Halister News

(Bloomberg) -- Aussie slumps over 1% after core inflation slows and the consumer price index unexpectedly falls. KRW and MYR lead gains among regional currencies ahead of FOMC decision. Yen is mostly steady as BOJ starts 2-day meeting.

• Aussie weakens after the soft CPI release this morning, as market raises bet on RBA rate cut, Irene Cheung, FX strategist at ANZ says in interview
  • Most Asian currencies are higher as Dollar Index momentum is still weak ahead of FOMC
  • Month-end selling of USD by exporters this week may support currencies such as Korea’s won
• RBA’s two core inflation measures slowed unexpectedly in 1Q
  • Trimmed mean CPI rose 0.2% q/q vs. est. 0.5%
  • Weighted median CPI gained 0.1% q/q vs. est. 0.5%
  • 1Q CPI fell 0.2% vs. median forecast 0.2% rise
• Further fall in Australia’s underlying inflation would increase chances of RBA rate cuts later this year, Paul Dales, chief economist for Australia and New Zealand at Capital Economics, said before the release
• Technical analysis suggests weaker-than-forecast inflation data and bearish momentum signals suggest AUD/USD could drop to 0.7518 in near term
• Yen gains as BOJ starts two-day policy meeting, with decision and Gov. Kuroda’s press conference due tomorrow
  • BOJ will deliver a myriad of policy easing measures tomorrow ranging from reserve and interest rate cuts to negative rates on loan support programs and expansion of QQE, according to 8 of 9 banks; see research roundup
  • USD/JPY is vulnerable to a pull back below 110.00 if BOJ fails to live up to expectations for some sort of additional QQE this week, Bloomberg strategist David Finnerty writes
• Korean won advances after data showed consumer confidence rose to highest since Dec.
  • April consumer confidence rises to 101 From 100
  • South Korean President Park Geun Hye says quantitative easing should be “positively” considered, Yonhap News reported on April 26
• Malaysia ringgit recovers from 1MDB-led selloff yday with oil prices near a five month high
  • Malaysia contingent liabilities with 1MDB at 2.5% of GDP: Moody’s said yesterday
  • Nomura closes short SGD/MYR position due to potential worsening of sentiment toward 1MDB and in light of Sarawak elections on May 7, according to note on April 26
• Offshore yuan extends gain as data today showed nation’s industrial profits jumped 11.1% y/y in March, most since July 2014, after a 4.7% decline in Feb.
• Rupiah strengthens along with other emerging Asian currencies
  • BI will cautiously use room to ease monetary policy, Juda Agung, executive director of monetary policy, said on April 26; will maintain FX volatility at less than 10% by managing inflows