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CNH Rallies As Growth Outlook Improves

ASIA FX

USD/Asia pairs are lower across the board, albeit to varying degrees. CNH and THB have outperformed, while IDR has lagged somewhat. Better than expected China PMIs have been the main impetus for lower USD/Asia levels. Tomorrow, South Korea IP and the PMI is due. Customs trade data for Thailand is also out.

  • USD/CNH is tracking back at the 6.9150 region, around 0.60% below NY closing levels. Lows for the session came in just under 6.9100. China equities are outperforming, while Northbound stock connect flows have returned today, for the first time since last Tuesday. For USD/CNH we are very close to the simple 200-day MA.
  • 1 month USD/KRW is 0.60% lower, last near 1313/14, with onshore markets closed today. South Korea export growth remained weak in Feb, but there is scope for improvement given China's rebound.
  • USD/INR has slipped in early trade, following the lead of USD/Asia lower. The pair prints at 82.50/50, around 0.20% sub yesterday's closing levels. This is still lagging broader USD/Asia moves though. The manufacturing PMI was close to last month's outcome (55.3 versus 55.4). March is a stronger seasonal month for INR, as we head into fiscal year end, although the RBI may use any better flow backdrop to rebuild its FX reserve position.
  • USD/IDR has also lagged broader USD moves, with the pair only a touch below Tuesday closing levels (last at 15248). Core CPI printed weaker than expected, reaffirming the case for an on hold BI. Rate differentials with the US are close to recent lows, which may be weighing on IDR at the margin.
  • THB is over 1% stronger, with USD/THB back down through 35.00 (last near 34.95). Optimism around the China pick up is fueling hopes of a better tourism picture for Thailand.

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