AUD
Australia’s central bank said low interest rates are supporting household spending and a weaker exchange rate is aiding local firms, even as it reiterated that a subdued inflation outlook gives scope to ease policy further if needed. Australia recorded its biggest back-to-back monthly jobs gain since 1988 after adding 71,400 workers in November, and consumer confidence has held up as optimists continue to outweigh pessimists. Expectations the central bank will further lower its benchmark in coming months to boost below-average growth have moderated, with traders pricing in a 44% chance of a rate cut by June.
The local currency edged higher, trading at 72.58 US cents.
THB
Baht strengthens 0.2% to 36.105 per dollar, headed for first advance in a week; central bank doesn’t plan to create a sovereign wealth fund to seek long-term returns, and FX reserves must be ready for use at any time. Daily momentum indicators are showing bullish bias for USD/THB, suggesting pressure is on upside in near term.
CNY
China’s yuan dropped for an eighth day, the longest run of losses since June, on capital outflows and signs the central bank is guiding the currency weaker.
PBoC cut reference rate for a seventh day, lowering it 0.1 percent to a four-year low of 6.4559 a dollar. The yuan fell 0.15 percent to 6.4690 a dollar. ABN Amro NV forecast yuan will drop to around 6.55 by the end of 2016. Yuan positions on PBOC’s balance sheet fell by 315.8 billion yuan ($49 billion) in Nov, the most in 1993 after a 318.4 billion yuan outflow in August when the central bank’s devaluation of the currency spurred the biggest monthly tumble in 2 decades.
IDR
Rupiah rises 0.2% to 14,050 per dollar, exports probably fell 11.5% y/y in Nov. and imports shrank 21.3%, leaving trade surplus of $900m. Bank Indonesia to cut interest rates only when inflation downtrend confirmed, likely in early 2016. Central bank will keep close eye on global financial market volatility as monetary policies diverge, with Fed expected to raise rates, before committing to rate-
cutting cycle.