July 4, 2019 / 5:32 AM / 3 months ago

EM ASIA FX-Most Asia currencies advance on Fed rate cut bets

    * Fed rate cut expectations boost Asian currencies
    * Resumption of Sino-U.S. trade talks also helps sentiment
    * Chinese yuan leads gains in the region
    * Indian rupee ticks up before budget 

 (Adds text, updates prices)
    By Aditya Soni
    July 4 (Reuters) - Most emerging Asian currencies gained
ground against a broadly weaker dollar on Thursday, as a slew of
weak U.S. economic data boosted chances the Federal Reserve will
cut rates this month.
    The U.S. trade deficit jumped in May while the protracted
trade war between Washington and Beijing drove activity in the
services sector to a two-year low in June, data showed on
Wednesday, adding to signs of a slowdown in the world's largest
    The gloomy readings increased expectations that the Fed
would loosen monetary policy to arrest a slowdown, boosting
risk-sensitive assets and denting the appeal of the dollar. 
    The Chinese yuan firmed 0.2% and led gains in the
region, while the Korean won was on track to snap
three straight sessions of losses. 
    Risk sentiment was also aided by a planned resumption of
trade talks between the United States and China, with Trump
administration officials saying negotiations could restart next
    Investor attention will now be on U.S. non-farm payroll data
slated to be released on Friday, which could cement the
possibility of a rate cut. 
    "If labour (market) weakens and wages start to fall, markets
will ramp up bets the Fed will need more aggressive
accommodations to deliver a soft landing,"  Edward Moya, 
senior market analyst at OANDA, said in a note.
    The Malaysian ringgit firmed slightly, shrugging off
a slower-than-expected rise in the country's exports in May.

    Elsewhere, the Thai baht weakened after gaining
0.4% in the previous session. 
    The Indian rupee ticked up ahead of Indian Prime
Minister Narendra Modi's first budget since winning a second
term by a landslide over a month ago.
    Billions of dollars worth of foreign funds were poured into
India ahead of the general election in the world's biggest
    Now in power, the Modi government is likely to unveil a
budget that will cut taxes on business and raise spending in a
bid to shore up consumption and faltering economic growth.

    "Expect finance minister Nirmala Sitharaman to try to boost
investment by reducing capital costs, in her maiden July 5
budget, as promised in the BJP agenda. She will likely retain
the interim February budget's FY20 fiscal deficit target of 3.4%
of GDP," Bank of America Merrill Lynch economists said in a

    The following table shows rates for Asian currencies against
the dollar at 0452 GMT.
 Currency               Latest bid  Previous day  Pct Move
 Japan yen              107.810     107.82        +0.01
 Sing dlr               1.355       1.3558        +0.04
 Taiwan dlr             31.104      31.130        +0.08
 Korean won             1170.100    1171.3        +0.10
 Baht                   30.610      30.56         -0.16
 Peso                   51.120      51.12         +0.00
 Rupiah                 14125.000   14115         -0.07
 Rupee                  68.865      68.91         +0.07
 Ringgit                4.131       4.135         +0.10
 Yuan                   6.871       6.8815        +0.15
 Change so far in 2019                            
 Currency               Latest bid  End 2018      Pct Move
 Japan yen              107.810     109.56        +1.62
 Sing dlr               1.355       1.3627        +0.55
 Taiwan dlr             31.104      30.733        -1.19
 Korean won             1170.100    1115.70       -4.65
 Baht                   30.610      32.55         +6.34
 Peso                   51.120      52.47         +2.64
 Rupiah                 14125.000   14375         +1.77
 Rupee                  68.865      69.77         +1.31
 Ringgit                4.131       4.1300        -0.02
 Yuan                   6.871       6.8730        +0.03

 (Reporting by Aditya Soni in Bengaluru
Editing by Jacqueline Wong)
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