HALISTER1: INSIDE ASIA: Yen Extends Gains on Brexit Concerns; NZD Slides

INSIDE ASIA: Yen Extends Gains on Brexit Concerns; NZD Slides

(Bloomberg) -- Most Asian currencies steady ahead of FOMC meeting, though yen climbs for third day as U.K.’s vote on Brexit approaches; New Zealand dollar stands out, falling as much as 0.55%.
  • Japanese, Aussie and Kiwi yields plumb new lows as risk aversion persists
  • General risk-off tone will linger heading into FOMC, ANZ FX strategist Khoon Goh says; Asia currencies still more likely to be swayed by uncertainty over U.K. referendum on June 23 than FOMC, with rate Fed widely expected to hold
    • Singapore dollar appears to be trading like a safe haven currency, gaining amid risk-off tone
  • NZD/USD selling led by leveraged investors ahead of sell stop-losses that will trigger on break of 0.7020, Asia-based FX trader says
    • NZD 10-yr interest-rate swap slides 7 bps to 2.7525% after touching 2.7524%, record low on data going back to 1996
  • Yen extends gain, rising as high as 105.94 vs dollar
    • Rally may continue ahead of Fed and BOJ meetings on haven demand stemming from Brexit risk, Ueda Harlow analyst Naoto Ono writes in note today
    • Fitch cuts Japan’s outlook to negative, affirms A rating; less confident in govt commitment to fiscal consolidation after delay to sales-tax increase
    • Kyodo News poll shows 62% of respondents don’t think economy will improve under Abenomics
    • USD/JPY option traders vulnerable to BOJ surprise: analysis
  • Yuan weakens, with Bloomberg synthetic RMB index at new 20- month low; onshore yuan edges down 0.04% vs dollar, while offshore yuan is steady
    • Risk aversion to keep dollar strong in short-term and push USD/CNY upward, but not beyond 6.65 by yr-end, NAB’s Asia head of markets strategy Christy Tan says
    • Most May economic data point to stabilization in China, UBS head of China economic research Wang Tao says in note yday
    • Fidelity buys more onshore Chinese debt on lower yuan volatility
    • MSCI to make call on A-share market early Wed HK-time
  • Aussie bonds rally; Australia May business confidence index falls 2 pts m/m to 3; AUD/NZD may extend rebound on bullish momentum signals: Charts
    • Ex-UBS trader’s hedge fund bets on 10% Aussie rally versus kiwi
  • Won set to advance for first time in three days; KRW expected to be worst performing EM currency due to factors including trade linkages with China, low yield and persistent market expectations of BOK easing, Societe Generale writes in note yday
    • South Korea plans to allow non-financial cos. to conduct FX transactions, Finance Ministry says
  • Baht builds on yday’s gains even with Asian stock markets poised to extend losses; Brexit wouldn’t have significant direct impact on Thai financial markets, says Pakorn Peetathawatchai, senior executive vice president of Thai exchange
    • Baht may weaken to 36.00 per dollar at end-2Q and 37.00 by yr-end as Fed interest rate increase later in yr will probably encourage outflows, Maybank Kim Eng said in note received yday
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Khoon Goh (Australia & New Zealand Banking Group Ltd)
Naoto Ono (Ueda Harlow Ltd)
Tao Wang (UBS Asset Management Japan Ltd)

Topics
Public Opinion Polls

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UUID: 7947283

HALISTER: Monsanto Due Diligence Looms as Next Step in Bayer Push for Deal

Monsanto Due Diligence Looms as Next Step in Bayer Push for Deal

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
BAYN GR (Bayer AG)
MON US (Monsanto Co)

People
Brett Wong (Piper Jaffray Cos)
Chris Shaw (Monness Crespi Hardt & Co Inc)
Kelly Wiesbrock (Harvest Capital Strategies LLC)

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UUID: 7947283

HALISTER1: USD/JPY Option Traders Vulnerable to BOJ Surprise: Analysis

USD/JPY Option Traders Vulnerable to BOJ Surprise: Analysis

(Bloomberg) -- USD/JPY option traders may be caught off-guard if BOJ follows Bank of Korea’s footsteps last week and surprises market with a decision to ease policy at its meeting on June 16, Bloomberg strategist David Finnerty writes.
  • BOJ will maintain policy when it meets this wk, according to 31 of 40 economists surveyed by Bloomberg; 9 of them expect more stimulus
  • USD/JPY 1-mo. implied volatility is currently 14.22 vol, indicating that market assigns a 72% probability that FX pair will trade between 101.47-110.49 over the next month based on current spot of 106.14
    • A trading range of about 4.50 big figures either way, suggests markets aren’t expecting a BOJ surprise given how much spot moved on past occasions when the central bank sprung a surprise
  • BOJ has a history of easing when markets least expect it, resulting in volatile spot moves:
    • Oct. 31, 2014: BOJ increased QQE by JPY10t when 32 of 35 economists predicted no change
      • USD/JPY rallied from 109.18 low on the policy decision day to 118.77 in the following month, a move of 959 pips
    • Jan. 29, 2016: BOJ introduced negative rates when 37 out of 41 economists predicted no change to monetary policy in any form
      • USD/JPY fell from a high of 121.69 immediately after the meeting to 112.69 at the end of Feb. a move of 900 points
  • Some economists are predicting BOJ to increase QQE in coming months to help the economy reach its 2% CPI target
    • April CPI was -0.3% y/y with core inflation at 0.7% y/y
  • NOTE: June 9 - BOK unexpectedly cuts rate to record low of 1.25% to support debt restructuring; only one of 18 economists surveyed by Bloomberg had expected this
  • NOTE: David Finnerty is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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UUID: 7947283

HALISTER: Disney Plays by China Rules With Shanghai Park, Media Strategy

Disney Plays by China Rules With Shanghai Park, Media Strategy

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
DIS US (Walt Disney Co/The)

People
Robert Iger (Walt Disney Co/The)
Barton Crockett (Friedman Billings Ramsey & Co Inc)
Gary Marsh (Walt Disney Co/The)
Richard Huang (Nomura Holdings Inc)

Topics
CEO Interviews

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UUID: 7947283

HALISTER: Microsoft’s Nadella Pays Up for LinkedIn to Speed Cloud Push

Microsoft’s Nadella Pays Up for LinkedIn to Speed Cloud Push

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
MSFT US (Microsoft Corp)
LNKD US (LinkedIn Corp)

People
Satya Nadella (Microsoft Corp)
Brent Thill (UBS Securities LLC)
Michael Shinnick (Wasatch Advisors Inc)
Shannon Cross (Cross Research Group LLC)
Sid Parakh (McAdams Wright Ragen Inc)

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UUID: 7947283

HALISTER1: AUD/NZD May Decline Further If N.Z. GDP Beats Estimate: Analysis

AUD/NZD May Decline Further If N.Z. GDP Beats Estimate: Analysis

(Bloomberg) -- AUD/NZD may extend losses if New Zealand 1Q GDP growth, expected to see the biggest quarterly decline in two years, beats estimates, writes Bloomberg strategist Michael G. Wilson.
  • AUD/NZD fell 1.3% last week to close at 1.0451, the weakest since May last year
  • Leveraged funds increased net NZD longs for the week ended June 7, according to CFTC date; funds moved to AUD shorts from longs for same period
    • Net NZD longs jumped 54% to 16,684 contracts, the most in two years, while the funds became net AUD sellers for the first time in more than three months
  • Expected decline in GDP growth, based on median est of 15 economists surveyed by Bloomberg, is the biggest since March 2014, leaving room for an estimate beat
    • Growth is seen slowing to 0.5% q/q, from 0.9% in the prior qtr, according to survey; range 0.3% to 0.8%, with data due Thursday at 10:45am local time
  • Markets may have underestimated the effects of RBNZ rate cuts on economy
    • The central bank cut cash rates four times in 2H 2015, the most since the global financial crisis when it reduced rates three times in 2009, and four times in 2H 2008
    • While ANZ is predicting a 0.5% q/q GDP growth, it said this week that 2Q activity, such as rising home prices & improving job & income data, are “generally hinting” that 1Q softness is likely to be temporary
    • Also expects a small gain in GDT auction prices this week, which runs against RBNZ’s lower-for-longer dairy price outlook
  • Nearside AUD/NZD support is 1.0354, the 23.6% Fibonacci retracement and adjacent to the 1.0337 May 5, 2015, horizontal support
  • AUD/NZD is up 0.1% to 1.0468
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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UUID: 7947283