Halister News

(Bloomberg) -- Korean won and the kiwi lead a sell off in regional currencies after Fed Vice Chairman Fischer signaled the possibility of a U.S. rate hike this year, reinforcing earlier comments by other officials.

• The dollar is strengthening given the consistent messages emerging from Fed’s Dudley, Williams and Fischer, says Moh Siong Sim, FX strategist at Bank of Singapore
  • It’s possible that Fed Chair Yellen, scheduled to speak Aug. 26 at Jackson Hole, will also echo comments by Dudley and Fischer for a rate hike by the end of the year
  • Fischer said over the weekend the economy is close to meeting the central bank’s goals and that growth will pick up
• U.S. 10-year Treasury yield rose 4 bps last Friday, now little changed at 1.5832%. Australia 10-year govt. yield up 4 bps to 1.902%, while the Chinese bond with same tenor was little changed at 2.71%
• Yen declines after Sankei newspaper reported over the weekend that BOJ Kuroda said there’s ‘sufficient chance’ for more easing in Sept.
  • Governor Kuroda may be seeking to dampen yen strength and answer doubts about the limits of monetary policy: SMBC Nikko Securities
  • Softer July inflation in Japan will raise odds for more aggressive BOJ easing, CBA says in note today
  • Still, yen will probably climb to a three-year high of 95 over next month as Japan may fail to rally support from other governments for intervention: Citi
• Yuan drops after PBOC cuts the daily fixing by the most in almost two months
  • China should increase the current fiscal deficit of 3.5%, and a 5% deficit isn’t a big deal, Yicai.com reported yesterday, citing Sheng Songcheng, head of the statistics and analysis department at PBOC. Sheng also said a cut in tax rate is preferable to an interest rate reduction
• Aussie drops for a second day
  • RBA’s easing bias combined with the Fed’s tightening bias should push AUD toward 0.74, and NZD to 0.70 by year end, Westpac said in a note today
  • Goldman Asset says Aussie may extend its rally toward 80 U.S. cents given positive yields
• India appoints Urjit Patel as new RBI governor over weekend
  • Indian rupee and bonds may fall initially as markets roll back expectations of policy easing, according to Standard Chartered
• Won drops as much as 0.9%. Sovereign yield curve steepens, with 10-year yield reaching highest since July 21
• Southeast Asia currencies all decline
• Baht drops, with central bank saying it’s concerned further appreciation of the baht will hurt exporters and damage the nation’s economic recovery
• Rupiah drops for a third session; Bank Indonesia kept 7-day reverse repo rate unchanged at 5.25% on Friday
  • Govt expects growth to improve to 6% or more toward the end of President Widodo’s term, National Planning Minister Brodjonegoro says in an interview today
• Peso drops vs dollar
  • Philippines will strictly observe budget deficit ceiling at 3% of GDP, Finance Secretary Dominguez says; debt interest payments penciled in at 334.9b pesos for 2017 vs 392.8b pesos in 2016, according to presentation today
  • BSP looking to boost capital by 150b pesos as buffer against open-market operations and FX swings, Deputy Governor Aquino said Friday
• Singapore dollar drops; Prime Minister Lee had to halt his National Day rally address for an hour after taking ill, before returning to finish speech on Sunday evening