Won leads FX gains as specs target resistance

SINGAPORE: The South Korean won led gains on Monday among emerging Asian currencies, which speculators bought as they targeted certain resistance levels at a time of some hopes Europe will set a plan to resolve its debt crisis.

Over the weekend, Group of 20 officials said they expected the European Union's Oct 23 summit to decisively address the euro zone's debt woes, cementing optimism and boosting risk appetites.

The expectations helped the euro stay around a one-month high and lifted Asian stocks, as well as commodities.

"The mood keeps improving. Dollar/Asia currencies will gradually fall," said a senior South Korean bank dealer in Seoul, adding he will add short positions.

Emerging Asian currencies last week rose as investors covered overly short positions in risky assets including stocks.

The won strengthened past 1,147.3 per dollar, the 38.2 percent retracement of its weakening between August and October.

The Philippine peso broke through a 200-day moving average.

Still, investors were reluctant to bolster emerging Asian currencies further and push them stronger than technical resistance lines amid sustained worries about the euro zone's sovereign debt problems.

The won is seen having a resistance at 1,144 and the Singapore dollar is seen facing resistance at around 1.2600 versus the greenback.

The Singapore dollar gave up some gains as speculators covered US dollar-short positions after worse-than-expected export data and on caution over intervention by the central bank.

"We are recommending that clients stay defensive for now, minimising new exposures, as event risk remains massive at the moment," said Callum Henderson, global head of FX research with Standard Chartered Bank in Singapore.

Copyright Reuters, 2011