Halister News

(Bloomberg) -- Yen surges while other Asian currencies are mixed as investors wait on the outcome of Bank of Japan’s two-day policy meeting that ends today.

• It’s wait and see for USD/Asia, with positions fairly neutral, says Stephen Innes, senior trader at Oanda.
  • “I’ve heard anything from a 20 bps drop to -0.3%, to an increase of asset bond purchases from 80t yen to 100t yen. Those two would be above market consensus and you would see a spike in USD/JPY on that call.”
  • Skeptical that USD/JPY will break 108-110 given market has priced out Fed rate hike for this year
• Yen surged as much as 1.8% in early Asian trade, before trading up 0.7% at 104.51 vs USD. Tokyo Exchange says there was a trading halt in 10-year JGB futures between 9:51 am and 10:12 am local time
  • Algorithmic platforms partly to be blamed for the early move, some FX traders say. Others say it was a fat- finger trade by ex-Asia fund
  • BOJ, under pressure from govt, is considering specific steps for expanding monetary stimulus Friday to address signs of weakness in inflation, Reuters reports, citing people familiar
  • USD/JPY may test 102 even if BOJ delivers easing, says Robert Savage, CEO of CCTrack Solutions, a fund backed by CITIC Capital
  • USD/JPY and Nikkei 225 have fallen eight times after the last 10 BOJ policy decisions, according to data since last Aug.
• Australia’s 3- and 10-year bond yields reach record lows
  • AUD and NZD bought as USD/JPY continues falling in Tokyo morning, trader says. Leveraged clients are initiating short JPY positions over BOJ decision as either haven or volatility trade
  • June credit to business, consumers gained 0.2% m/m, less than forecast 0.5% advance; RBA report shows impact of record-low interest rates on economy
  • 2Q producer prices up 0.1% from prior three months when they declined 0.2%
• Kiwi appreciates versus greenback
  • 2Q cow slaughter gains to record on low milk payout, up 11% y/y to 520,705. Annual home-building approvals rise to 11-year high
• Buy Asia FX on drop if BOJ disappoints, says Tim Condon, head of Asia research at ING Groep, who expects BOJ to tweak credit easing programs such as expansion of asset purchases and negative rates. KRW, MYR likely to be affected most by bearish sentiment, he writes in note
• Won heads for a fourth day of rally
  • June industrial production rose 0.8% y/y vs est. 0.3%, while Aug. manufacturers’ confidence declined to 71 from 72, lowest since April
• Taiwan dollar gains
  • Island’s economy grew 0.69% in 2Q on year vs est. 0.70% in Bloomberg survey
• Baht steady
  • June current-account surplus seen at $2.27b vs $2.23b prior month, according to Bloomberg survey before data due 2:30pm local time today

--DEREK WALLBANK

(Bloomberg) -- Indonesia 10-year govt bond yields may decline toward 6.54% as Bank Indonesia is seen reducing rates to 6.25%, Handy Yunianto, head of fixed-income research at PT Mandiri Sekuritas writes in note received today

• Seasonally, August is the best time to buy IDR government bonds, says Yunianto
• Foreign fund inflows will remain supportive:
  • Spread between 10-year IDR and USD yields at 547 bps is still more than the long-term average of around 500 bps
  • Indonesian govt bond yields, nominal and real, are attractive compared with other emerging markets
  • S&P Global could upgrade sovereign rating in early 2017 if tax amnesty is a success
• Yield on 8.375% govt bond due Sept. 2026 declines 1 bp to 6.960%, having fallen 10 bps this week; yield reached 6.931% earlier, lowest level since June 2013

--ADELA LIN

Economic Release Details: {TWGDCONY Index ECOD} --ADELA LIN

(Bloomberg) -- Five-year credit protection costs for Malaysia narrowed by 3 bps to 139 bps yesterday, snapping seven days of widening, according to CMA New York data.

• Five-year credit-protection costs for Indonesia tightened by 4 bps to 163 bps, falling for first time in six days
• USD/MYR 1-month NDF down 0.1% to 4.0627 vs 4.0493 onshore closing for spot
• Brent crude futures fell 1.8% to $42.70/bbl yesterday

Economic Release Details: {JNIPMOM Index ECOD} --JODI SCHNEIDER