Most Asian FX, stocks rise as Fed rate cut bets persist
South Korean won among top gainers in Asian FX
Indonesia rupiah slips more than 1% for week
Chinese stocks set for weekly loss
By Archishma Iyer and Shivangi Lahiri
Oct 11 (Reuters) -Emerging Asian currencies were heading toward weekly losses but they pushed higher on Friday as the buoyant dollar took a breather, while stocks in the region rose after slightly weaker U.S. labour data bolstered rate cut hopes.
The higher weekly jobless claims report from the world's largest economy overshadowed a slightly hotter inflation print, leaving traders firm in their view the Federal Reserve will reduce rates in November.
The South Korean won KRW=KFTC was among the lead gainers, rising about 0.6%, while shares in Seoul .KS11 gained 0.4% after the Bank of Korea kick-started its policy easing cycle with a 25 basis point cut. It became the latest regional central bank to join the bandwagon alongside Indonesia and the Philippines.
Other currencies such as the Indonesian rupiah IDR=, Philippine peso PHP=, Thai baht THB=TH and the Malaysian ringgit MYR= were flat to 0.5% higher.
However, the dollar =USD was set for its second straight weekly gain after a stronger jobs report last week reinforced bets on a smaller rate cut from the Fed, leading to outflows from riskier Asian assets.
On a weekly basis, the rupiah has lost more than 1% and is hovering near a two-month low, while the baht and ringgit were also poised for weekly losses.
"The broad dollar has rebounded from the past few weeks’ decline, which makes us more cautious that the previous out-performance in MYR and THB may have room to retrace," Citi analysts said in a note.
"We are also turning more selective in high yielders because the mutual reinforcement of lower rates and portfolio inflows may be also coming to a pause," they added.
Citi analysts estimated outflows from Indonesia and Thailand totalled $329 million and $221 million respectively, while India saw large foreign selling of about $5.2 billion last week.
Asian central bank meetings are set to take centre-stage next week, while economic growth data and inflation prints in the region could dictate the outlook for interest rates.
Analysts predict the Philippines to move forward with a 25 bps rate cut, while the others such as Thailand, Indonesia and Singapore may stand pat on rates.
The Reserve Bank of India held rates this week, but kept the doors open for a rate reduction as early as December.
Among Asian equities, the markets in Jakarta .JKSE, Bangkok .SETI, and Taipei .TWII rose between 0.5% and 1.2%, while Manila shares .PSI fell about 1.4%.
Shanghai shares .SSEC fell 1.6%, bringing weekly losses to 2.6% after initial euphoria about its stimulus measures faded as trading resumed after a week-long holiday break.
HIGHLIGHTS:
** Japan finance minister to attend G7, G20, IMF, World Bank gatherings this month
** Chinese premier hopes Japan, China can meet halfway, keep relations on right track
** Luxury goods unlikely to be next target of China's EU trade retaliation, analysts say
Asian currencies and stocks at 0355 GMT | ||||||
COUNTRY | FX RIC | FX DAILY % | FX YTD % | INDEX | STOCKS DAILY % | STOCKS YTD % |
Japan | JPY= | -0.09 | -5.13 | .N225 | 0.39 | 18.72 |
China | CNY=CFXS | +0.07 | +0.37 | .SSEC | -1.60 | 9.22 |
India | INR=IN | +0.01 | -0.90 | .NSEI | 0.00 | 15.03 |
Indonesia | IDR= | +0.38 | -1.31 | .JKSE | 0.83 | 3.70 |
Malaysia | MYR= | +0.07 | +7.12 | .KLSE | -0.23 | 12.54 |
Philippines | PHP= | +0.53 | -3.14 | .PSI | -1.43 | 13.26 |
S.Korea | KRW=KFTC | +0.62 | -4.37 | .KS11 | 0.42 | -1.70 |
Singapore | SGD= | +0.03 | +1.07 | .STI | 0.03 | 10.68 |
Taiwan | TWD=TP | -0.05 | -4.48 | .TWII | 1.24 | 27.93 |
Thailand | THB=TH | +0.36 | +2.57 | .SETI | 0.51 | 4.25 |
Reporting by Archishma Iyer and Shivangi Lahiri in Bengaluru; Editing by Jamie Freed
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