INSIDE ASIA: Yen Falls on G-7 Comments; Asian FX in Weekly Gains
(Bloomberg) -- USD/JPY rebounds from early losses after G-7 communique omitted Abe’s bid for leaders to warn about risks of global economic crisis. Rest of Asian currencies are set to snap weekly losses on optimism the global and U.S. economies can withstand Fed rate hikes.
- Bloomberg JPMorgan Asia Dollar Index rises 0.20% this week to 106.66, heading for the first weekly gain this month
- Focus turning to data next week which may show 2Q U.S. economy rebounded and support expectations that Fed will hike rates in June, Masashi Murata, currency strategist at Brown Brothers Harriman says in interview
- KRW and TWD may remain steady as both are typical exporters to U.S.
- Yen drops, still set for first weekly advance this month on final day of G-7 summit in Japan; nation earlier suggested including reference to crisis risk in draft of G-7 statement
- PM Abe considers delaying sales-tax hike by two years, Yomiuri reports
- Asahi reports Abe has decided to postpone tax increase
- Yen may decline if Abe unveils fiscal measures next wk, including delay in sales-tax hike: Mizuho
- Japan CPI excluding fresh food -0.3% y/y in April vs est. -0.4%
- BOJ to release measure of underlying CPI at 2pm Tokyo time
- Chinese yuan gains after PBOC raises daily fixing; currency still down 0.20% on week, headed for fourth weekly loss
- Industrial profit rises 4.2% in April vs. prev. 11.1%
- PBOC may be testing market response to any “unexpected shocking” event by weakening yuan reference rate on Wednesday: Commerzbank
- Current round of yuan depreciation is different from Aug 11; sharp FX realignment-driven market turmoil is not happening again, Nomura International global head of G10 FX research Bilal Hafeez wrote in a report yday
- PBOC sees slower China M2 growth in coming months on high base effect: Business News
- Won heading for 1% gain this week, strongest performer among EM Asia and biggest advance since week through April 1
- KRW gains with regional stocks as currency is high-beta and high-yielding; could weaken again prior to June-July FOMC meetings, Scotiabank wrote in note on May 26
- Ringgit little changed on the week, halting a 4-wk decline as WTI crude futures rise 2.9% this week to $49.14/bbl
- Evidence possibly central to 1MDB probes was place off limits or ignored, and at least one key figure, PM Najib, wasn’t interviewed by investigators, WSJ reports today
- Aussie set for 6th week of losses
- BNP Paribas says RBA could ease as soon as June, with risk of a further rate cut in August if 2Q CPI is soft, according to note today
- Rupiah strengthens together with most Asia EM currencies and regional equities
- Indonesia may impose tax amnesty July 1, valid for 6 mos., Detik reports yday
- IDR may be weighed by expectation of Fed’s hiking rates as BI shows there is a room to ease in near future: BBH
- Govt proposes inflation at 3%-5% and avg USD/IDR of 13,650-13,900 in 2017 state budget, Detik reported yesterday, citing Finance Minister Brodjonegoro
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Bilal Hafeez (Nomura Holdings Inc)
Masashi Murata (Brown Brothers Harriman & Co)
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