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EM ASIA FX-Asian currencies firmer after U.S. bond yields slip from highs
December 13, 2016 / 5:27 AM / 8 months ago

EM ASIA FX-Asian currencies firmer after U.S. bond yields slip from highs

* Most Asian currencies edge higher vs dollar
    * U.S. 10-year yield down from 2-year highs, offers respite
    * Traders cite paring back of bullish U.S. dollar bets

 (Adds text, updates prices)
    By Masayuki Kitano
    SINGAPORE, Dec 13 (Reuters) - Most Asian currencies firmed
against the dollar on Tuesday, finding support as a rise in U.S.
bond yields took a pause, although gains were limited ahead of a
Federal Reserve policy decision coming up this week.
    The Taiwan dollar rose about 0.3 percent, while the
South Korean won, Philippine peso and
Indonesian rupiah gained roughly 0.2 percent.
    Asian currencies seem to be taking their cues from moves in
the U.S. 10-year bond yield, said Stephen Innes, a senior trader
for FX broker OANDA in Singapore. 
    There is also an element of position-squaring before market
conditions become thinner going into the year-end, he said.     
    "People are starting to take some risk off the book," Innes
said, referring to the trimming of bullish bets on the dollar.  
    The U.S. 10-year Treasury yield last stood near 2.466
percent, having pulled back from a two-year high of
2.528 percent set on Monday.    
    The near-term focus is the Fed's two-day policy meeting
starting on Tuesday, at which the U.S. central bank is widely
expected to raise interest rates by a quarter of a percentage
point. 
    The markets will be watching for clues about the pace of
hikes in 2017, eager to know if Donald Trump's election to
president has reshaped the central bank's growth and inflation
outlook.
    The greenback had rallied in November, as U.S. bond yields
pushed higher on expectations of higher fiscal spending when
Donald Trump takes office, and speculation of a possible pick-up
in the pace of Fed monetary tightening.
    While most emerging Asian currencies have regained some
ground in the past couple of weeks, such respite will probably
prove short-lived, said Masashi Murata, currency strategist for
Brown Brothers Harriman in Tokyo.
    "I don't think there's any change in the outlook for
emerging market (Asian) currencies to weaken against the
dollar," he said. 
    The dollar will probably stay firm against emerging Asian
currencies until the specifics of Trump's plans for fiscal
spending are unveiled, possibly around February, Murata added.  

    SOUTH KOREAN WON
    South Korea's central bank is expected to keep interest
rates unchanged at Thursday's policy meeting as it tries to
gauge the economic fallout of a political crisis at home and the
impact on emerging markets from the Fed's forthcoming policy
decision.      
    All 20 analysts surveyed in a Reuters poll predicted the
Bank of Korea will leave its key policy rate at a record-low of
1.25 percent for the sixth consecutive month. 

    CURRENCIES VS U.S. DOLLAR
  Change on the day at   0456 GMT                        
  Currency               Latest bid   Previous   Pct Move
                                           day  
  Japan yen                  115.15     115.04      -0.10
  Sing dlr                   1.4243     1.4235      -0.06
  Taiwan dlr                 31.785     31.864      +0.25
  Korean won                1165.70    1168.20      +0.21
  Baht                        35.58      35.63      +0.13
  Peso                       49.745     49.820      +0.15
  Rupiah                      13302      13325      +0.17
  Rupee                       67.46      67.43      -0.05
  Ringgit                    4.4220     4.4215      -0.01
  Yuan                       6.9010     6.9086      +0.11
                                                         
  Change so far                                          
 in 2016                                        
  Currency               Latest bid   End prev   Pct Move
                                          year  
  Japan yen                  115.15     120.30      +4.47
  Sing dlr                   1.4243     1.4177      -0.46
  Taiwan dlr                 31.785     33.066      +4.03
  Korean won                1165.70    1172.50      +0.58
  Baht                        35.58      36.00      +1.17
  Peso                        49.75      47.06      -5.40
  Rupiah                      13302      13785      +3.63
  Rupee                       67.46      66.15      -1.94
  Ringgit                    4.4220     4.2935      -2.91
  Yuan                       6.9010     6.4936      -5.90
                                                         
 
 (Reporting by Masayuki Kitano; Editing by Eric Meijer)

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