China's Policy Shift Weighs On USD/Asia Crosses

Signs of change in China's policy stance took focus in the wake of Monday's 50bp cut to the RRR. On that day, Premier Li pointed to more room for monetary policy tools, including the RRR, while the Politburo signalled the easing of curbs on real estate. The Securities Times reported today that the PBOC will cut the relending rate for SMEs by 25bp. Spillover from China's growing readiness to take supportive policy steps pressured most USD/Asia crosses.

• CNH: The yuan firmed a tad in light of China's latest policy moves. Monthly trade data were ignored, as a marginal beat in exports in conjunction with a solid beat in imports generated a miss in headline trade surplus. Both imports and exports hit fresh record highs.
• KRW: Spot USD/KRW wavered. The rate clawed back its opening loss, only to swing back into negative territory. South Korea's daily Covid-19 cases stayed under 5,000 but critical cases hit a fresh all-time high.
• IDR: The rupiah garnered some strength on the back of broader risk-on impetus, while domestic headline flow provided little to rock the boat.
• MYR: Spot USD/MYR operated below yesterday's close, even as Malaysia's Plantation Minister warned against the impact of labour shortage on domestic palm sector.
• PHP: A beat in Philippine CPI inflation provided a tailwind to the peso, as BSP Gov Diokno admitted that price growth will breach the target this year, before returning to within the target range in 2022 and 2023. Diokno reiterated that Bangko Sentral is ready to maintain its accommodative stance, but is also committed to guarding against any price risks.
• THB: Spot USD/THB traded on a slightly softer footing, as local markets reopened after a public holiday. Thailand's daily Covid-19 cases fell to a five-month low, although officials reported the first Omicron case yesterday.