6% at 1060.94, session range 1052.85/1064.3

    - View: Bullish

    -- Rebounding after consolidation above Dec. 11 low since 2011

    -- Momentum: MACD differential rising from low since Sept., RSI higher from low since Nov., stochastics crossing higher from low since Oct.

    -- Resistance 1068.42 Nov. 21 high; 1077.25 Nov. 12 high


    • JPY higher vs 21 major peers as market unwinds Asia carry trades after Fed taper

    - All industry activity index for Oct. -0.2% m/m vs est. -0.3%, prior revised to 0.5% from 0.4%

    - USD/JPY -0.24% at 104.03, session range 103.78/104.37

    -- View: Downside bias negated by Fed taper

    ---New high since 2008; breaching May high, 38.2% rebound of 1998-2011 decline

    ---Momentum mixed

    --- Resistance 110.66 Aug. 2008 high, higher end of Japan government's FX range


    • NZD among FX underperformers despite data beat

    - GDP 3Q 1.4%q/q vs est. 1.1%, prior revised to 0.3% from 0.2%

    - Trade balance 183m NZD, prior -173m NZD as China becomes largest trading partner in dairy

    - NZD/USD -0.57% at 0.8191, session range 0.8178/0.8239

    - View: Lower

    -- Falling within downtrending channel from Oct. 22 high

    -- Momentum falling: MACD differential, RSI, stochastics lower

    -- Support 0.8085 Nov. low


    • BRL underperforming 22 FX peers, weighed by Fed QE taper, scaled-back BCB FX intervention program, unemployment rate beat

    - Central bank extends FX intervention program at least through mid-year, scales back program to $1b/week vs current $3b/week

    - Unemp. for Nov. 4.6% vs est. 4.9%, tied for record low in data to 2001

    - USD/BRL +0.66% at 2.3498, session range 2.3370/2.3562

    -- View: Higher

    --- Rebounding from test of 61.8% retracement of Nov.-Dec. rally

    --- Momentum turning higher

    --- Breaching 2.3374 61.8% rebound of Aug.-Oct. decline


    NOTE: TJ Marta is an FX strategist who writes for First Word. The observations he makes are his own.

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