Halister News

(Bloomberg) -- Asian currencies mixed after Chinese central bank set the yuan reference rate at weakest level since 2011 and U.S. homes sales surged to highest since 2008. Yuan drops a third day while won, rupiah and ringgit lead gains.

• Stephen Innes, a senior trader at OANDA Asia Pacific
  • Asian currencies and stocks buoyant as Fed rate hikes bets are triggering expectations that U.S. economy is doing well
  • Ringgit, rupiah may be seen at a balanced level now as they were the first ones to price in higher U.S. interest rates
  • Yuan’s weakest fixing since 2011 is just due to stronger dollar; U.S. rates curve point to further declines in yuan
  • Yuan declines are actually less reactive than others, suggesting PBOC is controlling pace of depreciation
• Weakening of yuan fixing today shows PBOC determination to align onshore and offshore yuan, and daily fixing rates: Guosen
• PBOC’s weaker yuan fixing rate today is delayed catch-up as other Asian currencies have dropped in recent days on hawkish Fed; PBOC sticking to USD peg, and that can’t last: Rabobank
• Weaker yuan fixing today shows PBOC allowing currency to decline at a gradual pace vs USD as depreciation expectation remains suppressed: Mizuho
• China has improved communication on currency, says Nathan Sheets, U.S. Treasury undersecretary for international affairs on May 25
• Volumes are above average this week in USD/CNH spot, options and forwards, but trading is much calmer than seen in January, according to FX traders in North Asia
• Singapore dollar steady after final 1Q GDP
  • GDP grew 0.2% q/q in 1Q on annualized basis, compared with official advance est. of 0.0% and Bloomberg median est. of 0.6%
  • MAS says inflation outlook unchanged
• Aussie firmer
  • RBA will cut trough rate to 1% in this cycle to avoid disinflation and assist with transition in the economy and equity mkt, as household leverage boom ends and commodity super-cycle unwinds: Morgan Stanley
• Korean won leads gains as Kospi Index rises, mirroring an overnight rally in U.S. stocks
  • Nomura estimates that 10% higher oil prices would only add 0.2 ppts to Korea’s headline CPI inflation, suggesting limited impact from higher crude prices, according to note on May 24
  • BOK will improve GDP forecasting methods as GDP’s credibility has fallen recently as service industry grows and digital economy expands, says Governor Lee
• Ringgit rises as oil extends gains and Asian stocks set for biggest advance in a month
  • Ringgit govt bonds were under net selling pressure amid weaker ringgit, CIMB writes in note today; domestic players trimmed positions from previous day’s auction, sending new 10-year MGS yield higher by about 3bps to 3.91%