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Divergence With CNH Persists


Outside of the Chinese yuan, Asian FX has posted solid gains today, led by KRW and THB. A positive regional equity backdrop for the most part has aided risk appetite. Regional currencies have also outperformed an indifferent USD trend against the majors today. Tomorrow, Philippines Q3 GDP is due, along with Thailand consumer confidence. China aggregate credit figures are also due between the 15th of the month.

  • USD/CNH has spent most of the session on the front foot, currently tracking near 7.2500, +0.25% on NY closing levels. Onshore equities are weaker amid further lockdown measures and rising Covid case numbers. Inflation data also argues for a further loosening in financial conditions to support growth. We still await October aggregate financing numbers.
  • 1 month USD/KRW hit close to 1360, right on the simple 100-day MA. This is fresh lows in the pair back to early September. The currency continues to ride the firmer equity wave (Kospi +1% again today) and we continue to see outperformance against CNH. Sentiment has stabilized somewhat this afternoon, the pair back to 1365.
  • Spot USD/IDR trades -48 figs at 15,650 in line with the broader regional trend. Bears look for losses towards Oct 28 low of 15,523, while a rebound towards Nov 4 high of 15,750 would please bulls. Indonesia's retail sales estimate rose 4.51%Y/Y last month against the revised +4.56% recorded in September.
  • Losses in spot USD/PHP have resulted in a breach of the ascending 50-DMA, a notable layer of support. The pair last deals -0.35 at 587.935, with bears now setting their sights on Oct 28 low of 57.830. The Philippines' agricultural production rose 1.80% Y/Y in Q3 after a 0.60% contraction in Q2. Rice production was up 1.0% Y/Y. Thursday will see the release of Q3 GDP data. The local statistics authority revised the Q2 growth estimate to +7.5% Y/Y from +7.4%.
  • At typing, spot USD/THB trades -0.47 at 36.833, after lodging new two-month lows at 36.78. The penetration of the 50-DMA yesterday shifts focus to the 100-DMA, which kicks in at 36.622. The baht has been one of the top performers in Asia EM space quarter-to-date, adding 3.34% versus the greenback, with only the Korean won faring better. Foreign investors were net buyers of $91.52mn in Thai stocks Tuesday, another decent round of inflows.

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