Asian Currency

EMERGING MARKETS-Most Asian currencies subdued ahead of US payrolls data, set for weekly declines


By Ayushman Ojha

Jan 5 (Reuters)Most Asian currencies were subdued on Friday, and were on track to end the first week of 2024 lower as a rally fuelled by an unexpectedly dovish shift from the U.S. Federal Reserve towards the end of last year stalled.

The Malaysian ringgit MYR= and the South Korean won KRW=KFTC lost 0.3% each, and were both on track to post their worst weekly decline since August last year.

Indonesia’s rupiah IDR= and Singapore’s dollar SGD= were on course to post their first weekly fall in four.

Traders have dialled back rate cut bets, with markets now pricing in a 65% chance of a rate cut in March, compared to 86% chance a week earlier, according to the CME FedWatch tool.

This has pushed the greenback to post its strongest week since July. FRX/

“For the short term, the market is just going to consolidate a little bit ahead of the nonfarm payrolls to assess the data,” said Christopher Wong, FX strategist at OCBC.

Back in Asia, inflation in the Philippines slowed to its weakest pace in nearly two years in December, in-line with the regional trend.

However, full-year readings remained outside the central bank’s target zone, diminishing chances of near-term rate cuts and the Bangko Sentral ng Pilipinas (BSP) maintained its stance that policy settings would stay “sufficiently tight”.

The peso PHP= fell 0.2% on Friday and was set for its worst week since late-August. Stocks .PSI stood at their highest level since August.

“Today’s reading was within the BSP’s monthly inflation forecast range of 3.6% to 4.4%. Going forward, we expect inflation to ease in Q1 due to a favorable base from last year, before increasing again in Q2,” analysts at Goldman Sachs said.

“We continue to expect BSP to keep its policy rate unchanged at 6.50% until Q3 2024.”

In Thailand, headline consumer price index (CPI) also dropped in December from a year earlier, and was the lowest in 34 months.

The baht THB=TH inched 0.2% lower on Friday and was set for its worst weekly fall since early-October.

The Taiwanese dollar TWD=TP was largely unchanged ahead of the country’s inflation reading later in the day, but was heading for its worst week since August.

Meanwhile, a Reuters poll found that most emerging-market currencies are set to regain their recent strength later this year as expectations of interest-rate cuts by the Fed may keep the dollar in check.

Equities in the region were largely mixed, with shares in Jakarta .JKSE rising as much as 0.6%, to record high level. They were also on track for their tenth straight weekly gain.

Stocks in Thailand .SETI and South Korea .KS11 were down 0.3% and 0.4%, respectively.

Stocks Malaysia .KLSE rose 0.4% to their highest level in nearly 11 months.

HIGHLIGHTS:

** Japan service activity expands in Dec, led by strong new business – PMI

** India likely to report higher GDP growth estimates for 2023/24

Asia stock indexes and currencies at 0421 GMT

COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

JPY=

-0.19

-2.64

.N225

0.70

0.16

China

CNY=CFXS

-0.09

-0.98

.SSEC

-0.13

-0.82

India

INR=IN

+0.03

+0.00

.NSEI

0.37

0.03

Indonesia

IDR=

-0.25

-0.83

.JKSE

0.20

1.40

Malaysia

MYR=

-0.32

-1.25

.KLSE

0.35

1.91

Philippines

PHP=

-0.19

-0.60

.PSI

0.24

2.61

S.Korea

KRW=KFTC

-0.26

-1.93

.KS11

-0.36

-2.93

Singapore

SGD=

-0.11

-0.85

.STI

0.38

-1.67

Taiwan

TWD=TP

-0.03

-0.93

.TWII

-0.10

-2.22

Thailand

THB=TH

-0.20

-1.17

.SETI

-0.30

1.02

Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

Asian stock markets https://tmsnrt.rs/2zpUAr4

(Reporting by Ayushman Ojha in Bengaluru; Editing by Stephen Coates)

((ayushman.ojha@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



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