HALISTER1: INSIDE ASIA: NZD, AUD Advance on Less Dovish RBNZ; Yen Gains

INSIDE ASIA: NZD, AUD Advance on Less Dovish RBNZ; Yen Gains

(Bloomberg) -- Kiwi and Aussie lead gains in the region as investors bet the central banks won’t ease further in the near term, while other Asian currencies decline ahead of the U.S. job data release.
  • RBNZ will probably hold cash rate at 2.25% next month due to housing market boom, ANZ says; probability of RBNZ cutting rate in August has dropped to 40.3%, from 65% yesterday
    • Both Australia and New Zealand have housing booms that restrict further monetary expansion, says Andy Ji, FX strategist at CBA; Aussie may find support at 0.75 in coming weeks as RBA likely to follow tone of RBNZ’s Spencer yesterday
    • Australia sovereign bond yield rises 2 bps to 1.894%, yield in New Zealand up 4 bps to 2.284%; 10-year Treasury yield steady at 1.3782%
    • NZD gains 0.6% to 0.7270, while Aussie rises 0.3% to 0.7502
  • Yen gains
    • If U.S. non-farm payrolls top expectations, USD/JPY could rise; however, it may be capped at around 102 level, says Kuniyuki Hirai, NY-based head of trading at MUFG Union Bank
    • Japanese government is vigilantly watching financial markets, and esp. foreign exchange markets, Vice Finance Minister for International Affairs Masatsugu Asakawa says
  • If tonight’s U.S. non-farm payroll data comes in stronger- than expected, market may price in Dec. rate hike, with near-term rate hike seen off the table: Stephen Innes, senior trader at Oanda
  • Yuan drops amid speculation that China will ease
    • USD/CNH seeing broad-based buying in the morning as some investors bet that China will lower RRR after today’s market close, according to FX traders in North Asia.
    • Can’t rule out lending & deposit rate cuts if 2Q economic data disappoint, Shanghai Securities News commentary by NDRC researchers says
    • Rising FX reserves in June may suggest that PBOC isn’t intervening, according to Securities Times commentary
  • Won heads for biggest weekly decline vs dollar in 7 weeks
    • CBA closes its long KRW/INR one-mo. NDF trade initiated at 0.05760 (FX spot reference) with target of 0.05900
  • Southeast Asian currencies mixed; MYR, PHP drop while SGD, THB little changed
  • Peso heads for weekly loss as risk-off sentiment sweeps Asia, with local equities seeing its first net outflow since June 28
    • Uncertainty over Fed, crude prices, yuan and developments in Europe potentially pose downside risks to ringgit: HSBC
  • Morgan Stanley looks to close long USD/SGD trade, according to July 7 note, saying expectation of further monetary accommodation has led to global hunt for yield
    • BOT’s increased intervention probably won’t be sufficient to stem baht strength indefinitely, Credit Suisse wrote in a quarterly note; continues to see a good chance that the BOT will cut its policy rate 25bps to 1.25% by the end of this year
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Andy Ji (Commonwealth Bank of Australia)
Kuniyuki Hirai (Bank of Tokyo-Mitsubishi UFJ Ltd/The)
Stephen Innes (OANDA Corp)

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