HALISTER1: INSIDE ASIA: Yen, Other Currencies Advance Ahead of BOJ Decision

INSIDE ASIA: Yen, Other Currencies Advance Ahead of BOJ Decision

(Bloomberg) -- Yen and other Asian currencies gain ahead of BOJ policy-decision announcement as dollar slips.
  • Asian currencies trade within previous ranges as market players are just waiting for BOJ’s policy decision, says Irene Cheung, FX strategist at ANZ
    • A more accommodative BOJ means higher USD/JPY, which would be positive for risk-taking
  • Japan’s yield curve bull-flattens this morning, with yield on 20-yr govt bond down 3 bps to 0.38%, while 5-yr yield is unchanged at -0.205%
    • Concerns that BOJ will taper purchases of long-term JGBs could be misplaced as central bank may have already begun, according to data
    • Japan’s big banks retreat further from government bonds: Nikkei
    • Exports dropped 9.6% y/y in August, vs. median est. -4.7%; Imports fell 17.3%, resulting in a trade deficit of 18.7b yen
  • Won gains
    • Aug. PPI at -1.7% y/y vs revised July -2.5%
    • Deflation narrowed to 3.0% through July, from 4.0% in 2015, because of accelerating oil price increases, ING wrote in note
  • Aussie and Kiwi little changed
    • Average price for whole milk powder falls to $2,782/MT from $2,793 at previous auction, according to GlobalDairyTrade website yesterday
    • Fonterra increases its forecast 2016/17 milk payout to farmers by 50 NZ cents to NZ$5.25/kgMS as global glut wanes
    • Australia’s Aug. leading index unchanged m/m at 96.99
    • There was no hint from yesterday’s RBA Sept. minutes that further rate reductions are under consideration, according to note today from High Frequency Economics
  • Yuan little changed both onshore and offshore
    • Premier Li says in speech in New York that there is no basis for long-term depreciation of yuan, and that are no grounds for China to use devaluation to boost exports
    • Li also says he has confidence in positive relations with the U.S., no matter who is elected president in November
    • PBOC denies intervention it intervened in yuan and HIBOR markets in response to questions
  • Peso rising for first time in four days
    • A strong economy and weak inflation combine to suggest BSP is almost certain to hold rates at Thursday’s meeting, Capital Economics writes in note today
    • All 16 economists surveyed by Bloomberg expect BSP to hold overnight borrowing rate at 3%; decision due tomorrow
  • Ringgit and rupiah little changed
    • Malaysia’s Aug. CPI est. +1.3% y/y vs July’s +1.1%; data due at 12pm local time
    • Indonesia to relax rule on issuing REITs to support tax amnesty, Financial Services Authority said yesterday
  • Baht gains for a third day as funds continued flowing into its equities, bonds
    • Global investors bought net 7.2b baht ($207m) in local bonds yday, most since Aug. 17: TBMA data; they bought net $51m of local equities yday: exchange data
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Irene Cheung (Australia & New Zealand Banking Group Ltd)

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