* USD short squeeze temporary, Asian FX to resume climb -
analyst
* Bullish bets on South Koran won, Singapore dollar most
reduced
* View on Indian rupee steady post high-spending budget
* Yuan bulls take support from expectation of tighter PBOC
stance
By Rashmi Ashok
Feb 11 (Reuters) - Long positions on most Asian currencies
were scaled back, a Reuters poll showed, as investors contended
with unexpected resilience in the U.S. dollar at the start of
the year, though long-term expectations of a weaker dollar
remained unchanged.
Bullish bets on the South Korean won KRW=KFTC and
Singapore dollar SGD= were trimmed the most and were at their
lowest since early October, while investors were verging on
turning bearish on the Malaysian ringgit MYR= , the fortnightly
poll of 14 respondents found.
The cut in long bets was a result of the dollar short
squeeze in developed markets and not due to a structural change
in sentiment towards Asian units, said Jeffrey Halley, senior
market analyst at OANDA.
Speculators have been reducing short positions - bets the
dollar will weaken - and some analysts have flagged the
likelihood they will be forced out of their short positions by a
rise in the dollar, or a 'squeeze'.
"With the market pre-programmed to sell dollars for most of
2020, when the plan didn't come together in January as inflation
expectations and U.S. yields rose, some doubts have crept into
weaker long Asia holders," Halley said, adding it would only be
a temporary correction.
Overnight, after the poll results, dollar bulls were held in
check after tepid U.S. inflation data was released, sending
Treasury yields lower even as Federal Reserve Chairman Jerome
Powell struck a dovish tone and vowed to keep policy loose.
Investors were close to turning bearish on the ringgit, with
bullish bets at their lowest since late-October, as a renewed
COVID-19 outbreak sparked fresh restrictions and raised the need
for continued fiscal and monetary accommodation.
Aside from global factors pressuring outlook, ANZ analysts
also noted domestic challenges to Malaysia's growth, including
weak global demand for its commodity exports as well as sluggish
domestic investment and discretionary spending.
Long bets on China's yuan CNY=CFXS were also lowered,
though by a smaller margin, given the central bank's preference
to contain excessive speculation and leverage, which has sparked
talks of monetary tightening.
Analysts at DBS noted that while the People's Bank of China
recently communicated it would not withdraw stimulus too early,
adjustments in the open market operations and the resultant
impact on short-term rates have suggested otherwise.
While analysts do not expect a sudden U-turn from the PBOC's
current position, most expect 2021 will see some return to a
tighter policy.
Bullish bets on the Indian rupee INR=IN also held steady,
amid improved growth outlook after the government unveiled a
highly expansionary federal budget last week, although increased
borrowing rattled bond markets and have sent yields higher.
The Reuters survey is focused on what analysts believe are
the current market positions in nine Asian emerging market
currencies: the Chinese yuan, South Korean won, Singapore
dollar, Indonesian rupiah, Taiwan dollar TWD=TP , Indian rupee
INR=D2 , Philippine peso PHP=PDSP , 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
U.S. dollars. The figures included positions held through
non-deliverable forwards (NDFs).
The survey findings ASIAPOSN are provided below (positions
in U.S. dollar versus each currency):
Date USD/C USD/K USD/S USD/I USD/T USD/I USD/M USD/P USD/T
NY RW GD DR WD NR YR HP HB
11-F -0.91 -0.24 -0.29 -0.36 -0.63 -0.53 -0.04 -0.47 -0.41
eb
28-J -1.08 -0.64 -0.79 -0.41 -0.68 -0.55 -0.30 -0.66 -0.36
an
14-J -1.21 -0.87 -0.83 -0.57 -0.89 -0.22 -0.30 -0.80 -0.50
an
10-D -1.53 -1.68 -1.11 -0.61 -1.6 -0.2 -0.53 -0.97 -0.87
ec
26-N -1.43 -1.29 -1.01 -0.92 -1.08 -0.3 -0.75 -0.8 -0.66
ov
12-N -1.28 -1.52 -0.99 -1.01 -1.08 -0.26 -0.44 -0.67 -0.8
ov
29-O -0.86 -1.14 -0.49 0.09 -1.23 -0.07 -0.03 -0.09 -0.02
ct
15-O -1.07 -0.94 -0.72 0.35 -1.12 -0.44 -0.33 -0.15 0.1
ct
01-O -0.47 -0.53 -0.25 0.61 -0.68 -0.31 -0.31 -0.68 0.38
ct
17-S -1.25 -0.6 -0.61 0.39 -0.51 -0.54 -0.89 -1.07 -0.17
ep
03-S -1.41 -0.71 -0.99 -0.19 -0.4 -0.91 -0.96 -1.34 -0.15
ep