A Familiar Story

A familiar story this week as the greenback held its bid and pushed most Asia FX into negative territory. Short covering and stronger US data are fingered as the main culprits of USD upside, markets look to January payroll data from the US.

• CNH: Yuan weakened, the PBOC fixed USD/CNY at 6.4710, 9 pips above sell side estimates and the thirteenth consecutive higher miss. US President Biden outlined his firm stance on China in his first foreign policy speech on Thursday.
• SGD: Singapore dollar is weaker, USD/SGD gains accelerating as the session goes on. SGD is on track for its worst week since September, USD/SGD is so far up 96 pips this week (0.72%).
• TWD: Spot USD/TWD is broadly flat on the session, bucking the trend for weaker Asia FX. The pair continues to look for a close underneath the 28.00 handle, 1-month implied volatility has continued its decline as the central bank "smooths" the rate into the close
• KRW: Won is the bottom of the pile in Asia. Risk assets are seeing some outflows after the decision earlier this week to extend the short-selling ban imposed in March last year to until early May, while there is also some concern over discussions of an extra budget to facilitate cash handouts.
• INR: Rupee strengthened as the RBI kept rates on hold against an outside chance for a cut. The bank upgraded growth forecasts and was positive on the outlook for the economy.
• IDR: Rupiah is lower, USD dynamics overshadowed local GDP data, with Q4 GDP printing marginally above forecasts, at least on a Y/Y basis.
• MYR: Ringgitt is lower, ignoring higher oil prices to drop to a 3-week low. Malaysian Defence Ismail Sabri announced that the gov't is looking into proposals to allow more businesses to operate throughout the duration of the MCO, but also unveiled stricter rules for LNY.
• PHP: Peso weakened slightly, even as data showed Jan CPI came in at +4.2% Y/Y, beating expectations of an unchanged pace of inflation of +3.5%. Consumer prices soared at the fastest pace since Jan 2019 and unexpectedly rose above the top end of the BSP's target range.
• THB: Baht weakened. Fiscal Policy Office Director-General Kulaya said that the gov't is prepared to take further fiscal steps if economic growth undershoots its base-case forecast. That said, she noted that the FinMin's current growth projection of +2.8% Y/Y is conservative enough and "things are still in line with our forecast."