Halister News

(Bloomberg) -- Most Asian currencies rally, led by Indonesia’s rupiah and South Korea’s won while bonds advance amid mounting speculation of fresh monetary easing and fiscal stimulus to cope with the Brexit fallout. Aussie and Kiwi dollars also rise to session highs as oil extends early gains.

• Dollar Index is set for its first drop in three days
• South Korea’s won reversed earlier losses of as much as 0.2% while 5-year bonds rise after the Presidential Office says govt plans more than 20t won ($17b) of fiscal stimulus package including ~10t won of extra budget
• If BOJ unleashes monetary stimulus at its emergency meeting, it would be risk on, Stephen Innes, senior trader at Oanda, says
  • Markets are still fragile, however, and sentiment can switch rapidly
  • Major central banks still seen not needing aggressive stimulus
• Liquidity conditions supports EM assets, with G-4 central banks potentially choosing even more dovish policies to contain volatility, BNP Paribas said in note
  • Scope for some EM central banks such as Korea, Thailand, and Taiwan to cut rates in the longer term due to G-4 central bank dovishness
• Korea one-year IRS drops to 1.23%, staying below benchmark rate of 1.25%; govt cuts 2016 GDP forecast to 2.8% from 3.1% earlier; lowers CPI forecast to 1.1% from 1.5%, govt says in 2H economic outlook report
  • BOK to release minutes of June 9 rate decision at 4pm local time; it unexpectedly cut benchmark interest rate by 25 bps to record low 1.25%
• Japan’s 10-year yield falls to record low of -0.22% while 20-yr rate hits all-time low of 0.055% as BOJ Governor Kuroda says global central banks have made statement on market cooperation, declines to comment on any emergency BOJ meeting
  • MOF’s first auction since U.K. referendum will measure investor appetite for haven assets post-Brexit
  • Overseas investors were biggest net buyers of JGBs maturing in 2 and 5 yrs last month, purchasing 1.09t yen ($10.7b), JSDA data show
  • Ruling LDP’s Nikai calls for 20t yen stimulus, Nikkei reports
  • Investors will pay closer attention to risks of growth slowdown in countries such as U.S. and Japan whose currencies are strengthening, according to note from SMBC Nikko Securities
    • Expectations are likely to mount that Japan will increase fiscal outlay in response to downside risks to growth: SMBC
• Yen pares gains after PM Abe says he will carefully watch currency and stock markets
  • FinMin Aso said Abe told pay attention to financial markets including FX; said he is watching FX moves with sense of urgency
• Australia’s 10-year govt bonds climb, leading regional rally on haven demand; Aussie and Kiwi dollars also reach session high as crude prices climb 1.5%
  • There is no suggestion fiscal stimulus is needed to help insulate Australia from market turmoil following Brexit, Treasurer Morrison says
  • Real money accounts outside of Asia were seen buying AUD overnight and early Sydney time, according to Asia-based FX traders
• China sets yuan fixing at weakest since Dec. 2010
• Ringgit erases losses after oil extends early gains
  • UBS recommends going long USD/MYR; sensitivity to falling oil prices and rising foreign holdings of govt bonds makes it unlikely for BNM to intervene in FX markets
  • Five-year govt bonds rally for a second day, sending yield lower by 5 bps to 3.396%, lowest since the notes were auctioned at the end of May
• Taiwan dollar strengthens
  • CBC seen cutting rate for 4th consecutive quarter amid fresh export uncertainty brought by Brexit and weaker economic growth outlook; 23 of 26 economists in Bloomberg survey taken June 22-27 predicted another rate cut at June 30 meeting
• Peso weakens
  • Philippines not intervening in FX mkt, and is ready to ease volatility, central bank Governor Tetangco says