Thai baht leads Asia FX losses after strong U.S. jobs data

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The Thai baht led declines among

emerging Asian market currencies on Monday, after strong U.S.

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payrolls data released last week strengthened the case for

further Federal Reserve rate hikes and dampened risk sentiment.

The Thai baht weakened 0.6%, and Malaysian ringgit

depreciated 0.2%, while the Indonesian rupiah and

Philippine peso were largely unchanged.

The world’s largest economy increased jobs at a brisk clip,

data showed on Friday, signaling labor market resilience that

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is expected to keep the Fed on track to raise interest rates one

more time next month.

“Wage growth staying further below 5% will give the Fed some

comfort the risk of wage-price spiral is not imminent but the

persistent tightness in some industry segments is likely to keep

the Fed on track for one more hike in May,” Alvin Liew, senior

economist at UOB, said in a note.

Markets participants will now turn to the U.S. inflation

print due on Wednesday that will shape the path the Fed will

take in its battle against rising prices. Minutes of the central

bank’s last meeting in March are also scheduled to be released

on Wednesday.

Mounting recession worries and the tumult in the banking

system sparked by the sudden collapse of Silicon Valley Bank in

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March have raised investor hopes that the Fed will cut rates in

the second half of the year to ward off an economic downturn.

Markets are currently pricing in a 70% chance of a 25 basis

point hike at the end of the Fed monetary policy meeting in May,

while also pricing in rate cuts before year-end.

“There appears to be no clear-cut trend in the FX space,

despite the early U.S. dollar declines that boosted most other

currencies,” said Vishnu Varathan, head of economics and

strategy at Mizuho Bank.

“But the bottom line is that Fed relief, based on bets that

the Fed will have to stop hiking far sooner and reverse course

sharply in second half, is now somewhat more fraught.”

Stocks across the region eked out small gains with South

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Korea’s benchmark leading the rises. Shares in the

Philippines and Taiwan gained more than 0.2%

each.

The Singapore dollar was up 0.1%. The country will

hold its monetary policy meeting on Friday, where it is expected

to tighten policy for the sixth consecutive time amid supply

chain disruptions globally.

Elsewhere in the region, Thailand’s central bank expects the

economy will grow 3.6% this year. Fiscal and monetary policy

should prioritize stability rather than economic stimulus, Bank

of Thailand’s governor said on Monday.

Highlights

** Indonesian 10-year benchmark yields are down 1.8 basis

points at 6.661%

** Indonesia’s FX reserves rise to $145.2 bln in March –

c.bank

** Malaysia says it will protect its rights in South China

Sea

Asia stock indexes and currencies

at 0336 GMT

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan -0.38 -1.15 <.n2>

China EC>

India +0.08 +1.10 <.ns ei>

Indonesi +0.07 +4.46 <.jk a se>

Malaysia -0.14 -0.16 <.kl se>

Philippi +0.06 +2.05 <.ps nes i>

S.Korea 11>

Singapor +0.11 +0.71 <.st e i>

Taiwan -0.01 +0.85 <.tw ii>

Thailand -0.66 +0.76 <.se ti>

(Reporting by Navya Mittal in Bengaluru; Editing by Jamie

Freed)