Commodities

EMERGING MARKETS-Currencies subdued as investors await new Fed toolbox

Credit: REUTERS/THOMAS WHITE

Asian currencies struggled on Thursday as investors looked to a key speech by Federal Reserve Chairman Jerome Powell for hints on inflation and monetary policy, while Sino-U.S. tensions kept a lid on gains for stock markets.

By Shriya Ramakrishnan

Aug 27 (Reuters) - Asian currencies struggled on Thursday as investors looked to a key speech by Federal Reserve Chairman Jerome Powell for hints on inflation and monetary policy, while Sino-U.S. tensions kept a lid on gains for stock markets.

Investors have largely priced in a dovish message from Powell when he opens the Kansas City Fed's annual economic policy conference later in the day, the question is whether any adjustments he may make to its policy toolbox will be enough to flatten U.S. market interest rates further.

"Given the overwhelming likelihood of Fed staying dovish for a long time to come, I wouldn't read much into the recent struggle for Asia currencies to make headway against USD – all it needs is a reinforcement of Powell and Fed of their dovish stance for the USD sell off theme to sustain," said Mahesh Sethuraman, deputy head of global sales trading at Saxo Capital Markets.

The Indonesian rupiah IDR=, Malaysian ringgit MYR= and Philippines peso PHP= were all flat to marginally lower against the dollar, but the Thai baht THB=TH edged up 0.2% and the Taiwan dollar TWD=TP was again the top gainer, up 0.6%.

South Korea's won KRW=KFTC also held in positive territory as its central bank kept policy rates at a record low 0.50%, in a widely expected move after delivering 75 basis points of rate cuts so far this year.

Shares in Seoul's export-focused KOSPI .KS11, however, were set to snap a four-day winning streak as the Bank of Korea cut its 2020 forecast for gross domestic product for an economy now battling its worst COVID-19 outbreak since early March.

Stock markets across Asia lagged a tech-driven rally on Wall Street overnight after Washington blacklisted 24 Chinese companies it said were part of construction and military action in the South China Sea.

Shares in Singapore .STI were down about 0.5%, while Philippine .PSI and Thai .SETI stocks posted marginal gains.

HIGHLIGHTS:

** Thailand's 10-year government bond yields TH10YT=RR are down 2.5 basis points at 1.395%

** Top losers on the Singapore STI .STI include Mapletree Commercial Trust MACT.SI down 3.03% at S$1.92; Singapore Airlines Ltd SIAL.SI down 2.13% at S$3.68; Dairy Farm International Holdings Ltd DAIR.SI down 2.07% at S$4.26

** Top gainers on the Thailand's SETI .SETI include Asiasoft Corporation PCL AS.BK up 13.76% at 4.96 baht, Thai Film Industries PCL TFI.BK up 12.5% at 0.09 baht, TKrungthai Industries PCL TKT.BK up ​ 11.43% at 1.17 baht

Asia stock indexes and currencies at 0411 GMT

COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

JPY=

-0.01

+2.47

.N225

-0.27

-1.82

China

CNY=CFXS

+0.04

+1.17

.SSEC

0.29

9.48

India

INR=IN

0.00

-3.92

.NSEI

0.56

-4.56

Indonesia

IDR=

-0.14

-5.51

.JKSE

-0.12

-15.33

Malaysia

MYR=

-0.07

-1.92

.KLSE

0.21

-2.26

Philippines

PHP=

-0.10

+4.11

.PSI

0.20

-23.95

S.Korea

KRW=KFTC

+0.08

-2.49

.KS11

-0.60

7.16

Singapore

SGD=

+0.00

-1.55

.STI

-0.53

-21.54

Taiwan

TWD=TP

+0.56

+2.57

.TWII

0.07

7.04

Thailand

THB=TH

+0.22

-4.32

.SETI

0.27

-16.06

(Reporting by Shriya Ramakrishnan in Bengaluru; Editing by Patrick Graham and William Mallard)

((Shriya.Ramakrishnan@thomsonreuters.com; +91 8061822842 ;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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