Asian currencies, stocks mixed ahead of U.S. inflation data

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Asian currencies and equities were

mixed on Wednesday as investors awaited U.S. inflation data for

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possible clues on the Federal Reserve’s next interest rate

moves.

The Indonesian rupiah firmed 0.5%, while the Thai

baht and the Philippines’ peso fell 0.1% and

0.2%, respectively.

Mitul Kotecha, head of emerging markets strategy at TD

Securities, said while the positive sentiment around Asian

currencies which have benefitted from dollar weakening and

reopening of China’s borders has not changed, they continue to

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fight against continually hawkish rhetoric from the Fed.

“We are coming off several days of pretty strong gains for

Asian markets and might be seeing a little bit of retracement

today,” Kotecha added.

China’s yuan, which has jumped roughly 1.8%

against the dollar so far this year, was little changed in

morning trade as investors continued to debate the scope and

timing of further monetary easing which is expected in coming

months to support the economic rebound.

Fed Chair Jerome Powell did not give any policy clues during

a panel discussion in Stockholm overnight. Markets have been

hoping that the Fed could soon signal an end to its rate hiking

cycle following recent signs of a slowdown in the U.S. economy,

even as policymakers reiterate the central bank’s priority to

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bring inflation under control.

Investor attention is now on the U.S. consumer price index,

due to be released on Thursday. The data is expected to show

December’s headline annual inflation at 6.5%, versus 7.1% in

November.

Equities in region were mixed. Stocks in Thailand

and the Philippines retreated 0.3% and 0.4%,

respectively, while those in Singapore advanced 0.3%.

Stocks in Jakarta fell as much as 1% to touch their

lowest level since May. Indonesian equities, which rose about 4%

in 2022, have reversed most of their gains so far this year.

Galvin Chia, an emerging markets strategist at Natwest

Markets said that the Indonesia stock market might be tempering

gains given its relative outperformance in 2022.

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“We could be seeing a bit of rotation in terms of equity

positioning in South Asian market,” Chia added.

HIGHLIGHTS

** New bank lending in China unexpectedly rose in December

from the previous month, but households were more wary about

borrowing and aggregate financing missed expectations, still

analysts see strong credit appetite as the economy reopens

** Malaysia’s industrial production in November rose 4.8%

from a year earlier, above expectations

** Brazil’s real rose 1% on Tuesday after a day of

volatility driven by uncertainty as supporters of far-right

former President Jair Bolsonaro stormed the capital

Asia stock indexes and currencies

at 0427 GMT

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan -0.13 -0.99 <.n2>

China EC>

India +0.01 +1.15 <.ns ei>

Indonesi +0.45 +0.42 <.jk a se>

Malaysia -0.01 +0.66 <.kl se>

Philippi -0.20 +1.42 <.ps nes i>

S.Korea 11>

Singapor +0.06 +0.71 <.st e i>

Taiwan +0.07 +0.88 <.tw ii>

Thailand -0.10 +3.32 <.se ti>

(Reporting by Himanshi Akhand in Bengaluru; Editing by Kim

Coghill)