INSIDE ASIA: Currencies Gain as China Data Boosts Risk Sentiment
Source: BFW (Bloomberg First Word)
People
Hao Zhou (Commerzbank AG)
Sean Callow (Westpac Banking Corp)
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(Bloomberg) -- Asian currencies are mostly stronger, shrugging off terror attacks in France, as regional stocks gain after China’s 2Q GDP, June industrial production and retail sales beat estimates. Yen declines to lowest since Brexit while Aussie hits 2-mo high.
Alert: HALISTER1- Slight risk-off sentiment seen in early Asian session following terror attack in France; truck rams into crowd in Nice, killing at least 80 in Bastille Day attack
- Fed’s Kaplan says “we need to be patient” on normalizing rates; Fed’s policy isn’t as accomodative as what most people think
- MSCI Asia Pacific Index up 0.6%, set for a fifth day of gains; crude oil down 0.3%; 10-yr Treasury yield up 1bp to 1.5476%
- “ Upside surprise on China’s GDP was only minor but we are encouraged by the clear pickup in industrial production growth in June,” Sean Callow, senior currency strategist at Westpac says
- Augurs well for Chinese commodity demand; suggests iron ore prices may remain resilient for longer, supporting AUD
- Data isn’t strong enough for AUD/USD to break 0.77 but adds to insulation on the downside
- Yen drops past 106 vs USD for first time since Brexit vote, set for 5.3% weekly decline, biggest since 1999, amid hopes for Japanese stimulus
- Chinese data add to tailwind in USD/JPY that stems from speculation of helicopter money in Japan and broader global risk-on sentiment: Daiwa Securities
- Japan’s major banks would reject any BOJ offer to pay them to borrow its money, and such a plan wouldn’t boost lending that much to customers, say people familiar with the matter
- Japan is drafting plans for overtime reduction, lower unemployment-insurance premiums and a higher minimum wage, Nikkei reports
- Yuan gains in both onshore and offshore mkts after economic growth beats estimates
- China’s economy grew 6.7% y/y in 2Q; est. 6.6%
- Industrial production in June rose 6.2% y/y; est. 5.9%
- June new loans 1.38t yuan; est. 1t yuan
- China end-June outstanding aggregate financing rises 12.3% Y/y
- Yuan’s 3% decline vs dollar in 2Q had little positive impact on growth; policy focus in 2H could switch to more fiscal measures to boost domestic demand, Commerzbank senior economist Zhou Hao says; pace of depreciation to be more gradual than in 1H; authorities have little incentive to lower yuan’s value much
- China economic growth stable in 1H but fixed-asset investments were much weaker and trade was worse, indicating clear trend of shrinking domestic demand in decelerating economy: BNP
- PBOC’s Zhou says removal of price distortion is key to reform
- Won leads rally in Asian FX; headed for 2.7% weekly gain
- Policy response in Korea still needs to be more aggressive and pre-emptive now, otherwise policy makers may need to react with more later, Morgan Stanley wrote in note yday; BOK kept rates steady yday
- Ringgit lower; still set for 2% weekly gain
- No plans at moment to change interest rates over next few meetings, BNM governor Muhammad Ibrahim says in interview with Bernama; central bank cut policy rate to 3.0% on Wednesday
- Peso higher, up 0.3% this week
- Overseas remittances probably rose 4.8% y/y in May after 4.1% gain in April, according to median est. in Bloomberg survey
- Rupiah steady after trade data, up 0.4% this week
- June exports fall 4.42% Y/Y; trade in $900m surplus, beating $212m estimate
- June foreign reserves rose to 13-month high to $109.79b in June
Source: BFW (Bloomberg First Word)
People
Hao Zhou (Commerzbank AG)
Sean Callow (Westpac Banking Corp)
To de-activate this alert, click here
UUID: 7947283