Asia FX: Tech-driven risk-off weighs before NFP – MUFG

MUFG analysts Khang Sek Lee and Lin Li note that the recent tech-led equity selloff has undermined Asia FX, offsetting support from lower Oil prices and US yields. Safe-haven demand has lifted the Dollar and Japanese Yen, while upcoming US Nonfarm Payrolls data could reinforce expectations of further Fed tightening, adding pressure on Asia FX, particularly tech-sensitive currencies like TWD and KRW.

Risk sentiment pressures regional currencies

"For Asia FX, the sharp deterioration in risk sentiment threatens to outweigh the relief from lower oil prices and US yields in Asia’s trading session today, especially for tech-sensitive currencies such as TWD and KRW."

"Amidst the risk-off episode, the dollar has regained some ground with the DXY rising towards 101.6 as investors sought safe-haven assets."

"Attention turns to today’s US nonfarm payrolls report, with markets expecting 70k jobs added in October, up from 29k in September."

"Stronger-than-expected JOLTS and ADP data suggest a better-than-expected US labour demand, raising the risk of further Fed tightening, adding another source of pressure for Asia FX."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)