HALISTER1: INSIDE ASIA: Asian Currencies Mixed Before BOJ, Fed Decisions

INSIDE ASIA: Asian Currencies Mixed Before BOJ, Fed Decisions

(Bloomberg) -- Asian currencies traded mixed ahead of the Fed and BOJ policy decisions tomorrow, with the Kiwi and Taiwan dollar leading gains.
  • USD will probably trade range bound before the central bank decisions, says Roy Teo, ABN Amro senior FX strategist
    • BOJ may deepen negative rates to -0.2%, and also steepen the yield curve which would lead to higher USD/JPY
    • Though Fed is expected to hold rates this week, it may raise in December, says Teo
  • NZD/USD hits session highs, rising as much as 0.4%, as milk futures climb to $3,000 per metric ton ahead of tonight’s GlobalDairyTrade auction
    • Recent trading in NZX WMP futures suggests 14.7% increase in GDT WMP result, says Mike McIntryre, director and head of derivatives at First NZ Capital Group
  • Aussie pares gains as macro accounts sold the currency, according to an Asia-based FX trader. RBA September minutes released today says policy stance is consistent with meeting CPI target
  • Taiwan dollar continues gains after investors bought shares of Apple manufacturers
  • Yen rises as BOJ starts two-day meeting
    • JGB yield curve is twisting steeper through BOJ meeting, see chart. Should BOJ normalize yield curve by reducing purchases of longer-maturity bonds to lift financial institutions’ lending rates, that could boost USD/JPY
    • Still, Deutsche says any yen weakening on BOJ “operation twist” could to be short-lived
    • BTMU expects cautious Fed and BOJ could send yen higher, dollar lower
  • Japan 30-year govt. bond yield drops 4 bps to 0.51%, while Australia 10-year sovereign bond yield rises 2 bp to 2.135%. Yield on China 2.74% govt bond due August 2026 falls 2 bps to 2.750%
  • Offshore yuan falls for a third day as investors took advantage of easing liquidity to sell down the currency
    • CNH drops as much as 0.1% as tussle over direction of yuan continues with PBOC strengthening the reference rate by the most in two weeks
    • Average investors tend to sell yuan when it stabilizes as the consensus in the market is that it will fall in the long term, BBVA chief Asia economist Xia Le says
    • There was steady USD/CNH buying from banks and leveraged accounts in early session as day-to-day forwards ease slightly, according to FX traders in North Asia
    • Yuan to stay basically stable at reasonable and balanced level, Xinhua News Agency reported, citing Premier Li in meeting with U.S. President Obama
    • China’s YTD FX outflow more than suggested by PBOC FX reserves data: Goldman
  • Korean won, Singapore dollar, peso and ringgit decline
  • Peso heads for a fourth day of decline as capital outflows from equity market hit longest streak since 2008
    • BOP surplus forecast of $2b for this year “within reach” even with outflows and uncertain global environment, BSP Governor Tetangco said yesterday
    • BSP seen holding overnight borrowing rate at 3% by all 15 economists in Bloomberg survey; decision due on Sept. 22
  • Rupiah rises for fourth day
    • Indonesia to relax rule on issuing REITs to support tax amnesty, says Nurhaida, head of capital-market supervision,
    • BI wants low interest rates, while needing to make hard choices related to macroeconomic condition, senior deputy Governor Mirza Adityaswara said yesterday. BI is scheduled to meet on Sept. 22
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Roy Teo (ABN AMRO Group NV)
Barack Obama (United States of America)

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