China's Q2 GDP Miss Spoils Mood In Asia, Won Underperforms

Disappointing Chinese Q2 GDP data dented sentiment in Asia as the session progressed, prompting the ADXY Index (BBG/J.P. Morgan Asia Dollar Index) to swing into a loss.

• CNH: Spot USD/CNH gradually unwound initial losses as participants parsed local activity data. The economy expanded at the slowest pace since the outbreak of the COVID-19 pandemic, making it increasingly difficult for China to meet its full-year growth target. Retail spending held up relatively well in June, while industrial output matched expectations. Unemployment dropped, but the jobless rate among young people rose to a record.
• KRW: The won went offered across the board, showing characteristic sensitivity to offshore yield dynamics. The news that SK Hynix was mulling cutting its 2023 capex by 25% may have amplified pressure to the won. Spot USD/KRW rose to its best levels since 2009, while USD/KRW 1-month NDF narrowed in on yesterday's cycle highs.
• IDR: The rupiah drew some incremental support from Indonesia's latest trade data, which revealed an above-forecast trade surplus. The resumption of palm oil exports was critical in boosting exports. USD/IDR 1-month NDF slipped in reaction to the data, but staged a decent rebound later in the session, as risk sentiment soured.
• PHP: The Philippine peso lost ground, with comments from BSP Gov Medalla drawing attention. The official said that another rate hike in August remains a possibility (after an off-cycle 75bp rate rise announced yesterday), but the odds of a 50bp move are now much reduced, but further course of action will be data-dependent.
• MYR: Spot USD/MYR kept creeping higher, running as high as to MYR4.4510, the highest point since March 2017. Headwinds for the domestic palm oil sector may have helped wound the ringgit.
• THB: The baht plunged to its worst levels since 2006, likely encouraged by the BoT which has been signalling a hands-off approach in the recent days. On Thursday, the central bank played down potential for an off-cycle rate review, after the BSP & MAS unexpectedly tightened monetary conditions.