Most Asian currencies gained on Thursday, helped by a pullback in the US dollar and the return of some risk appetite to markets, while Malaysia’s ringgit traded flat ahead of a budget announcement and speculation of a snap election.

The Thai baht rose 0.7% in its third straight session of gains and traded at 37.180 to the dollar, and the Singapore dollar was up 0.3%.

The greenback stregthened overnight after data showed private employment rose more than expected in September, which meant the Federal Reserve would likely stick with its hawkish stance.

However, gains in the dollar pulled back in Asia morning trade.

“(Markets) are betting that the Fed will back down on rate hikes and pivot on rising recession risks. But the Fed appears less inclined to swerve so quickly this time than it has on occasion in the past 15 years,” said Vishnu Varathan, an analyst at Mizuho Bank.

US benchmark 10-year yields rose overnight by 14.4 basis points (bps) to 3.761%. Yields in Asia followed, with Indonesian yields up 1.2 bps to 7.213%, and Singapore’s up 6.5 bps to 3.397%.

“We foresee the global investors to continue having intention for reducing their position on Indonesian government bond market as of today until tomorrow,” analysts at Maybank said.

The cautionary selling would come ahead of a key US labour report on Friday, they added. The jobless claims data due overnight would be another indicator of US economic strength, and by extension, the rate of the Fed’s policy tightening.

Malaysia’s ringgit traded flat, ahead of the 2023 budget announcement on Friday.

“The issue with the ringgit is not so much the budget, but actually the expectation that there will be a snap general election imminently. There’s talk that the parliament could be dissolved as as as early as tomorrow to hold the snap general election,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.

Local media have reported speculation that the parliament could be dissolved even before the budget was tabled by the finance minister, adding a further layer of uncertainty for ringgit traders.

Asian currencies dip as inflation, recession woes loom

Oil prices trended higher after OPEC+, a group of oil-exporting countries, said they would further reduce global supply with the largest cut to production since 2020.

Analysts at Maybank said this will further complicate global central banks’ fight against inflation.

Meanwhile, markets in South Korea enjoyed a rally on the back of advances made by heavyweight chipmakers, with the won rising 0.8% and the main stock index up 1.5%.

Late-day buying on Wall Street, which spilled into a rally in US equity futures, also meant the return of some risk appetite to markets.

Stock markets in Asia traded broadly higher, with markets in Thailand and Singapore rising 0.9% and 0.4% respectively. All other major stock markets in Asia also saw gains.

Markets in China remained shut for a holiday.

Highlights:

** India yields rise after country’s bonds not included in J.P. Morgan debt index, traders say

** Philippine government raises $2 bln in dollar bonds, in the first offshore debt issue by the Marcos adminstration