ASIA FX: KRW Steady After Yoon's Arrest, USD/IDR Higher, BI Seen On Hold
Jan-15 05:31
Asian FX moves haven't been large, as markets await the US CPI print later. The majors have mostly been steady, although yen is gaining ground this afternoon as speculation heats up of a rate hike next week. Regional equity trends have been mixed, China/HK markets weaker in the first part of trade, although only a fraction of yesterday's gains have been given back so far.
- USD/CNH has remained very steady, the pair holding under 7.3500, while USD/CNY is remaining above 7.3300 for now. Rhetoric continues from the authorities around keeping the yuan stable and supporting local equities.
- We have seen a lot of headlines around former South Korean President Yoon's arrest, but little market impact. Spot USD/KRW was last just under 1460, slightly firmer in won terms for the session. Earlier data showed a spike in the unemployment rate, which should add the case for a BoK cut tomorrow.
- USD/TWD has risen back above 33.00, but remains sub recent highs. Taiwan equities are down over 1%. Headlines crossed from BBG of further restrictions on TSMC chip flows to China.
- USD/IDR has tested above 16300 but found selling interest. The trade surplus was lower than forecast amid slowing export growth. The BI is expected to remain on hold later.
- In SEA FX elsewhere, aggregate moves are quite muted.
- USD/INR is lower, off recent highs and back sub 86.50.
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US TSYS: Tsys Futures Edge Slightly Higher Following Last Weeks Sell-Off
Dec-16 05:22
- Tsys futures are a touch higher today, although ranges have been narrow, volumes have also been below recent averages. TU -00⅛ at 102-28⅛, while TY is trading +01+ at 109-29+, just off initial support at 109-26 (Low Dec 13)
- Earlier, there was a large TY put seller at 0'28 x10,000.
- Cash tsys yields are -1bps lower today, with the 2yr -1.1bps at 4.234%, while the 10yr is -1bps at 4.387%. The 2s10s is hovering around recent highs at 15bps
- Investors will be focused on tonight's December US preliminary Mfg and services PMI for signs on the health of the US economy, while eyes are also on the 10yr break-even inflation rate after it climbed the most in two months as rising oil prices posed upside risks to the cost of living.
- Hedge funds trimmed net short positions in ultra 10-year to ultra-long bond futures by $6.1m/DV01 in the week to Dec. 10, while remaining bearish on the front end, adding $3m/DV01 to 2-year note shorts. Asset managers were bullish on ultra 10-year notes, extending net longs by $2.8m/DV01 to a record high, but added $1.2m/DV01 to net shorts in SOFR futures. Meanwhile, hedge funds increased their SOFR futures net longs by $2.4m/DV01.
- Projected rate cuts into early 2025 look near steady to lower vs. this morning levels (*) as follows: Dec'24 cumulative -24.3bp (-23.7bp), Jan'25 -28.6bp (-29.6bp), Mar'25 -42.2bp (-43.9bp), May'25 -48.4bp (-50.5bp).
- Later we have Empire Manufacturing & S&P Global PMI, the Fed remains in blackout ahead of the FOMC decision later this week
EQUITIES: Stocks Edge Lower Following China Data, Upcoming Central Bank Meetings
Dec-16 05:09
- Asian markets fell broadly today, weighed down by disappointing Chinese retail sales data, which grew just 3% y/y, missing expectations of 5%. China’s CSI 300 declined for a second consecutive session, dragging down Hong Kong stocks, while sentiment in Australia was hit by falling iron ore prices, pulling the ASX lower for a fifth straight day. South Korea's equities erased earlier gains following political uncertainty from President Yoon's impeachment, though analysts see limited long-term economic impact.
- The MSCI Asia gauge slipped as traders adopted a cautious stance ahead of a busy week of central bank decisions, including the Federal Reserve, Bank of Japan, and Bank of England. Meanwhile, the dollar steadied near recent highs, Asian currencies weakened to a two-week low, and Bitcoin reached a new record high amid continued optimism.
- Japanese equities were mostly lower today with investors remaining cautious ahead of key central bank meetings, including the Bank of Japan’s policy decision later this week. The TOPIX 0.20% lower, while the Nikkei is flat, exporters traded slightly better as the yen weakened a touch. While a rally on Friday for semiconductor stocks has done little to help Tokyo Electron which trades 0.50% lower.
- Taiwan's Taiex has pared earlier gains to trade flat as TSMC gives back some gains. There has been decent size selling of South Korean equities by foreign investors today, with a total outflow of $322m, the KOSPI is 0.36% lower, while the KOSDAQ is 0.67% higher.
- Australian mining stocks weighed on the ASX, with BHP, Rio Tinto, and Fortescue falling, while gold miners also declined as precious metal prices dipped, the ASX down 0.65%. New Zealand NZX 50 closed 0.34% higher.
US TSYS: Large TY Put Sellers
Dec-16 04:57
- TYF5 110 puts traded at 0'28 x 10,000
