China Markets Return Next Week, MLF Outcome Potentially On Sunday

USD/Asia pairs have been mixed, despite a generally positive equity tone to the region. A firmer US yields/broader USD backdrop has provided some offset though. As we look ahead to next week, China markets will return. Ahead of that the MLF outcome may print on Sunday (the first working day after LNY). No change is expected by the consensus, although come forecasters are penciling in a 10bps cut. Later next week we get the BI decision in Indonesia and BoK outcome, but neither central bank is expected to adjust policy rates.

• USD/CNH is little changed holding near 7.2180. The equity tone in Hong Kong has been positive for much of this week since markets returned, but this hasn't impacted CNH sentiment meaningfully as the market awaits the return of onshore markets next week from the LNY break. Note that Sunday is slated for the MLF announcement. No change is expected by the consensus in terms of the current 1yr rate at 2.50%, although some forecasters are penciling in a 10bps cut.
• 1 month USD/KRW has firmed versus end NY levels on Thursday, the pair last near 1331/32, around 0.30% weaker in won terms for the session. This comes despite a decent rise in onshore equities (Kospi up over 1.2%). The firmer USD backdrop against the majors is likely weighing at the margins. Earlier data showed a dip in the unemployment rate in Jan and a resilient jobs growth backdrop.
• USD/IDR has firmed in the first part of Friday dealing, although is off session highs. The pair was last at 15640. These moves keep us within recent ranges, albeit with spot testing resistance above the 20-day EMA near 15660 earlier today. Recent lows around 15565 remain intact. IDR is diverging somewhat from the positive local equity market trend. The JCI up a further 0.80% so far today, the index now close to the 7400 level, which is near early Jan highs. Yesterday saw a chunky $174.8mn in offshore inflows into local equities, the most in 2 months. The likelihood of clear election winner and policy continuity is aiding the Indonesian asset backdrop, although markets will look to the cabinet make up (particularly in terms of the FinMin) and fiscal discipline as important signposts for the new regime.
• Earlier data showed a stronger than expected bounce in Singapore exports for Jan. This was consistent with green shoots from the likes of South Korea and Taiwan in recent months. USD/SGD hasn't moved much though, last near 1.3460. The NEER is slightly firmer, last -0.40% from the top end of the policy band (per Goldman Sachs estimates). We were -0.60% earlier this week.
• USD/MYR sits down a touch, last just under 4.7790. Resistance is likely around the 4.8000 region. Earlier data showed better than expected Q4 GDP data, although full year growth for 2023 was slightly below estimates. Comments from BNM also suggested downside risks to the outlook. The current account position was barely positive in Q4. Net portfolio outflows continued in the quarter, albeit at a reduced pace.