HALISTER1: INSIDE ASIA: Won and Ringgit Drop on Hawkish Comments From Fed

INSIDE ASIA: Won and Ringgit Drop on Hawkish Comments From Fed

(Bloomberg) -- South Korea’s won underperforms Asian peers as Bloomberg’s dollar index rises from weakest level in almost two months, buoyed by hawkish comments from Fed speakers overnight.
  • “Asian currencies are falling today on the dollar move,” Dwyfor Evans, says macro strategist at State Street Global Markets. “However, looking at the economic data, the Fed can afford to wait on rate hikes.”
  • Singapore dollar drops after weaker-than-expected exports; island’s non-oil domestic July shipments fell 10.6% y/y vs est. -2.5%, marking the biggest decline since March
    • “I’d thought the MAS would stay on hold in October, but the risk of a downward re-centering is rising, considering the GDP forecast revision last week, weakness in exports and sluggish consumption,” says Hirofumi Suzuki, economist at Sumitomo Mitsui Banking
    • Singapore dollar is still strong and continues to hit exports, Suzuki says
  • Yuan falls despite PBOC strengthening daily reference rate to highest since June 24
    • USD/CNH gains on leveraged buying ahead of speech by Fed’s Bullard post-mkt Asia, says a trader
  • Shenzhen-Hong Kong stock connect announcement yesterday indicates authorities are less worried about capital outflows, which is supportive for yuan stability, says Standard Chartered Bank Asia FX strategist Eddie Cheung
  • Yen snaps three-day gain against dollar
    • Japan may be limited in its ability to cap yen strength through intervention because of a 10t yen threshold defined as unfair policy by the U.S. Treasury, says Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank
  • Korea’s sovereign bond yield curve steepens after govt said it would sell about 1t won ($909b) of 50-year bonds as soon as Sept.
  • Aussie falls against greenback
    • Recent AUD/USD triple top may be breached if tomorrow’s jobs data can survive rotational sampling to beat estimates; see analysis here
  • Kiwi halts two-day gain against dollar; New Zealand 2Q unemployment rate at 5.1% vs est. 5.3%, though govt cautions that strength in jobs data may be overstated
  • Baht retreats after yesterday rising to strongest level since July 2015
    • BOT Assistant Governor Chantavarn said yesterday that currency’s strength is a short-term obstacle for businesses
    • Central bank saw need to preserve policy space on rates, according to minutes of Aug. 3 meeting
  • Peso drops for first time in four days after BSP Governor Tetangco said yesterday central bank may cut reserve requirement ratio in next 10 months
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Dwyfor Evans (State Street Corp)
Ayako Sera (Sumitomo Mitsui Trust Holdings Inc)
Eddie Cheung (Standard Chartered PLC)
Hirofumi Suzuki (Sumitomo Mitsui Financial Group Inc)

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