INSIDE ASIA: AUD Gains as China Data Beat Est.; Most EM FX Lower
Source: BFW (Bloomberg First Word)
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Ken Cheung (Mizuho Financial Group Inc)
Koichi Yoshikawa (Standard Chartered PLC)
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(Bloomberg) -- Australian dollar holds gains after data showed China’s exports and imports beat estimates. Most Asian EM currencies weaken as investors wait for more directional cues on whether the Fed will raise rates this year.
Alert: HALISTER1- Speculation is increasing that the Fed will refrain from a rate hike in Sept., which could support capital inflows into EM stocks and other riskier assets, says Koichi Yoshikawa, executive director at Standard Chartered Bank; as such, sees EM currencies gradually recovering
- Market focus is still on monetary policy outlooks of the Fed and the BOJ
- Yuan declines as PBOC weakens reference rate for first time in three days; offshore yuan drops, reversing earlier gains
- China’s exports fell 2.8% y/y in Aug. vs est. -4.0% and imports rose 1.5% vs est. -5.4%, leaving trade surplus of $52.05b vs est. $58.85b
- USD/CNH selling in early session is partly from banks which have turned to the spot market to cover CNH funding needs, according to FX traders in North Asia
- Some Chinese banks have been selling USD in offshore market, squeezing liquidity and pushing forwards points higher, Commerzbank senior EM economist Zhou Hao says
- PBOC may have tightened liquidity in offshore yuan market to curb bearish yuan sentiment following speculation authorities may allow more FX depreciation with G-20 summit now over, Ken Cheung, Asian FX Strategist at Mizuho Bank says
- It’s a misperception China will devalue yuan after SDR inclusion, CICC economists led by Yu Xiangrong wrote in note yday
- China faces stagnation risk as SOEs absorb bank lending: Nobel Laureate Robert Engle
- Aussie slightly firmer after data showed July trade deficit stood at A$2.41b vs est. A$2.7b shortfall
- RBA Deputy Governor Philip Lowe says strong supervision essential to financial stability
- Kiwi slightly firmer
- New Zealand Aug. inflation gauge shows price pressures remain limp, ANZ says; measure rose 0.1% m/m
- Yen little changed
- Even if Fed doesn’t raise rates in Sept., there’s still speculation for BOJ to ease policy further this month, which could help boost USD/JPY, Standard Chartered’s Yoshikawa says
- Japanese buy most U.S. sovereign bonds since record in March; bought 4.72t yen ($46.4b) in July, second-biggest amount on finance ministry data going back to 2005; domestic investors sold net 1.3t yen of overseas debt last week
- Chinese investors sold net 1.17t yen of Japanese short- term debt in July, most since April 2011, according to data released by Ministry of Finance
- 2Q GDP grew annualized 0.7% in final reading, vs est. +0.2%
- July current-account surplus stood at 1.94t yen vs est. 2.07t yen excess
- Won declines
- Downside risks to South Korea’s economy include Fed’s possible rate increase and corporate restructuring, finance ministry says in monthly economic report
- Authorities plan to strengthen monitoring of FX market ahead of Fed meeting, Finance Ministry Director-General said yesterday
- BOK to hold rates at its meeting on Friday, with policy makers unlikely to strongly signal next rate cut at press conference, Standard Chartered Bank writes in note today
- Rupiah set to snap four days of gains
- Indonesia’s Chamber of Commerce asks govt to extend period of 1st phase of tax amnesty program to Dec. from Sept., Investor Daily Indonesia reports
- Tax amnesty program is seen missing target, Jakarta Globe reports, citing central bank Governor Martowardojo
- BI data late yesterday showed Aug. foreign reserves increased to $113.54b, highest since Feb. 2015
- Peso slips for third straight day
- Philippine’s FX reserves rose to record $85.9b in Aug., data showed yesterday
- Ringgit steady
- Morgan Stanley pushes out 25 bps rate cut forecast to Nov. after Malaysia’s central bank held policy rate unchanged, according to note yesterday
Source: BFW (Bloomberg First Word)
People
Ken Cheung (Mizuho Financial Group Inc)
Koichi Yoshikawa (Standard Chartered PLC)
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