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ASIA FX: USD/CNH Breaks Higher, KRW Benefits From BoK Comments

ASIA FX
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Both onshore and offshore yuan are weaker by around 0.15% against the USD. Modest losses, but USD/CNH has broken above 7.1500. Onshore spot is near 7.1400, also a multi month high. 

  • For USD/CNH, highs in mid August around 7.1850 may present an upside target. Note before this we have the 200-day EMA near 7.1710. Today's break is a clear shift, if maintained, above the 100-day (near 7.1475). Direct FX catalysts don't appear evident, with equities lower in the first part of trade.
  • Proximity to the US election is another potential driver. The risk reversal space has got the 1 week and 2 week RR's close to flat and mostly trending higher, but the move is not sharp. 2 week implied vol is surging, around 10.75% in latest dealings. 
  • USD/KRW spot got to lows of 1378.65 in earlier dealings, as BoK Governor Rhee stated that the country has enough FX reserves to stabilize the USD/KRW rate if needed (RTRS). We have since rebounded though to 1384/85, dragged higher by the weaker yuan. Recent highs remain intact above 1391.
  • Spot USD/TWD remains very stead, holding under 32.10 at this stage. 
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Both onshore and offshore yuan are weaker by around 0.15% against the USD. Modest losses, but USD/CNH has broken above 7.1500. Onshore spot is near 7.1400, also a multi month high. 

  • For USD/CNH, highs in mid August around 7.1850 may present an upside target. Note before this we have the 200-day EMA near 7.1710. Today's break is a clear shift, if maintained, above the 100-day (near 7.1475). Direct FX catalysts don't appear evident, with equities lower in the first part of trade.
  • Proximity to the US election is another potential driver. The risk reversal space has got the 1 week and 2 week RR's close to flat and mostly trending higher, but the move is not sharp. 2 week implied vol is surging, around 10.75% in latest dealings. 
  • USD/KRW spot got to lows of 1378.65 in earlier dealings, as BoK Governor Rhee stated that the country has enough FX reserves to stabilize the USD/KRW rate if needed (RTRS). We have since rebounded though to 1384/85, dragged higher by the weaker yuan. Recent highs remain intact above 1391.
  • Spot USD/TWD remains very stead, holding under 32.10 at this stage.