CNH Rebounds As Yuan Defence Steps Up

USD/Asia pairs are mostly lower, led by a sharp CNH rebound, as the authorities stepped up their defence of the yuan. THB outperformed early but has trimmed gains from best levels. Only MYR is not firmer against the USD in the session to date. Still to come is Taiwan export orders. Tomorrow, the focus will rest on the first 20-days of trade data for July out of South Korea.

• USD/CNH got to lows near 7.1750, but sits slightly higher now, last in the 7.1840/50 region, This is +0.65% stronger for the session and more than unwinds yesterday's dip. The CNY fixing was the strongest (relative to expectations) since Nov 2022, while macroprudential rules were shifted to enable onshore firms' greater access to offshore capital. Bloomberg also reported the authorities are considered easing mortgage restrictions.
• USD/THB hit fresh lows of 33.76 in earlier trade. We now sit higher, back around 33.90/95. This is fresh lows in the pair back to mid May. Lows at that juncture were in 33.55/60 region. Beyond that lies the 33.40 region, levels seen in early February of this year and then the 33.00 figure level. Highs from yesterday were near 34.20, while at the start of the week the pair topped out around the 34.70 level.
  Broader USD weakness is helping the baht, although in the past week it has rallied over 2%, a clear outperformer, as market optimism grows we may be getting towards an end to the political impasse. Still, a Pheu Thai candidate could be fighting an uphill battle to secure enough votes in parliament, with the next PM vote scheduled for the 27th of July.
• The rupee is marginally firmer in early dealing, the USD is broadly weaker however the Rupee is underperforming in the USD/Asia space. USD/INR prints at 82.03/05, the pair found support ahead of 82 in early trade and continues to hold above the figure. Strong inflows by foreign investors into Indian equities have continued with $369mn net inflow on Monday and Tuesday of this week.
• The Ringgit has pared early losses as broader USD/Asia weakness after a firmer than forecast Yuan fixing saw USD/MYR retreat from session highs. USD/MYR prints at 4.5450/4.5500, the pair is ~0.2% above yesterday's opening levels. Palm Oil futures sit at their highest level since early March, as supply concerns in the US market spill over. The market has looked through a stronger than forecast June Trade Balance, which printed at MYR25.81bn vs 16.65bn exp.
• The SGD NEER (per Goldman Sachs estimates) is little changed in early dealing, the measure sits a touch off cycle highs and is ~0.2% below the top of the band. Broader USD trends are dominating flows today, USD/SGD is down ~0.2% a touch above session lows and last prints at $1.3215/25. A reminder that the local docket is empty for the reminder of the week. Looking ahead, the next data of note is Monday's June CPI print, there are no estimates as of yet and the prior readings were 5.1% Y/Y (headline) and 4.7% Y/Y (core).
• USD/PHP sits below earlier highs, the pair last in the 54.40/45 region. Earlier highs were close to 54.65. The pull back is in line with broader USD weakness, with the move lower in USD/CNH particularly strong today. For USD/PHP we remain above recent lows around the 54.30 level. This keeps us within recent ranges for the pair. Peso bulls will target a move towards 54.20, late March lows, while we need to fill the gap back towards the July 12 low of 54.94 on any renewed upside push. On the geopolitical front, the country stated the US has pledged to support the Philippines defence upgrade and that the Philippines will do everything to assert its rights in the South China Sea.