Market participants turned bullish on the Chinese yuan after nearly seven months and increased long positions on most emerging Asian currencies over the past two weeks, a Reuters poll showed, as prospects of an interim Sino-US trade deal whetted risk appetite.
Both Washington and Beijing have touted the signing of a "phase-1" trade deal by as soon as November, although a recent Reuters report said it could be delayed until December. Responses to the poll were logged before the report came out.
Still, investors took positions for higher capital flows to most emerging markets as hopes grew for a de-escalation of the damaging tariff spat between the world's top two economies, a poll of 14 respondents showed.
Markets turned bullish on the Chinese yuan for the first time since April. The currency has benefited recently from positive trade headlines and local measures to increase liquidity.
Long positions on the Philippine peso touched their highest in 5-1/2 years, amid a rosy outlook for the currency due to better-than-expected third-quarter economic growth, sustained government spending and easing inflationary pressure.
Investors turned bullish on the South Korean won for the first time since early-January, while long positions on the Taiwan dollar rose to their highest since January 2018.
The two economies, which rely heavily on technology exports, are sensitive to any trade news.
Markets scaled back short positions on the Indian rupee and the Malaysian ringgit.
Investors trimmed long bets on the Thai baht, which has been emerging Asia's best performing currency this year. The Bank of Thailand on Wednesday cut interest rates and loosened currency regulations to reign in the baht, whose strength has hurt exports and the tourism industry.
The Asian currency positioning poll is focused on what analysts and fund managers 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 US dollars.
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