Asian currencies to fall sharply as US jobs data pushes dollar index to new 11-year high

Asian currencies are set to fall sharply on Monday as the late Friday US jobs data has pushed the dollar to a 12-year high versus a trade-weighted basket of six majors.

Non-farm employers added 295,000 jobs in February as per data from the Department of Labour, up from 239,000 in January and compared to market expectations of 240,000.

The USD index jumped 1.35% on the day to a new 11-year high of 97.65. So far in March, the index has risen 2.5%, adding to the 20% rally since July through February. The euro has fallen to a 12-year low of $1.0841 after the US data, its lowest since February 2003 on a closing basis.

The Singapore dollar, the Malaysian ringgit and the Indonesian rupiah are already trading at multi-year lows against their US counterpart while the Indian rupee and the Thai baht have just turned south this month, reversing the January-February trend of strengthening.

The USD/SGD jumped 0.9% on Friday to a new 4-1/2-year high of 1.3825. The pair had risen 11% during July-February and has added a 1.3% gain so far this month.

The USD/MYR has rallied 1.9% in March, reversing the February trend of losses. At Friday's high of 3.3825, the pair clocked a six-year high and from the August end, it is now up 16.8%.

The USD/INR rose to a two-month high of 62.28 on Friday with a 1.4% gain so far in March, but still below the 15-month high of 64.09 touched in December. The pair will target a retest of the 64 mark as long as 62 holds as a support, charts show.

The USD/THB, moving off a one-year high just below the 33.15 mark, had dropped 1.85% in the first two months of the year, but so far this month, it has recovered 0.8%.

The 33.15 mark seems a strong resistance after having proven unbreakable in the two attempts in January and December last year. If it manages to break, then the pair will be at a five-year high.

In Monday's trade, the rupee may fall to 63/dollar and the Thai baht to drop to 32.80/dollar levels before hitting the 33-mark. The immediate target for the rupiah seems to be 13,250 and the Singapore dollar appears headed for the 1.4000 mark.