HALISTER1: INSIDE ASIA: Currencies Drop; Offshore Yuan Breaks to 6-Year Low

INSIDE ASIA: Currencies Drop; Offshore Yuan Breaks to 6-Year Low

(Bloomberg) -- Asian currencies decline, led by Korean won, as dollar strengthens after ECB’s Draghi remains guarded on QE, signaling it won’t come to abrupt end.
  • Yuan tumbles, with CNH passing Jan. 7 low to hit weakest since Sept. 2010, at 6.7666; CNY also weakest since that month, down 0.2% at 6.759 per USD
    • Chinese central bank weakened fixing by most since Aug. 29
  • Asian currencies are under pressure today, with dollar strengthening particularly against EUR and GBP, CBA foreign- exchange strategist Andy Ji says; yuan fixing is line with expectations, reflecting stable basket
    • Fed hike path and U.S. presidential election remain key issues
  • Typhoon Haima approaches H.K.; market trading delayed, schools shut, airlines warn of disruptions
  • China capital outflow pressure eased in Jan.-Sept., SAFE says
    • Chinese banks sold net 179.3b yuan of forex for clients in Sept.: SAFE; regulator will step up crackdown on forex violations
    • Yuan weakness may spill into other Asian currencies, says Commerzbank senior economist Zhou Hao; USD/CNH could move toward 6.78 today if no intervention, which would further dent Asian currency sentiment
    • Yuan weakening today has more to do with external factors than domestic policies, ABN Amro senior currency strategist Roy Teo says; yuan stable vs basket of currencies; deleveraging could put downward pressure on growth, in turn pressuring yuan
    • Prices of new homes rose in 63 Chinese cities last month vs 64 in August
  • Yen drops for second day, still heading to first weekly gain in three
    • Timing of 2% inflation target may be delayed, BOJ board member says
    • BOJ Governor Kuroda says setting range for long-term yields isn’t appropriate; no immediate need to back away from 80t yen bond-buying target
    • Strong dollar trend resumed as U.S. presidential debate and ECB meet finished, uptrend for USD/JPY may continue to 105 next week: Nomura
  • Aussie drops, heading for second weekly decline; kiwi also falls
    • Goldman Sachs sees RBA beginning tightening cycle early 2018
    • Case for correction toward 0.74 by year end if Fed tightens in December: Westpac
    • New Zealand proposes changes to rules governing dairy market, Fonterra
  • Won leads declines, falling as much as 0.8%
  • Thai baht also one of hardest hit today, falling 0.5%
  • KRW, MYR and SGD most vulnerable to Fed rate hike in December, Scotiabank writes in note today; recommends buying USD against basket of KRW, MYR and SGD with equal weight, targeting 2.5% gain in coming weeks
    • Korea 10-year govt. bond yield drops 2 bps to 1.605%, same tenor govt. bond yield in Malaysia rises 2 bps to 3.649%;
  • Ringgit falls, though still heading for first weekly gain in four
    • Malaysia’s 2017 budget scheduled for release at 4pm local time; foreign reserves and Sept. CPI also due today
  • Thai weekly foreign reserves data through Oct. 14 also due at 2:30pm local time; prior week saw biggest increase since February
    • Headline exports could surprise as oil-related products will improve with crude prices advancing, according to Maybank Kim Eng; NOTE: Sept. trade data due Oct. 31
  • Peso falls 0.4%, set to end 3-day rally vs dollar
    • Duterte declared “separation from the U.S.” late Thursday during visit to China; U.S. says it is baffled by the comment
    • Philippines to see $13.5b in economic and finance deals from visit to China, Trade Secretary Lopez said yesterday
    • Central bank to release 3Q inflation assessment
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)

People
Andy Ji (Commonwealth Bank of Australia)
Roy Teo (ABN AMRO Group NV)

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