Singapore dollar, ringgit breach resistance

Short-term investors bought emerging Asian currencies on Tuesday, helping the Singapore dollar and the ringgit break resistance lines on improving risk appetite on the first trading day of the year in most markets. Players remained reluctant to chase the regional units too aggressively, however, as they awaited fresh developments in Europe's debt crisis.
The Singapore dollar strengthened as investors were relieved by data showing the country's economy contracted just in line with market estimates. Persistent worries about the eurozone's debt crisis forced investors to take profits from emerging Asian currencies rather than chasing them up further, dealers and analysts said. "The (emerging Asian currencies') outlook for Q1 remains negative as the euro zone fiscal crisis has not been solved and will come back to bite," said Dariusz Kowalczyk, senior economist and strategist for Asia ex-Japan at Credit Agricole CIB in Hong Kong.
US dollar/Singapore dollar broke through the 61.8 percent Fibonacci retracement of 1.2903 as interbank speculators and short term leveraged accounts sold it. Investors were relieved that fourth-quarter GDP data was not worse then expected. The economy contracted 4.9% in the fourth quarter of 2011 from the previous three months, roughly in line with economists' estimates.
If the pair ends the day lower than the retracement, it may head to the 76.4 percent retracement of 1.2851. Offshore funds sold dollar/won, helping the pair break through a 20-day moving average of 1,151.7 and pushing it down to around the top of the daily Ichimoku cloud.
Some local players also cleared long positions to stop losses. But South Korean importers bought dollars for settlements. "Despite offers from some foreign names, I don't expect further falls from here. Importers bids are pretty strong for now," said a foreign bank dealer in Seoul.
But if the cloud's top is cleared, dollar/won is seen heading to 1,146.0, the 61.8 percent retracement of its rise in December. Dollar/ringgit broke through a 55-day moving average and the 61.8 percent Fibonacci retracement of its December rise. The pair breached the retracement of 3.1509 and the average of 3.1483. If it ends the day lower than those support levels, it may head to 3.1396, the 76.4 percent retracement. And the next level could be 3.1382, the 38.2 percent retracement of its rise between October and December. Interbank speculators sold dollar/Philippine peso, but some players were looking to buy it on worries about the eurozone.