Investors trim long bets on Asian currencies as Sino-U.S. trade deal hopes dwindle – Reuters poll

Investor sentiment towards most Asian currencies soured over the past two weeks, a Reuters poll showed, as markets reined in hopes that an interim Sino-U.S. trade deal would materialise soon.

Expectations have eased that Beijing and Washington would sign an initial pact this year to end their 16-month-long tariff spat, after U.S. President Donald Trump threatened a hike in tariffs earlier in the week if a deal was not signed.

Also, a fresh row over U.S. bills backing protesters in Hong Kong has emerged, threatening to worsen relations between the world’s two top economies and clouding the deal outlook.

Majority of 12 poll participants responded by 0630 GMT on Wednesday, before Reuters reported, citing trade experts and people close to the White House, that a “phase one” deal could slide into next year.

Bullish bets on China’s yuan slipped, a fortnight after investors turned long for the first time in nearly seven months.

Meanwhile, China’s central bank cut both short- and medium-term lending rates this week to prop up an economy hurt by slowing demand and U.S. trade tariffs.

Investors scaled back some bullish bets on the Indonesian rupiah, the Taiwan dollar and the Philippine peso, while short bets rose on the Indian rupee and the Malaysian ringgit.

Long positions on the Singapore dollar rose to their highest since February 2018.

Official data released on Thursday showed the export-reliant economy grew 0.5% in the third-quarter from a year ago, beating the government’s advance estimate and in line with a Reuters poll.

The data signals some stabilisation in the bellwether Asian economy that has been hit by the U.S.-China spat and prompted the government to tighten its 2019 growth projection toward the top of its previous forecast range.

The Reuters survey is focused on what analysts believe are the current market positions in nine Asian emerging market currencies: the Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and the Thai baht.

The poll uses estimates of net long or short positions on a scale of minus 3 to plus 3.

A score of plus 3 indicates the market is significantly long U.S. dollars. The figures included positions held through non-deliverable forwards (NDFs).
Source: Reuters (By Niyati Shetty)