China Negatives Spill Over, Countering Initial Risk-On Impulse

China headline flow provided a mix of negative signals, countering the initial risk-on impetus, carried over from Tuesday's Wall Street session. Although Shanghai extended its run without community transmission of COVID-19, daily case tallies rose in Beijing, Tianjin and Sichuan, fuelling concerns about virus flare-ups. Elsewhere, China's new home prices fell for the eight straight month in April, with the pace of decline accelerating to 0.30% M/M, signalling continued distress in the local property sector despite support measures proposed to date.

• CNH: Spot USD/CNH went bid carried by local headline flow, with the upswing facilitated by the reintroduction of weak bias into the PBOC's yuan fixing. The mid-point of permitted USD/CNY trading band was set at CNY6.7421, 21 pips above sell-side estimate. USD/CNH is on track to snap a three-day losing streak.
• KRW: The won led gains in the Asia EM basket as spot USD/KRW failed to claw back the entirety of its opening losses, even as 1-month NDF pushed higher. Broader risk dynamics were in the driving seat.
• IDR: Spot USD/IDR soared to its highest point since early Oct 2020.
• MYR: The ringgit slipped but spot USD/MYR failed to re-test yesterday's high.
• PHP: Spot USD/PHP crept higher ahead of tomorrow's BSP monetary policy decision, but key resistance from PHP52.500 remained intact.
• THB: The baht weakened from the off as participants assessed yesterday's GDP data & downgrade to the 2022 growth outlook by Thailand's main economic forecaster.
• INR: Spot USD/INR extended its pullback from an all-time high, in the wake of Tuesday's wholesale prices beat & suspected RBI intervention.