Halister News

(Bloomberg) -- Asian currencies weaken against the dollar following the bigger-than-estimated increase in U.S. payrolls data on Aug. 5; baht bucks trend after Thais affirm military-backed charter in Sunday’s referendum. China’s July exports remain sluggish in dollar terms while trade surplus widens.

• Bonds drop in Asia following increase in U.S. yields on Friday after the employment data
• The stronger U.S. employment data revives talk of Fed rate hike this year and supports the dollar broadly, says Tsutomu Soma, Tokyo-based general manager of fixed-income at SBI Securities
  • Baht is exception for now as Thai voters approved draft constitution in referendum, providing “relief” to investors
• Onshore yuan falls as much as 0.2%, most since July 18, as PBOC weakens reference rate; July exports stabilized in yuan terms as weaker currency lends some support to shipment
  • July trade balance rose to $52.3b vs est. $47.3b, prev. $48.1b; exports -4.4% y/y vs est. -3.5%, prev -4.8%; imports -12.5% y/y vs est. -7%, prev. -8.4%
  • Data Sunday showed FX reserves dropped $4.1b to $3.2t in July
  • Excluding valuation effect, outflow may have been $15b, Goldman Sachs says
  • Reserves stabilized on weaker dollar, less intervention: Commerzbank economist Zhou Hao
  • China needs to stick to prudent monetary policy; improve stability of policies to make it more targeted and efficient, according to a commentary in PBOC-run Financial News
  • PBOC’s comment late Friday that “too frequent RRR cuts will aggravate yuan depreciation pressures” rules out large-scale easing in 3Q, says Harrison Hu, chief Greater China economist at RBS
• Yen and JGBs fall
  • June current-account surplus came in at 974.4b yen; est. +1.1t yen
  • Japanese life insurers bought record amount of overseas securities in July, finance ministry data show
  • One BOJ member said policy review should be conducted from perspective of what should be done to achieve the price target, according to summary of opinions at July 28-29 meeting released today
  • Twenty-two of 33 analysts surveyed by Bloomberg say BOJ’s review of monetary policy makes expanded stimulus more likely
• Kiwi set for second day of decline ahead of RBNZ policy meeting this wk where median est. forecast a 25bps rate cut to 2%
  • RBNZ will cut benchmark rate to 1.5% by Nov., BNZ forecasts
  • Kiwi’s wings clipped by macro selling ahead of RBNZ; AUD/NZD ascent paused momentarily at 1.0700 strikes before continued macro selling of kiwi lifted the cross above that level, according to an Asia-based FX trader
• Baht bucks weaker trend in Asian currencies to rise after Thai voters approved peacefully on Sunday a military-backed constitution, putting the country on track toward an election scheduled for late 2017
• Won set to snap two-day rally
  • Financial Supervisory Service identifies 32 firms in need of restructuring
• Ringgit leads slide in Asia’s EM currencies
  • Foreign funds halt 2-month selling streak for Malaysia stocks in July, exchange data shows
  • PM Najib asks UMNO party members not to undermine presidency: Sun reports
• Taiwan dollar steady
  • Island’s exports probably decreased 2.1% y/y in July vs -2.1% previous month; imports seen -5.1% vs -10.0%; trade surplus at $3.83b after $3.58b prior month: Bloomberg survey before data today

Economic Release Details: {CNTSTCN Index ECOD} --SIMON LEE

Economic Release Details: {CNTSICNY Index ECOD} --SIMON LEE

Economic Release Details: {CNTSECNY Index ECOD} --SIMON LEE

(Bloomberg) -- A steeper-than-expected decline in Taiwan’s exports in July could be the trigger for USD/TWD 1-mo. NDF to rebound to 21-DMA of 31.846 near term, Bloomberg strategist Andrew Robinson writes.

• Exports probably fell 2.0% y/y following a 2.1% decline in June, median est. in Bloomberg survey shows; ests. range from -4.0% to -1.0%; data due at 4pm local time
  • Would be 18th negative monthly print in a row
• Imports fell 5.0% y/y while trade surplus widened to $3.81b from $3.58b, median ests. in other surveys show
• Central bank is likely to trim its policy rate by another 12.5 bps in 3Q as persistently contracting export orders impose downward pressure on the island’s economic growth, Scotiabank wrote in Aug. 5 note
  • NOTE: Export orders fell 2.4% y/y in June, data released July 20 showed; that was 14th straight month of negative growth
• 1-mo. NDF rises 0.1% to 31.423 after touching 31.330 on Aug. 5, weakest since July 2015
• NOTE: Andrew Robinson is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice

(Bloomberg) -- Asia-Pacific currencies and rates may experience a volatile week navigating regional event risk and the after-effects of strong U.S. nonfarm payrolls data, Bloomberg strategist Mark Cranfield writes.

• Click here to see major local data due this week
• RBNZ may front-load rate cuts with a 50 bp move on Aug. 11 after RBA lowered rates last week; all economists in Bloomberg survey see a 25 bp cut to 2.0%, and OIS are pricing in an 8% chance of a 50 bp reduction
  • Westpac and HSBC both see RBNZ cutting twice in the months ahead to reach 1.75%
  • If there is a 50 bp rate cut, AUD/NZD may rise to test resistance at 200-DMA, now at 1.0795, for first time since April; chart here
• Japan’s auction of 30-year bonds on Aug. 9 may be a pivotal moment for JGBs after a torrid selloff in past month
  • Investors will try to gauge whether the jump in yields in this cycle is a repeat of 2015, in which case it could be nearing completion. Or is it more like 2013, and there’s worse to come? Click here for a chart
  • In 2015, JGB 30-yr yield rose 52 bps over a three-week period; in 2013, yield rose 95 bps over seven weeks; since falling close to zero on July 6, yields are about 40 bps higher
• Other events include:
  • RBI Governor Rajan will preside over his final meeting and the first since govt voted to create a GST; nearly all surveyed economists see no change to rates; a preview is here
  • China data this week includes trade, CPI and industrial production; also one-year anniversary of yuan mini- devaluation
  • Philippines central bank meets Aug. 11, is seen holding overnight rate at 3.0% by all surveyed economists
• NOTE: Mark Cranfield is an FX strategist who writes for First Word. The observations he makes are his own and are not intended as investment advice.

(Bloomberg) -- RBI Governor Raghuram Rajan will probably leave rates steady at his last scheduled policy review Tuesday, with inflation likely to stay elevated a few more months, economists say.

• His statement will be monitored for any further guidance on RBI’s liquidity stance; banking cash has broadly turned neutral ahead of ~$20b of outflows for repayment to non- resident Indians starting Sept.
• 12 of 13 economists in a Bloomberg poll expect repo rate to be held at 6.50%; one expects 25-bp cut
• Rate decision due 11am Mumbai time

• KEY MACRO
  • CPI at 22-mo. high of 5.77% in June; RBI’s March 2017 target is 5%
  • Wholesale prices rose 1.62% in June, highest since Oct. 2014
  • Govt sticks to 4% +/-2% CPI target through 2021
  • Industrial production rose 1.2% in May vs -1.3% in April; volatile data make index less reliable
  • Banking system liquidity boosted by RBI liquidity infusions via OMO and FX intervention
  • RBI’s real rate of interest is 93 bps vs 1.5%-2.0% rate advocated by Rajan
  • Govt has pushed through GST bill in Parliament
  • Govt yet to select members of RBI’s rate-setting panel
  • Monsoon rainfall 1% above normal as of Aug. 4
  • April-June fiscal deficit at 3.26t rupees, 61.1% of full FY target

• WHY RBI IS LIKELY TO HOLD
  • CPI should remain elevated in next few prints due to higher than seasonal jump in food prices, ANZ said in Aug. 5 note; doesn’t see retail inflation moving below 5% on a sustained basis; RBI should keep rates on hold for rest of 2016
• Inflation outlook remains RBI’s most significant concern, Capital Economics writes in Aug. 2 note; prices are close to peaking, but substantial drop seems unlikely
  • Finance Ministry will relax fiscal-deficit targets in coming months, reinforced by govt’s decision to formally approve pay increases of $31b
• RBI will need to factor in higher than expected May and June CPI plus partial implementation of pay panel recommendation, UBS says in a note dated Aug. 5

• WHY RBI COULD SURPRISE
  • Passage of GST will support call for 25-bp rate cut now, BofAML economists wrote in Aug. 4 note; good monsoon will pull down agflation and inflation; high lending rates hurting recovery; will allow faster transmission of lending rates ahead of busy lending season starting Oct.

(Bloomberg) -- Hong Kong govt received 43,260 reports of suspicious financial transactions in 1H, exceeding 2015 full-yr amount, the Hong Kong Economic Journal reports, citing data from police and customs.

• Reported trades may involved money laundering, other financial crimes: HKEJ
• Most cases were reported by employees of banks, brokerages: HKEJ
• Some reported cases involved penny stocks that recently plunged: HKEJ citing unidentified brokerage managers