Most emerging Asian units set for weekly gains

07 Sep, 2019

Most emerging Asian units rose on Friday, as Sino-US trade tensions dialled down and robust US economic data spurred investors' appetite for riskier assets. Sentiment rose after the United States and China agreed to hold official trade talks in October, while on Thursday, a private survey showed US services sector activity accelerated in August and private employers boosted hiring.
The Chinese onshore yuan posted marginal gains, after initially opening a shade weaker. It is set to gain about 0.2% this week.
Yet again, the People's Bank of China set its midpoint fix at a stronger than expected level, supporting the currency.
The Malaysian ringgit and Korean won both gained 0.3%.
Most units are set to wrap the week with gains, apart from the Thai baht and the Indian rupee.
Markets now await the release on a US jobs report, which is expected to show continued strength in its labour market. If the data meets expectations, it could spur risk sentiment and help the dollar.
However, analysts caution that good data could play a double-edged sword by undermining expectations of further interest rate cuts by the US Federal Reserve this year.
"As markets rally in expectation of a trade deal and jobs data remain strong, the inclination to provide immediate accommodation recedes, but a Fed pause in September will shock the markets," analysts at DBS Group Research said in a note.
The baht is set for a weekly loss of 0.2%, in contrast with most peers. However, it was the sole gainer last week during the largely risk-averse mood pervading markets.
"Due to the large current account surplus that Thailand runs, it has taken on somewhat of a safe haven flavour," said Sim Moh Siong, FX strategist at Bank of Singapore.
While Taiwan and South Korea both run current account surpluses, neither have seen that translate into currency strength.
This is due to capital outflows and partly because historically both economies have been able to recycle the current account surplus by domestic pension funds investing abroad, Siong said.
Meanwhile, Thailand has seen some difficulty in recycling its current account surplus, while its tourism sector has also performed well, leading to sustained currency strength, he added.

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