July 7, 2017 / 6:24 AM / 17 days ago

EM ASIA FX-Asian currencies tepid after global bonds sell-off; U.S. jobs data in focus

6 Min Read

 (Adds text, updates prices)
    By Christina Martin
    July 7 (Reuters) - Most Asian currencies traded cautiously
on Friday as global sovereign debt yields were elevated across
the board on bets the European Central Bank (ECB) is moving
closer towards unwinding its monetary stimulus, even as
investors awaited the U.S. June jobs report. 
    The prospect of the ECB turning off the flow of easy money
has been a dominant global market theme since President Mario
Draghi's hawkish comments last week, pushing bond yields higher
and hurting equities.
    The dollar gained against the yen after the Bank of
Japan increased its purchases of Japanese government bonds in a
move aimed at stemming a rise in yields. 
    "From a structural viewpoint, the re-balancing away from
hitherto cyclical trades (or partial unwind of carry) given the
ECB's slightly more confident tone may see the dollar trading
mixed," OCBC said in a note.
    The 10-year Japanese government bond yield hit a five-month
high of 0.105 percent earlier in the day, while the benchmark
U.S. 10-year yield touched a nearly eight-week high of 2.391
percent on Thursday.
    The German 10-year bund yield hovered near an 18-month high
after the ECB's June meeting minutes showed the central bank
opening the door to dropping a long-standing bond buying pledge.

    In Asian currencies, the Indonesian rupiah slipped to
a seven-week low, while the Chinese yuan traded flat.
    The Thai baht extended losses for a fifth straight
day, hitting its lowest in five weeks, and headed for a second
week of losses. 
    "It seems to be a very quiet day in Asian trading floors so
far today. Strong export numbers were not enough to take the
ringgit significantly stronger, while dollar-yen fixed a bit
lower, but with the spot close to unchanged," said Anders
Svendsen, chief EM analyst at Nordea Bank. 
    A trader at a Thai local bank added "emerging markets will
depreciate for a while since the sell-off tone ended and the
nonfarm payroll to be released tonight will also be watched."
    Activity in the markets was limited ahead of the closely
watched U.S. non-farm jobs report due later in the day.         
    Much of the focus was on the wage component of the
employment report and whether spending by U.S. consumers would
be strong enough to back the Fed's intention to further tighten
policy. 
    Oil prices also fell by more than 1 percent early on Friday,
with U.S. crude futures dipping below $45 per barrel as news of
a rise in U.S. production added to earlier reports that OPEC
output was also on the rise. 
    
    INDONESIAN RUPIAH
    The Indonesian rupiah, which headed for a third
straight day of declines, touched its lowest level since May 19.
    The Indonesian government has proposed to parliament to hike
2017 spending and cut the revenue target, resulting in a wider
budget deficit that almost reaches the legal limit, according to
a government document.
    Indonesian 10-year bond yields rose to its
highest level since November 2016. 
    
    MALAYSIAN RINGGIT
    Malaysia's ringgit remained unchanged on Friday, even
as exports in May rose 32.5 percent from a year earlier,
significantly above expectations, as shipments of manufactured
goods surged.
    Export growth outpaced that of imports for the first time
since May 2016, data from the International Trade and Industry
Ministry showed. Imports rose 30.4 percent from a year earlier,
up from the 24.7 percent in April.
    The ringgit is headed for a fourth straight week of
declines. 
    
    The following table shows rates for Asian currencies against
the dollar at 0542 GMT.
    CURRENCIES VS U.S. DOLLAR
  Currency               Latest bid  Previous day  Pct Move
  Japan yen              113.710            113.2     -0.45
  Sing dlr               1.383             1.3820     -0.05
  Taiwan dlr             30.583            30.601     +0.06
  Korean won             1155.400          1157.4     +0.17
  Baht                   34.080             34.06     -0.06
  Peso                   50.565             50.67     +0.21
  Rupiah*                13405.000          13387     -0.13
  Rupee*                 64.735             64.78     +0.06
  Ringgit                4.297              4.297     +0.01
  Yuan                   6.801             6.8035     +0.03
                                                           
  Change so far in 2017                                    
  Currency               Latest bid   End 2016     Pct Move
  Japan yen              113.710           117.07     +2.95
  Sing dlr               1.383             1.4490     +4.79
  Taiwan dlr             30.583            32.279     +5.55
  Korean won             1155.400         1207.70     +4.53
  Baht                   34.080             35.80     +5.05
  Peso                   50.565             49.72     -1.67
  Rupiah                 13405.000          13470     +0.48
  Rupee                  64.735             67.92     +4.92
  Ringgit                4.297             4.4845     +4.38
  Yuan                   6.801             6.9467     +2.14
 
 (Reporting By Christina Martin in Bengaluru; Editing by Sunil
Nair)
  
 
 

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