May 23, 2017 / 6:31 AM / 6 months ago

EM ASIA FX-Manchester blast subdues trade; Fed minutes in focus

 (Adds details, updates prices)
    By Rushil Dutta
    May 23 (Reuters) - Asian currencies were subdued on Tuesday,
with a suicide attack in Manchester dampening a mild resurgence
in risk appetite, just as investors had begun looking past the
political crisis still simmering in Washington.
    Meanwhile, the euro floated near a six-month high
after German Chancellor Angela Merkel said the currency was too
week, whereas the pound sagged on news of a blast at a concert
in Britain's Manchester which killed 19. 
    The dollar, which slipped to more than 6-month lows
in the previous session, remained weak.
    "Market reaction has been fairly muted in Asia in response
to the Manchester blast. The yen did strengthen slightly
initially, but this has partly unwound," said  Khoon Goh, head
of Asia research at Australia and New Zealand Banking Group in
    The mild hit to the risk-on sentiment manifested in a
sell-off in the Korean won and the Taiwan dollar
, the biggest gainers in the previous session.
    The won was 0.3 percent lower, while the Taiwan dollar fell
0.2 percent.
    Traders say investors will now shift their focus to the FOMC
minutes due on Wednesday, for any hints of the Fed's rate cycle
plans for the year.
    "The market is expecting the Fed to stay on course for a
rise in June. But that's priced in about 70 percent, so, there's
a bit of an upside there," said Stephen Innes, a senior trader
for FX broker OANDA.  
    "But the thought here is that if the Fed starts to ratchet
it up towards the end of the year, then there's some appeal for
the dollar to go higher. This may be tempering expectations
across global markets."
    Dallas Federal Reserve President Robert Kaplan on Monday
repeated his view that three interest rate increases in 2017 was
"appropriate" in an article he wrote.
    The Malaysian ringgit, however, was higher for a
third straight session, up nearly 0.2 percent.
    Malaysia's central bank on Monday said the country's gross
international reserves stood at $97.3 billion as of May 15,
which it said were sufficient to finance 7.8 months of retained
imports and 1.1 times the short-term external debt.
    Analysts expect the ringgit to continue doing well going
forward on better expectations for oil prices. An OPEC meeting
on Thursday might see the oil cartel and other producers agree
on extending supply cuts by a further nine months until March.
    Conversely, the Singapore dollar fell 0.14 percent
against the U.S. dollar as inflation was not seen likely to
change the central bank's neutral policy stance.
    Singapore's headline consumer price index in April rose a
less-than-expected 0.4 percent from a year earlier, the slowest
rise since December last year, while core inflation accelerated
a stronger-than-expected 1.7 percent in April.
    The Monetary Authority of Singapore held policy steady in
April, saying a "neutral" stance would be needed for an extended
period as it looked to support an economy that contracted in the
first quarter amid lingering risks to the global outlook.

 Change on the day at 0519 GMT                          
 Currency                     Latest bid  Previous day  Pct Move
 Japan yen                    111.120     111.27        +0.13
 Sing dlr                     1.387       1.3858        -0.10
 Taiwan dlr                   30.120      30.052        -0.23
 Korean won                   1121.800    1118.6        -0.29
 Baht                         34.378      34.4          +0.06
 Peso                         49.815      49.77         -0.09
 Rupiah                       13291.000   13300         +0.07
 Rupee                        64.770      64.55         -0.35
 Ringgit                      4.296       4.303         +0.17
 Yuan                         6.889       6.8892        +0.00
 Change so far                                          
 Currency                     Latest bid  End 2016      Pct Move
 Japan yen                    111.120     117.07        +5.35
 Sing dlr                     1.387       1.4490        +4.46
 Taiwan dlr                   30.120      32.279        +7.17
 Korean won                   1121.800    1207.70       +7.66
 Baht                         34.378      35.80         +4.14
 Peso                         49.815      49.72         -0.19
 Rupiah                       13291.000   13470         +1.35
 Rupee                        64.770      67.92         +4.86
 Ringgit                      4.296       4.4845        +4.40
 Yuan                         6.889       6.9467        +0.84
 (Reporting by Rushil Dutta in Bengaluru; Additional reporting
by Nichola Saminather in Singapore; Editing by Jacqueline Wong)

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