Asian currencies edge lower, stocks mixed ahead of US inflation data

By Ayushman Ojha

Feb 28 (Reuters) –Most Asian currencies inched lower on Wednesday while equities were largely mixed as traders remained cautious ahead of a key U.S. inflation reading due on Thursday that could give clues on the timing of rate cuts by the Federal Reserve.

The Philippine peso PHP= was down 0.4% and the Indonesian rupiah IDR= weakened 0.3%, both on track for their fourth consecutive decline.

The Malaysian ringgit MYR= was largely unchanged at 4.758 per U.S. dollar after gaining 0.3% in the previous session. The currency briefly touched its lowests since January 1998 last week.

The response from Malaysia’s central bank echoed Prime Minister Anwar Ibrahim’s sentiment that the currency is undervalued and should be trading higher on account of positive fundamentals and prospects for the economy.

“The combination of weak domestic fundamentals, lack of USD sellers, lower FDI inflows, persistent portfolio outflows and the absence of central bank intervention drove MYR weakness,” analysts at Goldman Sachs wrote.

They think there is scope for the ringgit to weaken further as the Bank Negara Malaysia (BNM) will not intervene heavily in the FX markets given its moderate level of FX reserves.

Meanwhile, stocks in the region were mixed ahead of U.S. core personal consumption expenditures (PCE) price index data – Fed’s preferred measure of inflation – scheduled for release on Thursday.

The PCE is expected to have risen 0.3% on a monthly basis in January, according to a Reuters poll showed.

Markets currently anticipate June to be the starting point of the Fed’s easing cycle compared with March at the start of the year.

In Asia, Singapore shares .STI were down as much as 0.7%, on track for their fourth straight fall, while Malaysian equities .KLSE lost as much as 0.5%.

Meanwhile, Indonesia stocks .JKSE were 0.6% higher and South Korean shares .KS11 gained as much as 1.2%.

Amongst local data, the focus is on a February inflation report from Indonesia and Thailand, both due on Friday.

Investors are also looking out for any signals on policy easing by regional central banks, with recent inflation prints from Southeast Asian economies showing a downward trend in inflation.

Markets in Taiwan .TWII were closed on Wednesday for a public holiday.

HIGHLIGHTS:

** India’s fourth quarter GDP due on Thursday and China’s Feb PMI data due on Friday

** Thai c.bank to allow asset management firms to tackle household debt

** Hong Kong scraps property tightening measures to aid economic recovery

Reporting by Ayushman Ojha in Bengaluru; Editing by Michael Perry