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ASIA FX: USD/CNH Tests 7.2500, Foreign Policy Hawks Touted For Key US Positions

ASIA FX
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The weaker yuan trend has remained in focus in the first part of Tuesday trade. USD/CNH highs were just above 7.2500, while onshore spot continues to gravitate higher, the pair last above 7.2300. We had some earlier respite as China equities rebounded amid potentially further property easing measures (BBG stated lower taxes were being considered). However, this provided on brief relief for the yuan. 

  • The USD/CNY fixing was neutral, so little push back through this mechanism around recent yuan weakness. A number of US new services also touted some foreign policy hawks for key Trump administration positions (Marco Rubio for Secretary of State and former veteran Republican Mike Waltz for National Security Adviser), is also likely in focus.
  • CNY options volumes have dominated trade so far today, while longer dated USD/CNH risk reversals are trending up.  
  • Spot USD/KRW has been supported on dips, but hasn't made fresh post election highs above 1404. The pair was last near 1401, little changed for the session. We are seeing tech related equity weakness, with the Kospi off over 1%. The Korea Development Institute (“KDI”) lowered its export growth outlook for 2025 to +2.1%.(as per article in Yonhap).
  • Spot USD/TWD is pushing higher, the pair last near 32.40. These levels were last seen in mid August. Yuan weakness and a decent equity sell off (-1.9% for Taiex) have weighed on the TWD so far today. 
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The weaker yuan trend has remained in focus in the first part of Tuesday trade. USD/CNH highs were just above 7.2500, while onshore spot continues to gravitate higher, the pair last above 7.2300. We had some earlier respite as China equities rebounded amid potentially further property easing measures (BBG stated lower taxes were being considered). However, this provided on brief relief for the yuan. 

  • The USD/CNY fixing was neutral, so little push back through this mechanism around recent yuan weakness. A number of US new services also touted some foreign policy hawks for key Trump administration positions (Marco Rubio for Secretary of State and former veteran Republican Mike Waltz for National Security Adviser), is also likely in focus.
  • CNY options volumes have dominated trade so far today, while longer dated USD/CNH risk reversals are trending up.  
  • Spot USD/KRW has been supported on dips, but hasn't made fresh post election highs above 1404. The pair was last near 1401, little changed for the session. We are seeing tech related equity weakness, with the Kospi off over 1%. The Korea Development Institute (“KDI”) lowered its export growth outlook for 2025 to +2.1%.(as per article in Yonhap).
  • Spot USD/TWD is pushing higher, the pair last near 32.40. These levels were last seen in mid August. Yuan weakness and a decent equity sell off (-1.9% for Taiex) have weighed on the TWD so far today.