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ASIA FX: USD/CNH At Fresh YTD Highs, Won Outperforms

ASIA FX
BulletEM BulletAPACEmerging Market News

USD/CNH hit fresh YTD highs in early trade, getting to 7.3148, but we sit lower now, last close to 7.3000. This is still 0.20% weaker in CNH terms for the session so far. Spot USD/CNY has also risen, the pair last above 7.2900, fresh highs back to Nov 2023. 

  • There didn't appear to be a fresh catalyst for today's yuan weakness. The fixing error widened and the actual fix held sub 7.2000. Recent tariff threats from incoming President Trump, along with depressed onshore yields (although we have seen a slight uptick today) appears to be weighing on sentiment still.
  • Local equities are close to flat, despite chip restrictions from the US, which were less harsh than feared.
  • Spot USD/KRW has fared slightly better. We are close to unchanged, last near 1404. The won is also outperforming a firmer USD/JPY backdrop. The local equity backdrop is quite strong, the Kospi up 1.70%, amid broader tech/chip gains. Offshore investors bought +$392.5mn of local shares so far today, a healthy inflow backdrop. Caution around fresh longs above 1400 could have also been tempered by earlier headlines around FinMin/NPS discussing the pension funds hedging.
  • Spot USD/TWD has pushed higher, the pair last making fresh highs of 32.65/70, amid broader USD gains. The better equity backdrop not helping to offset at this stage. 
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USD/CNH hit fresh YTD highs in early trade, getting to 7.3148, but we sit lower now, last close to 7.3000. This is still 0.20% weaker in CNH terms for the session so far. Spot USD/CNY has also risen, the pair last above 7.2900, fresh highs back to Nov 2023. 

  • There didn't appear to be a fresh catalyst for today's yuan weakness. The fixing error widened and the actual fix held sub 7.2000. Recent tariff threats from incoming President Trump, along with depressed onshore yields (although we have seen a slight uptick today) appears to be weighing on sentiment still.
  • Local equities are close to flat, despite chip restrictions from the US, which were less harsh than feared.
  • Spot USD/KRW has fared slightly better. We are close to unchanged, last near 1404. The won is also outperforming a firmer USD/JPY backdrop. The local equity backdrop is quite strong, the Kospi up 1.70%, amid broader tech/chip gains. Offshore investors bought +$392.5mn of local shares so far today, a healthy inflow backdrop. Caution around fresh longs above 1400 could have also been tempered by earlier headlines around FinMin/NPS discussing the pension funds hedging.
  • Spot USD/TWD has pushed higher, the pair last making fresh highs of 32.65/70, amid broader USD gains. The better equity backdrop not helping to offset at this stage.