Halister News

(Bloomberg) -- Most Asian currencies gain, led by KRW and JPY, as June Fed rate rise expectations ease slightly from last week’s high. Chinese yuan climbs as PBOC sets stronger reference rate for a second day.

• Fed funds futures pricing 28% probability of June hike on May 20 compared to a high of 32% after FOMC April minutes
• Dollar’s pull back against most Asian FX today is due to uncertainty in BOJ FX policy, which is driving yen higher, while some traders are taking profit on long dollar positions after hawkish Fed statement last week, Moh Siong Sim, FX strategist at Bank of Singapore says in interview
  • Looking ahead, likelihood that Fed raises rate in June could be more than 50%; so uptrend in dollar against EM and commodity currencies remain intact
• Japanese yen gains after April trade surplus widened
  • Exports in April -10.1% y/y vs est. -9.9%; imports -23.3%, leaving a trade surplus of 823.5b yen vs est. 540.0b yen
  • Governor Kuroda tells CNBC in interview that BOJ’s monetary policy is targeting the inflation rate, not the exchange rate
  • Leveraged funds increased net long yen position by 2,380 contracts to 30,164 in week ended May 17: CFTC data
• Korean won rises for second day
  • BOK’s biannual risk survey shows China’s slower economic growth, rising possibility of default by Korean companies and household debt are among major risks for the financial system
  • Morgan Stanley expects won to fall to 1,250 per dollar this year, with capital outflows likely to accelerate due to weak growth and low yields; monetary policy easing more than priced in by market
  • Govt to cut 2016 growth forecast to below 3%: Dong-A Ilbo newspaper
• Chinese yuan rebounds after 3 weeks of losses as PBOC sets a stronger yuan reference rate for second day
  • China mkts “cautious and confused” after recent high level comments shifted investors’ policy expectation to “neutral with a tightening bias”, UBS says
  • May Minxin manufacturing PMI falls to 45.8, declining 1.1 percentage points from previous month
  • Time to short yuan against subset of CFETS basket: Deutsche Bank
  • Yuan could drop to 6.8 per dollar if Dollar Index returns to 100, Macquarie Bank says
• Recommend switching out of THB 10Y into MYR 10Y as forward real yield projections much more attractive for MYR bonds, ANZ writes in note dated May 20
  • Expects significant favorable swing in real yields towards Malaysia over the next six to nine months
  • Malaysia’s inflation is expected to ease from 1Q due to the high base of GST implementation in April last year
  • Forecasts the CPI to drop from 3.4% in 1Q to 2.1% by 1Q 2016
• Aussie, Kiwi gain
  • RBNZ needn’t be in a rush to return inflation to its 2% inflation target, according to former governor Don Brash
  • Bank of New Zealand expects RBNZ to hold cash rate in June
  • AUD/USD ascent brings macro selling above 0.7240 into play, according to an Asia-based FX trader.
  • Coalition narrowly leads Labor in Fairfax-Ipsos poll ahead of Australia’s July 2 election, Sydney Morning Herald says
  • Leveraged funds cut net AUD longs for third consecutive week, paring positions by 11,927 contracts in week ended May 17 to 25,841, the least since Mar. 29: CFTC data