INSIDE ASIA: Currencies Gain; Aussie Rises on Jobs; BOK Holds
(Bloomberg) -- Asian currencies gain on improved risk appetite after Dallas Fed chief Kaplan urges a gradual approach to U.S. rate hikes. Aussie rises as jobs data showed full-time employment surged last month. Korean won leads gains among regional peers following BOK’s decision to hold rates while lowering growth and inflation forecasts.
- Kaplan said taking slow, gradual, careful approach toward U.S. central bank monetary policy is “appropriate”; Fed’s Beige Book offered little to suggest an imminent hike
- MSCI Asia Pacific Index up 0.2%, crude oil up 0.9%; 10- yr Treasury yield little changed at 1.47%
- “Currencies are gaining on continued risk appetite, steadier sentiment while accommodative external liquidity favor risk-taking,” says Gao Qi, forex strategist at Scotiabank
- Need to be nimble when trading on strength as sentiment likely to turn cautious ahead of July FOMC meeting
- Aussie gains after June jobs data
- Employment rises 7,900 m/m vs est. 10,000 gain; jobless rate at 5.8%, in line with est.; full-time jobs jumped by 38,400 in June, compared with a revised 2,500 gain a month earlier
- AUD/USD buying by leveraged accounts ahead of stop- losses that could be triggered today above 0.7660, according to FX traders in Asia
- Kiwi drops to 0.7227 session low; swap rate declines
- NZ bonds held by foreigners fell to 67.4% from 68.5% a month ago, RBNZ data shows; biggest decline since 2014
- ANZ says confidence gauge adds to sign of faster growth
- RBNZ to update mkt on assessment of economy on July 21 which won’t include OCR review; update reflects longer- than-usual gap between Monetary Policy Statements
- Won rises to 2-mo. high after BOK keeps rate unchanged at 1.25% as forecast
- BOK cuts GDP forecast to 2.7% for 2016, CPI cut to 1.1%
- Uncertainties to growth path to be high, BOK says; inflation will remain low for time being, then gradually rise as effects of low oil prices diminish
- BOK’s cut in forecasts were less than thought; central bank may ease in Sept: Truston Asset Management
- Offshore yuan lower while onshore yuan is little changed; PBOC strengthens CNY fixing for second day in a row
- 2Q GDP due 10am local time on July 15; median est. is +6.6% y/y vs +6.7% in 1Q
- M2 also due tomorrow; seen at 11.4% vs 11.8%
- Yen declines
- Japanese buy record amounts of foreign bonds and stocks last wk, MOF data shows
- Lower JGB yields last week may spur Japanese investors to increase purchases of foreign bonds, Nomura says
- Japan’s emperor said to seek abdication; chief cabinet secretary Suga says govt has not discussed the matter; not an economic issue, but emperor is widely respected, says Morgan Stanley MUFG Securities
- BOJ outlook on July 29 may get a boost from fiscal plan, oil prices, Nikkei reports
- Taiwan dollar gains
- Taiwan said to cut overnight guiding rate to 0.178% from 0.179%
- Southeast Asian currencies mostly stronger
- Peso set for second day of gains
- International investors bought net $52.2m of local equities yday, largest one-day inflow this month: exchange data
- Ringgit strengthens for fourth day as oil advances and BNM’s unexpectedly cut rate yday
- BNM leaves door open for further rate cuts after yday’s surprise cut as protection against downside risks to growth and to ensure key domestic engine of growth, UOB wrote in note yday
- Singapore dollar little changed after advance GDP data
- 2Q GDP growth matches median 2.2% y/y est. of Bloomberg survey, according to advance reading; 1Q GDP revised higher to 2.1% from 1.8% previously
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HALISTER1Source: BFW (Bloomberg First Word)
People Qi Gao (Bank of Nova Scotia Asia Ltd/Singapore)
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