INSIDE ASIA: Currencies Drop on USD Rebound Before Risk Events
(Bloomberg) -- Asian currencies weaken led by South Korea’s won and Malaysia’s ringgit ahead of major risk events including the Fed and BOJ policy meetings next week, and the U.K. referendum the week after.
- Dollar index heads for second day of gains; 10-year JBG yields fall to record low on demand for haven assets while Asian stocks retreat
- “Global markets remain on edge as the UK’s EU referendum uncertainty casts a shadow,” according to Oanda Asia Pacific
- Dollar rebounds after currency was sold following disappointing U.S. jobs data last week, says Tsutomu Soma, Tokyo-based general manager of fixed-income department at SBI Securities
- Trend for weaker dollar will probably remain intact due to growing speculation the Fed will hold off on raising rates until later this year, and that would mean support for EM FX, Soma says in interview
- Yen heads for biggest weekly loss in three weeks
- Japan’s 10-year govt bonds yield hit record low following similar moves in U.K. gilts and Germany bunds yesterday, says Tomohisa Fujiki, chief rates strategist at BNP Paribas
- Goldman Sachs expects BOJ to bolster stimulus next month while watching for possible surprise easing at June 15-16 meeting
- BOJ unlikely to introduce additional stimulus until Brexit vote is over, Yasuhiro Kaizaki, NY-based vice president for global markets at Sumitomo Mitsui Trust Bank, says in interview; sees USD/JPY trading in 106-108 range
- Aussie weakens for a second day, with its decline to 13- month lows versus NZD y’day more on kiwi strength than AUD weakness, according to CBA in note today
- AUD/NZD bids from macro, hedge accounts near 1.0350, trader says
- Legg Mason favors “high-quality” nations that provide carry trades including China, Indonesia and Philippines, according to investment director Amanda Stitt
- South Korea’s won set to snap five-day rally after BOK unexpectedly cut key rate to 1.25% on Thursday
- BOK Governor says monetary policy will remain accommodative and focused on reviving economic growth, according to statement of his speech Friday for the central bank’s 66th anniversary
- Rupee one-month forwards steady
- Potential decision not to renew Rajan’s term as RBI governor would create “unhelpful noise,” and be negative for rupee, CLSA’s chief equity strategist Christopher Wood writes in note
- Major Southeast Asian currencies all fall today:
- Ringgit falls as much as 0.5% today
- Malaysia to report April industrial production at 12 p.m. today; est. at 3.5% y/y vs March’s 2.8%
- Govt confident 4%-4.5% growth can be achieved this year, Second Finance Minister said yday
- Philippine peso declines, with exports falling 4.1% y/y in April, vs median est. -4.7%
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Amanda Stitt (Legg Mason Inc)
Christopher Wood (CLSA Ltd)
Tomohisa Fujiki (BNP Paribas SA)
Tsutomu Soma (Softbank Corp)
Yasuhiro Kaizaki (Sumitomo Mitsui Trust Holdings Inc)
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