CNH Outperforms Amid Tighter Offshore Liquidity

USD/Asia pairs are mixed ahead of the US CPI print. CNH has firmer amid tighter offshore liquidity, bucking the firmer USD trend against some of the majors. There are pockets of weakness elsewhere, notably THB and IDR, but losses aren't large. Thailand consumer confidence headlines an otherwise quiet data calendar tomorrow. Indian trade figures could also print, 13-15 Sep release window.

• USD/CNH is tracking close to fresh lows, the pair last near 7.2880 (session lows sit at 7.2836). The pair is bucking the generally firmer USD trend against the majors. We also haven't seen the weaker onshore equity tone weigh materially yet either. A further move higher in CNH implied yields is helping though, amid on-going liquidity pressures. The 1 week sits at 5.62%, fresh highs back to August 22, while the 1 month is near 5.10%, also fresh highs back to August 22. T/N points sit at 4, elevated but below August highs. The PBoC is planning a 15bn yuan offshore bill auction late in September.
• USD/HKD spot sits modestly above session lows, the pair last near 7.8250. We got to 7.8234 in earlier trade. We are now sub all the key EMAs, although the simple 50-day MA at 7.8240 may be somewhat of a support point. The US-HK short term yield differential continues to track lower, now back to +44bps on a 3 month basis, -16bps versus yesterday's levels. 1 month Hibor is back close to 5%, likewise for the 3 month.
• The Rupee has opened dealing little changed, USD/INR sits at 82.92/93 little changed from yesterdays closing levels. Yesterday USD/INR continued to see-saw in a narrow range between the 83 handle and the 20-Day EMA (82.85) as recent ranges persist. In August CPI fell to 6.83% Y/Y from 7.44% prior as govt measures to ensure adequate food supplies kick in. CPI does remain above the RBI's target band. On the wires sometime between today and Friday is August Trade Balance, a deficit of $21bn is expected.
• The Ringgit is little changed in early dealing, USD/MYR continues to consolidate in narrow ranges with little follow through on moves. The pair last prints at 4.6790/4.6825, the pair was ~0.1% firmer yesterday. Palm Oil sits a touch above its lowest level since late June, the November contract is ~10% lower in September as inventories in Malaysia rose 23% in August. A reminder that the local data docket is empty for the remainder of the week.
• The SGD NEER (per Goldman Sachs estimates) is marginally softer in early dealing on Wednesday, the measure sits well within recent ranges and is ~0.7% below the top of the band. USD/SGD is consolidating its Q3 gains above the $1.36 handle, the pair has risen ~3.5% since mid-July as broader USD trends continue to dominate flows in the pair. A reminder that the local docket is empty this week. The next data of note is Monday's August Export data.
• USD/THB has hit fresh YTD highs of 35.73. Like other parts of the region, the recent USD correction hasn't benefited the THB to any great extent. Focus locally remains on the new government's policy agenda, with visa-free entry approved for China tourists. Retail diesel prices will also be lowered. Local equities, continue to struggle to gain traction above the 1550 level. Offshore outflows persist from local equities, now -$285.7mn in September to date.
• USD/IDR sits a touch below session highs, last at 15360/65. We have moved beyond mid August highs, with mid-March highs at 15450 the next potential upside target. The 20-day EMA continues to trend higher, last around the 15280 level. The still firmer US yield backdrop, ahead of the upcoming CPI print, is presenting a headwind. As we noted earlier in the week, seasonality for IDR is quite negative in September, which may be leaving the authorities reluctant to curb rupiah weakness at this stage. Outflows from local bonds were chunky at the start of the week -$216.4mn.