Asian FX dwindles

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    Most Asian currencies weakened on Wednesday, with the South Korean won falling the most, as comments from US President Donald Trump dashed bets of a speedy resolution to Washington’s drawn-out trade war with Beijing.

    Trump said a trade deal with China might have to wait until after the 2020 presidential election, knocking hopes that a “phase 1” deal would be signed by Dec. 15, when additional tariffs on Chinese goods are set to take effect.

    “Investors have become more desensitized to trade headlines of late but given the extent to which trade optimism was running towards the top end, the latest trade headlines are extremely bitter pills for the market to swallow,” Stephen Innes, Asia Pacific market strategist at AxiTrader, said in a note.

    China, which stands to lose the most from a longer trade war, saw its currency weaken for a third session and touch a more than one-month low at one point in the session.

    Leading the declines in the region, the South Korean won fell 0.6 percent and was set for a seventh straight session of losses.

    The currency, which is already sensitive to trade headlines, has seen risk sentiment sour further after neighbor North Korea earlier this week accused the US of trying to drag out denuclearization talks.

    In contrast to the barrage of negative trade headlines, the day’s busy economic roster showed China service data hitting a 7-month high, Malaysian exports drop slower than expected and India’s dominant services sector rebounding to growth.

    “Economic green shoots are a budding theme to end 2019 and may kickstart 2020 on a positive tone,” OCBC said in a note.

    However, the positive prints did little to stave off caution towards Asian currencies, with the Malaysian ringgit and the Indian rupee down 0.1 percent, each.

    The Philippine peso was on firmer footing than its peers, slightly higher ahead of annual inflation data on Thursday.

    Inflation likely quickened for the first time in six months in November but the expected number will be below the central bank’s comfort range for the year, a Reuters poll showed.

    The expected bounce led ING to posit in a note that the country’s central bank would hold rates at its Dec. 12 meeting.

    “The peso may benefit from a rebound in inflation and the possible BSP pause as the dovish Governor closes shop for the year,” ING said in the note. – Reuters