January 29, 2019 / 5:28 AM / 10 months ago

EM ASIA FX-Most Asian units weaken on clouds cast over U.S.-China trade talks

    * Markets await Powell comments after Fed policy meeting
    * Investors wary of possible Huawei case impact on trade
talks 
    * Rupiah drops most against dollar early Tuesday

 (Adds text, updates prices)
    By Nikhil Nainan
    Jan 29 (Reuters) - Most emerging Asian currencies weakened
on Tuesday as the prospects for progress at high-level U.S-China
trade talks this week were hurt by Washington's placement of
criminal charges against China's Huawei Technologies Co. 
     Further undermining the outlook for the talks, set for
Wednesday and Thursday in Washington, was China triggering the
legal process on Monday for the World Trade Organization to hear
Beijing's challenge to U.S. tariffs.  
    The combination of the U.S. Justice Department's charges
against Huawei         , which Beijing expressed serious concern
over, and China's WTO move may complicate recent hopes of a
trade deal between the world's top two economies. 
    Indonesia's rupiah weakened the most in the region,
down 0.2 percent to 14,090 a dollar, but it remained among the
top gainers this year.   
    Malaysia's ringgit and the Thai baht both
fell 0.1 percent, while the Philippine peso was flat.
    While most Asian currencies were weaker in early trade,
losses were capped by the U.S. dollar holding flat and some
optimism that there still could be positive developments from
discussions between China's Vice Premier Liu He and U.S. Trade
Representative Robert Lighthizer and others.
    The safe-haven yen gained against the greenback, while the
dollar index was roughly flat, but hovered around its
lowest level in two weeks.
    "Having relented on the US government shutdown, President
Donald Trump needs to show a win on trade at his State of the
Union address on 5 February," DBS said in a note.
    The actions by the U.S. Justice Dept. "show that it would
not be enough for China to buy more US goods. America wants
China to make structural reforms especially on its intellectual
property practices", the bank said. 
    The Indian rupee and China's yuan were
largely unchanged. 
    
    MARKETS AWAIT FED MEETING OUTCOME 
    Tuesday brings the start of a two-day U.S. Federal Reserve
policy meeting, where Chairman Jerome Powell is widely expected
to acknowledge growing risks to the U.S. economy as global
momentum weakens.
    Investors will be keenly looking for further confirmation
that the U.S. monetary authority will pause its rate-hike cycle.
    The interest rate futures market is pricing in no Fed hikes
this year. Last year, the dollar enjoyed a solid rally as the
Fed raised rates four times because of a robust economy, to the
dismay of regional emerging market currencies. 
    In a note, Maybank analysts said "a case of extended pause
in Fed's tightening cycle would further reinforce our bias to
lean against USD strength." 

CURRENCIES VS U.S. DOLLAR
 Change on the day at 0444 GMT                    
 Currency               Latest bid  Previous day  Pct Move
 Japan yen              109.240     109.34        +0.09
 Sing dlr               1.353       1.3524        -0.05
 Taiwan dlr             30.810      30.790        -0.06
 Korean won             1117.200    1117.7        +0.04
 Baht                   31.573      31.54         -0.10
 Peso                   52.500      52.489        -0.02
 Rupiah                 14090.000   14065         -0.18
 Rupee                  71.110      71.10         -0.01
 Ringgit                4.111       4.108         -0.07
 Yuan                   6.744       6.7450        +0.01
                                                  
 Change so far in 2019                            
 Currency               Latest bid  End 2018      Pct Move
 Japan yen              109.240     109.56        +0.29
 Sing dlr               1.353       1.3627        +0.71
 Taiwan dlr             30.810      30.733        -0.25
 Korean won             1117.200    1115.70       -0.13
 Baht                   31.573      32.55         +3.10
 Peso                   52.500      52.47         -0.06
 Rupiah                 14090.000   14375         +2.02
 Rupee                  71.110      69.77         -1.88
 Ringgit                4.111       4.1300        +0.46
 Yuan                   6.744       6.8730        +1.91
 
 (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by
Richard Borsuk)
  
 
 
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