ASIA FX: IDR Weaker Ahead Of BI, THB Steady Despite Further Easing Calls
Feb-19 05:26
In South East Asian markets, FX trends are relatively steady. The exception being IDR weakness, which comes ahead of the BI decision later. Cross asset trends have been fairly modest. US yields are little changed ahead of the FOMC minutes later. In the equity space, we haven't seen large shifts in SEA markets.
- USD/IDR has pushed up to 16360. This is around 0.50% weaker in IDR terms versus end Tuesday levels. The 1 month NDF has lost 0.3%. We have the BI decision a little later. The BBG sell-side consensus is for no changed, but there are a number of economists forecasting a cut today. Our own bias is for no change, but we had a surprise earlier in the year with a cut, as BI's priorities shifted somewhat to economic growth. For USD/IDR spot, recent highs have rested close to 16400, while on Feb 3 we spiked to 16471.
- USD/THB is relatively steady, the pair last near 33.70/75. We have again seen both the Prime Minister and MinFin call for the BoT to lower rates in order to boost growth. The next BoT meeting is on the 26th of Feb. For USD/THB, we remain within recent ranges, tracking sideways over recent sessions.
- USD/MYR is unchanged, last near 4.4455, while USD/PHP has edged down a little to 58.10/15, but this is above recent lows sub the figure level.
- USD/INR is holding under 87.00, which may be a short term intervention point for the central bank.
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ASIA STOCKS: Asian Equities Head Higher As US-China Tensions Ease
Jan-20 05:15
Asian markets traded higher today, driven by optimism over easing US-China tensions following a positive call between Donald Trump and Xi Jinping. The MSCI Asia Pacific Index rose 1.2%, with notable gains in Hong Kong, where the Hang Seng Index climbed 2.3%, and mainland Chinese shares also advanced. Japanese stocks rebounded, with the Topix Index posting its biggest intraday jump since early December, as tech and financial shares gained on expectations of a potential Bank of Japan rate hike. Broader sentiment was supported by hopes for improved US-China trade relations, though concerns about Trump's upcoming policies, including tariffs and deregulation, tempered enthusiasm.
- South Korean equities have struggled today with political uncertainty seen as the major driver, the KOSPI last trades 0.20% lower. Foreign investors had been better buyers of South Korean equities to kick the year off, however we another day of over $200m of outflows we are now effectively flat in terms of net flows.
- Indian equities have seen heavy outflows totaling $4.5b to start the year, the Nifty 50 is trading up 0.20% today as earnings season kicks off.
- Equities in Australia & New Zealand have been mixed today, the ASX20 trades up 0.45%, while the NZX 50 closed 0.30% lower.
- US equity futures are trading slightly lower in Asia Today, please note there will be no cash equity trading tonight for Martin Luther King Day. Focus will be largely on the Inauguration of Trump and any executive orders he may sign on Day 1.
GOLD: Gold Off Lows as World Watches Inauguration.
Jan-20 05:12
- Having softened into Friday’s close, gold opened lower today, trending down in the morning session.
- Closing at US$2,703.25 on Friday, gold trended down to $2,689.47 before rebounding in the afternoon, above key technical levels to be at $2705.40.
- The weaker than expected US inflation release last week gave hope to interest rate cuts by investors, boosting gold’s fortunes and ensuring a third week in a row of gains.
- Gold had an excellent 2024 in the back of expectations for interest rate cuts and resumption of purchases by key Global Central Banks and a report by the World Gold Council forecasts that this trend will continue in 2025.
- Gold is sensitive to interest rate changes and with the outlook for the FED at the next meeting still unclear, data releases will be a key input into gold's near term direction as it tracks the probability of a FED cut.
- The incoming President’s proposed policies present a mixed headwind for gold with increased geo-political risk could increase demand for gold’s safe haven status, whilst said policies may also ignite the USD which traditionally is challenging for gold.
- In a recent research report released by State Street Global Advisors, it projects gold bullion to hit US$3,100 in 2025 (as per BBG).
JGBS: Cash Bonds Modestly Richer, 40Y Supply Tomorrow, BoJ Decision On Fri
Jan-20 04:58
JGB futures are firmer and at session highs, +10 compared to settlement levels.
- In November, core machine orders data significantly exceeded expectations. Additionally, both Industrial Production (year-over-year) and Capacity Utilization (month-over-month) showed improvement, although both metrics remain in negative territory. However, the Tertiary Industry Index for November declined by 0.3% month-over-month, falling short of the estimated 0.1% growth.
- The BoJ is expected to raise interest rates on Friday barring any market shocks when U.S. President-elect Donald Trump takes office, a move that would lift short-term borrowing costs to levels unseen since the 2008 global financial crisis.
- A tightening in policy would underscore the central bank's resolve to steadily push up interest rates, now at 0.25%, to near 1% - a level analysts see as neither cooling nor overheating Japan's economy. (per RTRS)
- The cash US tsy market and stock exchanges are closed today for Martin L. King Day. Also noteworthy, the Federal Reserve entered its policy blackout at midnight Friday through January 30.
- Cash JGBs are 1-2bps richer across benchmarks beyond the 1-year. The benchmark 10-year yield is 0.7bps lower at 1.196% versus the cycle high of 1.262%.
- Swap rates are 1-2bps lower. Swap spreads are little changed.
- Tomorrow, the local calendar will see 40-year supply.
