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ASIA FX: USD/CNH To Multi Month Highs Amid US Yield Bounce/Fresh Tariff Threat

ASIA FX
BulletEM BulletAPACEmerging Market News

USD/CNH has surged higher, the pair rising above 7.2800, to fresh multi month highs. Upside focus could be on the 7.3000 level, while beyond that is the 7.3114 level, which is a YTD high. 

  • We had better Caixin manufacturing PMI data (rising to a 4 month high), while onshore equities are also higher at the start of the month. Firm offset has come from higher US yields (now that we are clear of month end), while EUR weakness has spilled over elsewhere amid fresh political concerns in France. Also, over the weekend we had fresh tariff threats from incoming US President Trump. He warned the BRICS countries they will suffer 100% tariffs if they abandon the USD or look to create alternative reserve currencies.
  • The fresh low in China yields, with the 10yr threatening to trade sub 2.00% is also a yuan headwind.
  • Spot USD/KRW is also higher, last near 1403/04, but hasn't underperformed the majors or other Asian currencies meaningfully. Recent highs in the pair near 1411 remain intact. The PMI for Nov rose to 50.6 from 48.3 prior, providing some positives around the growth backdrop.
  • Spot USD/TWD is pushing higher, the pair last near 32.60. This is close to a break higher for the pair. Recent highs are at 32.61, with a clean break higher potentially seeing late July highs targeted (32.92). The Taiwan PMI also recovered ground, up to 51.5, from 50.2, but market focus was on firmer USD trends elsewhere. 
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USD/CNH has surged higher, the pair rising above 7.2800, to fresh multi month highs. Upside focus could be on the 7.3000 level, while beyond that is the 7.3114 level, which is a YTD high. 

  • We had better Caixin manufacturing PMI data (rising to a 4 month high), while onshore equities are also higher at the start of the month. Firm offset has come from higher US yields (now that we are clear of month end), while EUR weakness has spilled over elsewhere amid fresh political concerns in France. Also, over the weekend we had fresh tariff threats from incoming US President Trump. He warned the BRICS countries they will suffer 100% tariffs if they abandon the USD or look to create alternative reserve currencies.
  • The fresh low in China yields, with the 10yr threatening to trade sub 2.00% is also a yuan headwind.
  • Spot USD/KRW is also higher, last near 1403/04, but hasn't underperformed the majors or other Asian currencies meaningfully. Recent highs in the pair near 1411 remain intact. The PMI for Nov rose to 50.6 from 48.3 prior, providing some positives around the growth backdrop.
  • Spot USD/TWD is pushing higher, the pair last near 32.60. This is close to a break higher for the pair. Recent highs are at 32.61, with a clean break higher potentially seeing late July highs targeted (32.92). The Taiwan PMI also recovered ground, up to 51.5, from 50.2, but market focus was on firmer USD trends elsewhere.