May 4, 2018 / 5:24 AM / a year ago

EM ASIA FX-Asian currencies inch up but cautious ahead of U.S. job data

 (Adds text, updates prices)
    By Patturaja  Murugaboopathy 
    May 4 (Reuters) - Most Asian currencies edged higher on
Friday as traders squared dollar positions ahead of the release
of U.S. payroll data later in the day, and after the Federal
Reserve's less hawkish tone this week propped up regional
    The dollar index, which tracks the greenback against
a basket of six major peers, was little changed at 92.424.
    The Fed held interest rates steady on Wednesday and
expressed confidence that a recent quickening in inflation to
near the central bank's target would be sustained, leaving it on
track to raise borrowing costs in June.
    Christopher Wong, an FX strategist with Maybank, said he
believes the Fed's slight revision on inflationary trends is to
pre-empt market views that further CPI upticks are likely and
also that Fed will tolerate inflation temporarily overshooting
the 2 percent symmetric objective. 
    "Temporary deviation is not likely to trigger the Fed to
quicken its pace of monetary tightening. A gradual pace of rate
increases remains the game plan for the Fed," Wong said.
    Traders were also closely watching trade talks between the
U.S. and China, though breakthrough deal is viewed as highly
    Treasury Secretary Steven Mnuchin told media on Friday that
the U.S. trade delegation has been having very good
    The Taiwan dollar rose more than 0.25 percent after
touching a four-month low in the previous day. It also led
regional currencies' gains against the dollar on Friday.
    The Philippine peso edged up after consumer
prices accelerated in April at their fastest pace in at least
five years, raising the prospect the central bank may need to
tighten monetary policy as soon as next week.
    China's yuan inched up after a firmer official
fixing by the People's Bank of China (PBOC), however it was on
course for its third straight weekly loss.
    But the market focus was clearly on Friday's employment
report for April for further indications of the strength of the
U.S. labour market and inflation pressures.
    "Even if we get better labour market data tonight, it is
unlikely to provide much support to the dollar as the FOMC has
already indicated in its latest FOMC meeting it is willing to
tolerate an overshoot in its 'symmetric' inflation target," said
a MUFG bank report. 
    Outside Asia, Argentina's peso, which has been
among the worst hit emerging market currencies during the past
couple of months on rising U.S. yields, tumbled to a record low.
    The currency has been hit by a lack of investor confidence
in Latin America's No. 3 economy, which has been blighted by one
of the world's highest inflation rates.
    Maybank's Wong said the falls in Argentina's peso will have
minimal impact on Asian currencies.
    The Malaysian ringgit was slightly lower at 3.932 per
    Malaysia's exports rebounded in March. However, election
risks loomed and reined in the currency.
    Chang Wei Liang, FX strategist at Mizuho Bank said the May 9
election is shaping up to be a nail-biter.
    "If BN unexpectedly loses its majority, we see prospects of
heavy foreign bond and equity outflows, which are likely to
trigger sharp MYR losses," Chang said.
    "Given the asymmetry in possible post-election outcomes, we
favour steering clear of the ringgit into elections."
    Malaysia's main opposition bloc is making gains and will
likely win the popular vote, but Prime Minister Najib Razak is
expected to retain power, according to a survey by pollster
Merdeka Center.
    The following table shows rates for Asian currencies against
the dollar at 0458 GMT.
  Change on the day at                          
        0458 GMT                           
  Currency               Latest  Previous    Pct
                            bid       day   Move
  Japan yen             109.10     109.18  +0.07
  Sing dlr              1.3299     1.3305  +0.05
  Taiwan dlr            29.666     29.742  +0.26
  Korean won            1077       1076.3  -0.04
  Baht                  31.675     31.625  -0.16
  Peso                  51.660      51.67  +0.02
  Rupiah                13939       13935  -0.03
  Rupee                 66.68       66.64  -0.06
  Ringgit               3.932       3.931  -0.03
  Yuan                  6.347      6.3500  +0.05
  Change so far in                              
  Currency              Latest   End 2016    Pct
                        bid                 Move
  Japan yen             109.10     117.07  +7.31
  Sing dlr              1.3299     1.4490  +8.96
  Taiwan dlr            29.666     32.279  +8.81
  Korean won            1077      1207.70  +12.1
  Baht                  31.675      35.80  +13.0
  Peso                  51.660      49.72  -3.76
  Rupiah                13939       13470  -3.36
  Rupee                 66.683      67.92  +1.86
  Ringgit               3.932      4.4845  +14.0
  Yuan                  6.347      6.9467  +9.45

 (Reporting by Patturaja Murugaboopathy in Bengaluru; Editing by
Kim Coghill)
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