INSIDE ASIA: Yen and Yuan Decline as Other Currencies Strengthen
(Bloomberg) -- Majority of Asian currencies gain with dollar weakening again ahead of U.K. referendum today; GBP extends gains, hits highest level this year.
- Yen declines; rose on Monday and Wednesday but down Tuesday and today; yuan also lower; PBOC strengthens CNY reference rate by 0.42%, most since June 6; weakened by same amount, 0.42%, yday
- Dollar Index down 0.25% after 0.32% drop yday; heading for sixth decline in seven sessions
- Mkts worldwide to be “very light” today ahead of U.K. vote, ANZ senior FX strategist Khoon Goh says
- Australian 10-yr bond yield rises for fifth day, up 3 bps; same tenor bond yield in Japan up 2 bps at -0.13%, while in China down 1 bp at 2.925%
- G-7 leaders to issue joint statement stressing readiness to take necessary steps to calm mkts if U.K. votes leave: Reuters
- NOTE: Brexit Referendum Day Finally Arrives
- Brexit Polls Diverge on Referendum Eve
- FX Traders Face 3am Singapore Start for Brexit Vote
- If U.K. stays and next week’s U.S. consumption and ISM manufacturing data are steady, mkts could be subdued again by prospect of Fed rate hikes, says Masashi Murata, FX strategist at Brown Brothers Harriman
- Yen leads declines, falling vs all Asian and G-10 peers; Citi currency position indicator shows investors have squared yen positions ahead of U.K. vote
- Nikkei flash manufacturing PMI at 47.8 in June vs 47.7 in May, fourth consecutive month of contraction
- BOJ board member Kiuchi says expectations for more easing are overly high
- Slow pace of Fed tightening likely to weigh on USD/JPY even if U.K. votes to stay in EU, says Naohiro Nomoto, NY-based associate for currency trading at Bank of Tokyo-Mitsubishi UFJ
- Foreigners turn sellers of Japanese bonds for first time in three months
- Japan sold net 457.7b yen of overseas bonds in week
- NOTE: The Mysterious Case of the BOJ’s Missing Pre- Brexit Bond Buying
- Negative rates drive biggest lenders from overnight market
- Yuan gives up early gains, edges lower
- USD/CNY will rise a modest 1% to 6.63 in event of Brexit, fall 0.3% to around 6.55 if U.K. stays: RBS
- Stealth stimulus puts China’s fiscal gap over 10%, economists say
- China among most vulnerable to Brexit: Bloomberg Intelligence
- Taiwan dollar hits strongest level vs USD since Aug. as foreign funds flow into local equities; global funds have put $2.4b in Taipei-listed stocks this month through Wednesday
- Ringgit leads gains as oil rallies and U.K. vote approaches
- WTI crude futures rise 0.7% to $49.49/bbl
- MYR vulnerable to USD strength if Fed starts gearing up for rate increase, Macquarie says in note
- NZD rises for a seventh day, longest stretch since Oct.
- Likely to “blast through” 0.72 handle if U.K. remains in EU, or fall 4-5 cents if leaves, Bank of New Zealand currency strategist Jason Wong says in note
- RBNZ dials back public speaking
- Aussie climbs for second day; Westpac is neutral at current levels but sees AUD higher into next week if U.K. remains in EU, according to note yday
- Benchmark iron ore delivered to Qingdao China rose 2.8% to $52.29/MT last night
- SGD edges higher ahead of May CPI data, due 1pm local time; est. -0.8% y/y vs -0.5% in April
- CPI’s correlation with SGD NEER has weakened as linkage with oil increased; click here to read analysis
- USD/SGD’s overnight implied volatility heading for steepest advance since Oct. monetary policy review
- Won strengthens for fourth day, hitting highest since May 3
- Bank of America Merrill Lynch forecasts S. Korea GDP growth at 2.7% y/y in 2016 and 2.9% in 2017, with export slump affecting recovery, according to note received yday; expects BOK to stay on hold for while
- Baht rises; Bank of Thailand left benchmark rate at 1.50% yday as expected; maintained 2016 GDP growth forecast at 3.1%, trimmed 2017 outlook to 3.2%
- BOT likely to hold policy for rest of yr as weak loan demand undermines effectiveness of interest-rate channel in monetary-policy transmission, Goldman Sachs says in note received yday
- Rupiah advances after falling yday for first time since June 14; Indonesia cuts max. guaranteed rupiah deposit rate to 6.75%
- Philippine peso heading for first daily advance since Monday; central bank rate decision due 4pm local time; seen holding at 3.0%
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Jason Wong (Bank of New Zealand)
Khoon Goh (Australia & New Zealand Banking Group Ltd)
Masashi Murata (Brown Brothers Harriman & Co)
Naohiro Nomoto (Bank of Tokyo-Mitsubishi UFJ Ltd/The)
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