HALISTER1: INSIDE ASIA: Yuan and Aussie Decline as China Data Disappoint

INSIDE ASIA: Yuan and Aussie Decline as China Data Disappoint

(Bloomberg) -- Weaker-than-expected economic data from China, Japan and Malaysia weigh on regional currencies, with Chinese Vice Foreign Minister Li warning of significant downward pressure on global growth.
  • Asian currencies, after a strong run in the past couple of months, are starting to run out of momentum, says Khoon Goh, head of Asia research at ANZ. A period of consolidation and retracement look likely in the near-term, he says
  • Japan reported today 2Q GDP growth of 0.2%, less than the estimate of 0.7%. China last Friday released data, including M2 and industrial ouput, that failed to meet estimates. Malaysia growth slowed for a fifth qtr, it said Friday
  • China 10-year govt. bond yield drops 2 bps to 2.64%, the lowest for the benchmark since Bloomberg started compiling ChinaBond data in 2006. 10-year Treasury yield little changed at 1.5118%
  • Yuan drops as much as 0.24%, the most in six weeks
    • Weaker-than-expected data suggest China may be running out of policy options to stimulate economy, says Sue Trinh, head of Asia FX strategy at RBC Capital Markets
    • PBOC’s chief economist Ma Jun on Saturday said the slowing growth in money supply hasn’t affected the economy and fundamentals support a stable foreign- exchange rate
    • PBOC Deputy Governor Yi Gang says today first batch of SDR bonds will be issued on the Chinese interbank market before G-20 Summit Sept. 4-5
  • Yen little changed after GDP report
    • Weakness in capital spending indicates companies are becoming more cautious about the outlook, BTMU says, while Capital Economics writes that deflationary impact of strong yen may pressure BOJ to ease
  • Aussie drops for a third day, while the kiwi also declines
    • New Zealand PSI for July fell to 54.2 from 56.4 in June, lowest since Nov. 2014. All five sub-indexes declined; new orders still strong at 57.4
  • Southeast Asia markets are mixed, with the Thai baht reversing losses after better-than-expected GDP
  • Thailand 2Q GDP grew 3.5% y/y vs ests. 3.3%
    • Data confirms economy is recovering, though not fast enough to sharply accelerate the pace of baht gains: Kozo Hasegawa, Bangkok-based FX trader at Sumitomo Mitsui Banking Corp
  • Rupiah steady before July trade data in which economists predict exports rose for the first time since Sept. 2014. Report due 11 a.m. local time
    • BI will likely leave 7-day reverse repo rate at 5.25% as it focuses on implementation of new monetary-policy corridor, which becomes effective Aug. 19, Nomura writes in Aug. 14 note
  • Markets in South Korea and India are closed for public holidays
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Khoon Goh (Australia & New Zealand Banking Group Ltd)
Kozo Hasegawa (Sumitomo Mitsui Banking Corp)
Ma Jun (People's Bank Of China)
Yi Gang (People's Bank Of China)

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