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Asian FX drifts sideways on strong dollar, await U.S. jobs data


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Asian currencies struggled to make headway

on Thursday as the U.S. dollar remained strong on easing

geopolitical tensions and hawkish Federal Reserve officials who

suggested more upcoming rate hikes even at the risk of

recession.

Regional equities were mixed, with benchmarks in Malaysia

, Thailand, South Korea and China

advancing as much as 0.7%, while shares in the Philippines

, Taiwan, and Indonesia slipped up to

0.5%.

The U.S. dollar index, which measures the greenback

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against a basket of six currencies, was steady in early trade at

106.380, a half-percent appreciation this month so far as

investors absorbed potential future rate hikes.

Treasury yields slipped from two-week highs, with yields on

the 10-year note at 2.7191% on strong factory orders

data, with an eye on non-farm payrolls set to be released on

Friday which would partly determine the magnitude of Fed’s

tightening.

Regional bond yields were flat-to-low, with returns on

high-yield notes: India and Indonesia at

7.216% and 7.223%, respectively.

The Indian rupee fell 0.3% on a widening trade

deficit and global flows into the safe-haven dollar. The

currency, down around 7% so far, is expected to trade near its

historic lows in the coming quarter, a Reuters poll showed.

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The Reserve Bank of India (RBI) is expected to hike its repo

rate on Friday, although analysts are split on the size of the

hike. Tightening of borrowing costs is expected to provide some

stability to the wobbly currency.

In Thailand, the baht appreciated marginally as

investors await central bank meeting next week when the

tourism-reliant country is expected to hop on the policy

tightening bandwagon.

“Signs of resilience in macro outcomes could help buffer

Thai baht from further bouts of deterioration in sentiment, even

as the pace of recovery could be crimped by uncertainties over

timing in return of Chinese tourists,” analysts at Maybank said

in a note.

They expect the currency, which is among the worst hit so

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far this year, to find support at 37.0 per dollar level, with

resistance at 36.0 level.

HIGHLIGHTS:

** Indonesian 5-year yields edge higher to 6.516%

** DBS Q2 profit tops estimates as banks benefit from rising

interest rates

** FX markets haven’t seen last of dollar strength yet –

analysts – Reuters poll

Asia stock

indexes and

currencies

at 0404 GMT

COUNTRY FX FX FX INDEX STOCKS STOCKS

RIC DAILY YTD % DAILY % YTD %

%

Japan +0.08 -13.96 0.50 -3.16

China +0.07 -5.92 0.15 -12.95

India -0.39 -6.47 0.43 0.63

Indonesia -0.13 -4.55 0.28 7.36

Malaysia +0.07 -6.47 0.62 -2.45

Philippines -0.05 -8.51 0.12 -9.62

S.Korea -0.08 -9.36 0.26 -17.12

Singapore +0.01 -2.26 0.22 4.34

Taiwan -0.09 -7.80 -1.38 -20.01

Thailand +0.03 -7.78 0.42 -3.39

(Reporting by Sameer Manekar in Bengaluru; Editing by Sam

Holmes)

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