Asian currencies dip, stocks mixed ahead of Fed chair’s testimony

July 9, 2024 - 8:28 PM
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US dollar notes are seen in this November 7, 2016 picture illustration. REUTERS FILE

Most Asian currencies edged lower on Tuesday while regional stocks were mixed as global markets awaited comments from the head of the U.S. central bank to assess prospects of a rate cut in September.

Fed Chair Jerome Powell will appear before Congress later in the day, with investors hoping for dovish comments that will cement their bets that it will start to lower borrowing costs in a few months, giving a fresh leg up to riskier assets and economies.

Despite a softer U.S. dollar, the Indonesian rupiah <IDR=> was down as much as 0.4% after four consecutive sessions of gains, while the Taiwanese dollar <TWD=TP> lost 0.2%.

The Thai baht <THB=TH> inched 0.1% lower, while the Singapore dollar <SGD=> was largely flat.

The South Korean won <KRW=KFTC> and the Malaysian ringgit <MYR=> were largely unchanged. Interest rate decisions from both countries are due on Thursday.

Bank Negara Malaysia bank will keep its key policy rate on hold until at least 2026 as inflation looks set to pick up in the second half of this year, a Reuters poll showed.

Another poll showed that the Bank of Korea will hold rates on Thursday, but was expected to ease in the next quarter.

“Currency weakness will remain the key constraint for these central banks in thinking about cutting interest rates ahead of the Fed,” said Lloyd Chan, senior currency analyst at MUFG Bank.

On the other hand, the Philippine central bank has more scope to cut interest rates at its next meeting in August after annual inflation slowed in June, its Governor Eli Remolona said.

The next U.S. inflation report, due on Thursday, could further bolster rate easing expectations. Markets are now pricing in a 80% chance of a cut in September, up from 64% last week. FEDWATCH

Indonesian shares <.JKSE> rose as much as 0.7% to their highest level since May 28, while Singapore stocks <.STI> gained 0.4%, still hovering near their record high touched last week.

The rally in Singapore shares is being driven by local bank stocks hitting record highs due to investor optimism about dividend payouts and higher-for-longer interest rates in the U.S. and Singapore, MUFG’s Chan added.

Shares in Kuala Lumpur <.KLSE> gained as much as 0.4%, while Taiwan shares <.TWII> and Thai stocks <.SETI> fell 0.3% and 0.2%, respectively, bucking the trend.

Markets are also awaiting China’s inflation data on Wednesday and advanced gross domestic product estimates from Singapore on Friday.

HIGHLIGHTS:

** Thailand central bank head says stronger growth needed

** Japan finance minister to monitor discussions at BOJ bond market meeting

Asia stock indexes and currencies at 0455 GMT
COUNTRYFX RICFX DAILY %FX YTD %INDEXSTOCKS DAILY %STOCKS YTD %
Japan<JPY=>-0.07-12.35<.N225>2.0824.40
China<CNY=CFXS>-0.06-2.40<.SSEC>-0.01-1.77
India<INR=IN>+0.00-0.34<.NSEI>0.1612.10
Indonesia<IDR=>-0.11-5.37<.JKSE>0.500.20
Malaysia<MYR=>-0.04-2.53<.KLSE>0.3411.13
Philippines<PHP=>+0.15-5.24<.PSI>0.231.46
S.Korea<KRW=KFTC>-0.04-6.91<.KS11>0.187.82
Singapore<SGD=>+0.01-2.26<.STI>0.405.48
Taiwan<TWD=TP>-0.14-5.55<.TWII>-0.3232.74
Thailand<THB=TH>-0.10-6.20<.SETI>-0.20-6.78

—Reporting by Ayushman Ojha in Bengaluru; Editing by Kim Coghill