INSIDE ASIA: Currencies Mixed After Yellen; Yuan Extends Decline
(Bloomberg) -- Asian currencies mixed, with yuan and yen falling a second day while Aussie holds steady ahead of RBA meeting, where rates widely expected to be held at 1.75%.
- Won sharpest gainer as South Korean markets reopen from three-day weekend; rises to highest since May 12; ringgit and rupiah also advance
- Yellen quells speculation of imminent Fed rate hike, though signals higher interest rate is appropriate; Asian stocks rise; Dollar Index up 0.2%
- Dollar may be subdued in coming days, which is positive for EM currencies, says Kay Van-Peterson, Saxo Capital global macro strategist; Yellen clear that hikes expected this yr, though June is off table
- Aussie erased Asia losses overnight after Yellen speech pushed back likely timing of Fed hike; RBA decision at 2:30pm Sydney time; analysis here; 25 of 26 economists in Bloomberg survey expect RBA to hold
- RBC Capital Markets expects 25-bp cut; WATCH: Three Reasons RBA Will Cut
- Yen falls vs all G-10 peers apart from NZD, heads for second day of losses vs dollar after 3.6% rally last week
- USD/JPY buying by macro funds and banks helped trigger stop-losses against leveraged account around 107.70, Asia-based FX traders say
- USD/JPY may gradually rebound toward 109, says Etsuko Yamashita, NY-based chief economist at Sumitomo Mitsui Banking Corp.; May jobs were bad but U.S. isn’t entering recession
- Japan’s international reserves fell to $1.25t in May from $1.26t in April
- Yuan declining for a second day; PBOC weakens fixing 0.18%
- Shanghai Commercial Bank’s head of research Ryan Lam says CNY fixing likely to gradually strengthen as dollar is set to retreat with Fed hike probably postponed to at least Sept.; sees USD/CNY fixing finding support around 6.54 in next 30 days
- PBOC may be trying to release yuan depreciation pressure with fixing: Commerzbank
- Yuan will remain “relatively stable” because the currency basket system is flexible: Financial News, citing head of PBOC finance research institute
- Central bank will focus on impact loose liquidity has on currency while maintaining ample cashflow in banking system, PBOC professor Wang writes in Shanghai Securities News
- Korean won rises after markets closed Monday for Memorial Day
- Nomura maintains call BOK will hold rates at June 9 meeting, though sees high likelihood of one or two dissenting votes, according to June 6 note
- All 16 economists in Bloomberg survey expect BOK to hold at 1.5%
- Rupiah extends rally to fourth day; Bank Indonesia to release FX data for May today; rose to $107.71b in April, highest in 10 mos.
- BI sees 2017 GDP growth at 5.2%-5.6%, rupiah avg 13,700/USD this yr, Governor Martowardojo said yday; govt sees budget deficit at 1.9%-2.5% of GDP, Finance Minister Brodjonegoro said
- Malaysian ringgit set to gain for third day; still pressure on currency in short-term, CIMB analysts wrote in note yday; crude oil finding it difficult to break above $50/bbl
- Foreign reserves data due 6pm local time
- Malaysia stock inflows rapidly vanishing this year: CHART
- Philippine CPI rises 1.6% y/y in May vs +1.3% median est. and +1.1% previous; DBS sees at least 3-4 more months of sub-2% inflation, making it likely avg CPI misses official 2-4% target
- Goldman Sachs sees inflation gradually moving into target band in 3Q on robust domestic consumption and govt spending; BSP hike likely in 2Q 2017
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Etsuko Yamashita (Sumitomo Mitsui Financial Group Inc)
Kay Van-Petersen (Saxo Bank A/S)
Ryan Lam (Shanghai Commercial & Savings Bank Ltd/The)
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