Halister News

(Bloomberg) -- Asian currencies fluctuated as investors await U.S. non-farm payrolls data later today to gauge the possibility of a summer Fed rate increase.

• Should the payroll data come in “strong” or Fed Chair Yellen makes more hawkish comments next week, the market may price in the possibility of a June rate hike rapidly: Mizuho Bank emerging-market trader Masakatsu Fukaya
  • That will weigh on Asian currencies: Fukaya
  • Fed funds futures are pricing 22% chance of a U.S. rate hike this month, and a 55% probability in July
  • Economists estimate U.S. non-farm payrolls may increase 160k in May vs 160k in April, according to Bloomberg survey
• Dollar index is set for its fifth week of gains; brent oil prices rise, heading for four straight weeks of advance; MSCI Asia Pacific index is poised for a weekly loss
• Yuan falls as PBOC weakens reference rate after U.S. dollar gains overnight: growing risk of capital outflows accelerating as yuan weakens, Goldman Sachs says.
  • That would lead to broad selloff similar to Jan. and Aug.; “We shift to an outright negative view” on the yuan, strategists led by Robin Brooks write
  • China hasn’t lost its competitive edge even as yuan’s real effective exchange rate appreciated 30% since 2010, HSBC says
  • Caixin China May services PMI 51.2 vs 51.8 in April
  • China is approaching global economic organizations including IMF, World Bank to establish annual meeting that would offer nation stronger policy voice, according to a person familiar with talks
  • China may loosen capital controls after a stretch of tightening since late last year, getting back on track with its goal of yuan internationalization, says Steve Wang, head of fixed income research at BOCI Securities
• Yen is set for weekly advance as demand for haven-assets increase
  • Morgan Stanley recommends selling USD/JPY at 110.70 with target of 105.00, and stop-loss at 111.60 as rising negative-risk appetite, BOJ’s decreasing ability to weaken yen and market’s reduced expectations for large fiscal support package will help yen strengthen
  • April cash earnings rise 0.3% y/y vs est. 0.9% increase; real-cash earnings slow to a 0.6% yearly rise from revised 1.6% increase in March
  • Nikkei Japan May services PMI 50.4 vs 49.3 in April
• Aussie dollar advances, is set to biggest weekly gain in seven weeks; May services index rises 1.8 pts m/m to 51.5
• NZ dollar rises; construction work rises most in 2 years led by Auckland
• Indonesia rupiah gains 0.3%, biggest advancer among major Asian currencies today
  • Govt proposes budget deficit at 2.48% of GDP in revised 2016 budget, Brodjonegoro said yday
  • S&P assessment on Indonesia is ‘not appropriate’, Finance Minister Brodjonegoro said yday after the rating agency maintained its junk status on the country’s debt
• Philippine peso rises, is set for a two-week advance
  • Philippine approved foreign investment rises 19.2% y/y in 1Q
  • Wage hike has little impact on inflation, BusinessWorld reports
  • Deficit of 3% to GDP unlikely to bring material pressure on rating, S&P says yday
  • Philippines has freed itself from structural and fiscal constraints for next administration to boost investment in infrastructure and social services, outgoing Finance Secretary Purisima says
• Won is set for weekly fall of 0.7% as continued declines in exports and factory output raise expectations for a rate cut
  • BOK today says FX reserves slide 0.4% to $370.9b from April
  • Weak data, dovish Bank of Korea minutes released this week, and impending restructuring suggest a rate cut is coming soon, according to HSBC
• Thailand baht gains, heads for biggest weekly rally in five weeks
  • Bank of Thailand’s business sentiment index was at a contractionary 49.7 in May, just below neutral level of 50
  • Prime Minister Prayuth to give keynote speech at Shangri-La dialogue in Singapore
• Ringgit set for weekly fall of 1.7%; April trade surplus at 9.06b rgt; est. surplus 8.56b rgt
  • Recent sell-down on specific domestic issues and amid global market volatility presents another buying opportunity because Malaysia is in a different EM category, Daiwa wrote in note on June 2