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CNH Lags Firmer Asian FX Backdrop

ASIA FX

Most USD/Asia pairs are lower amid a supportive regional equity backdrop. CNH is an exception, undermined by a weaker local equity tone. IDR has also been steady to slightly weaker. Still to come today is Taiwan export orders for Nov. Tomorrow, we have South Korea PPI and the first 20-days export data for Dec. The BI decision in Indonesia is also due, but no change is expected.

  • USD/CNH has risen modestly, last near 7.1350 (+0.20%), slightly sub session highs. We started the session close top 7.1200. The Yuan has underperformed most other Asian currencies. A weaker equity tone to the CSI 300 hasn't helped, with the index close to recent cyclical lows. China equity underperformance compared to the improved global trend has been more prominent in recent months. As expected, the 1yr and 5yr LPRs were held steady.
  • 1 month USD/KRW saw a subdued start in early trade but has seen greater downside as the session progressed. We last tracked near 1296.5, against earlier highs were close to 1301. Onshore equities have risen just over 1.6% amid broadly positive risk appetite. Offshore investors have added 300mn to local shares. Slightly lower USD/JPY levels have helped at the margin.
  • Rupee has sits at 83.14/15, in line with yesterday’s closing levels marking a muted start to Wednesday’s trade. Monday marked the seventh straight day of inflows into Indian Equities as foreign investors bought a net of $215.2mn. A reminder that the data docket is light this week.
  • The Ringgit has firmed in early dealing today trimming some of its recent losses. USD/MYR remains well within the 4.63/70 range which has persisted for the most part since early November. We last print at 4.6530/80, ~0.5% below yesterday's closing levels. Looking ahead the local data docket is empty until Friday when November CPI is due. A downtick in CPI to 1.7% Y/Y from 1.8% Y/Y is expected.
  • The SGD NEER (per Goldman Sachs estimates) is steady this morning, we remain well within recent ranges. The measure sits ~0.4% below the top of the band. USD/SGD continues to see-saw around the $1.33 handle as broader greenback trends dominate flows. A downtick in the USD yesterday saw the pair retreat below the handle and we sit ~0.1% lower this morning at $1.3270/75. A reminder that the data docket is empty for the remainder of the week.
  • USD/PHP has tracked lower, last in the 55.75/80, and away from recent highs above 56.00. Oil prices may be a headwind in the near term, but we have seen steadier Brent levels so far today. BSP Governor Remolona stated the BSP was unlikely to cut rates in the near term. The CB remains wary of supply side shocks.
  • USD/IDR has drifted a little higher, last at 15515. This comes despite modest US Tsy futures gains, although Tuesday US trade saw US real yields steadying. Tomorrow the BI decision is due, with no change expected.

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