HALISTER1: INSIDE ASIA: Yen Jumps, Other Currencies Mixed Ahead of BOJ

INSIDE ASIA: Yen Jumps, Other Currencies Mixed Ahead of BOJ

(Bloomberg) -- Yen surges while other Asian currencies are mixed as investors wait on the outcome of Bank of Japan’s two-day policy meeting that ends today.
  • It’s wait and see for USD/Asia, with positions fairly neutral, says Stephen Innes, senior trader at Oanda.
    • “I’ve heard anything from a 20 bps drop to -0.3%, to an increase of asset bond purchases from 80t yen to 100t yen. Those two would be above market consensus and you would see a spike in USD/JPY on that call.”
    • Skeptical that USD/JPY will break 108-110 given market has priced out Fed rate hike for this year
  • Yen surged as much as 1.8% in early Asian trade, before trading up 0.7% at 104.51 vs USD. Tokyo Exchange says there was a trading halt in 10-year JGB futures between 9:51 am and 10:12 am local time
    • Algorithmic platforms partly to be blamed for the early move, some FX traders say. Others say it was a fat- finger trade by ex-Asia fund
    • BOJ, under pressure from govt, is considering specific steps for expanding monetary stimulus Friday to address signs of weakness in inflation, Reuters reports, citing people familiar
    • USD/JPY may test 102 even if BOJ delivers easing, says Robert Savage, CEO of CCTrack Solutions, a fund backed by CITIC Capital
    • USD/JPY and Nikkei 225 have fallen eight times after the last 10 BOJ policy decisions, according to data since last Aug.
  • Australia’s 3- and 10-year bond yields reach record lows
    • AUD and NZD bought as USD/JPY continues falling in Tokyo morning, trader says. Leveraged clients are initiating short JPY positions over BOJ decision as either haven or volatility trade
    • June credit to business, consumers gained 0.2% m/m, less than forecast 0.5% advance; RBA report shows impact of record-low interest rates on economy
    • 2Q producer prices up 0.1% from prior three months when they declined 0.2%
  • Kiwi appreciates versus greenback
    • 2Q cow slaughter gains to record on low milk payout, up 11% y/y to 520,705. Annual home-building approvals rise to 11-year high
  • Buy Asia FX on drop if BOJ disappoints, says Tim Condon, head of Asia research at ING Groep, who expects BOJ to tweak credit easing programs such as expansion of asset purchases and negative rates. KRW, MYR likely to be affected most by bearish sentiment, he writes in note
  • Won heads for a fourth day of rally
    • June industrial production rose 0.8% y/y vs est. 0.3%, while Aug. manufacturers’ confidence declined to 71 from 72, lowest since April
  • Taiwan dollar gains
    • Island’s economy grew 0.69% in 2Q on year vs est. 0.70% in Bloomberg survey
  • Baht steady
    • June current-account surplus seen at $2.27b vs $2.23b prior month, according to Bloomberg survey before data due 2:30pm local time today
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
8301 JP (Bank of Japan)

People
Stephen Innes (OANDA Corp)
Robert Savage (CCTrack Solutions LLC)
Timothy Condon (ING Groep NV)

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