Equity Gains Drive USD/Asia Pairs Lower, Tech Sensitive Plays Outperform

USD/Asia pairs are lower today, with equity sensitive plays outperforming, particularly in the tech space. This has been evident for both KRW and TWD. The regional equity tone has been strong, led by higher US tech futures post the Nvidia results. USD/CNH has been faded on upticks, the pair touching fresh lows for the week sub 7.2700. Still to come is the BI decision, with no change expected. Tomorrow, Malaysia CPI is out, along with Singapore IP and Thailand trade.

• USD/CNH has turned back lower. We hit fresh lows for the week at 7.2679, but sit back above 7.2700 in latest dealings. Earlier highs were near 7.2950. Onshore equities started slowly, but gains have improved as the session progressed. The CSI 300 now up over 1.3%, while the HSI has rallied more than 2%. For USD/CNH we aren't too far off the 20-day EMA, near 7.2600. The pair hasn't been sub this support level since late July in any meaningful way.
• Spot USD/KRW has sunk 1.4% today to be back near 1320. This is back to earlier August levels, with the won riding the better equity wave in the tech space. The Kospi is +1.20% firmer at this stage, with offshore investors adding nearly $300mn to local equities so far. A hawkish BoK hold earlier also likely helped at the margins. Spot is close to its 20-day EMA (~1319), but the 1 month NDF has already tested this support point.
• Spot USD/TWD has played some catch up to the downside, the pair slipping 0.50% to be back at 31.76. The 20-day EMA isn't far off at 31.74. The better tone to tech equities has aided local shares, the Taiex +1.2% at this stage.
• Spot USD/HKD broke above 7.8400 late yesterday and hit highs in NY trade near 7.8425. We sit slightly lower now, back near the 7.8395 level, having been range bound for much of today's session. US-HK yield differentials maintained an uptrend for Wednesday, with the US yield pullback less evident in the very short end. 3 month Hibor fell to 4.78% in yield terms on Wednesday, we were above 5% at the end of last week.
• USD/IDR is back near 15250, lows back to the first half of August. We aren't too far away from the simple 200-day MA which comes in at 15210, the 20-day EMA is slightly higher around ~15218. Spot IDR gains are close to 0.30% at this stage. The rupiah is benefiting from the broader improvement in risk appetite, which is being led by global equities at this stage. The focus ahead will be on the upcoming BI policy meeting later. No changes to rates are expected, with recent IDR weakness the central bank is unlikely to turn too dovish.
• The Ringgit has firmed in early dealing as participants digest yesterday's US PMI print which was softer than forecast. USD/MYR is down ~0.3% and sits a touch above the 4.64 handle. In Wednesday's dealing USD/MYR edged higher printing it's highest close since mid-July. July CPI crosses tomorrow, a downtick in inflation to 2.1% Y/Y from 2.4% is expected.
• The Rupee has opened dealing on the front foot as local participants digest yesterday's US PMI print which was softer than forecast. USD/INR prints at 82.45/46, the pair is ~0.3% lower today. Reserve Bank of India's Das said on Wednesday that core inflation was still elevated although he expects food prices to start cooling from September. A reminder that the docket is empty for the remainder of the week.
• The SGD NEER (per Goldman Sachs estimates) is marginally firmer in early dealing and sits a touch off its highest level since 3 Aug. The measure is ~0.5% below the top of the band. USD/SGD is softer in early dealing , the pair is ~0.1% lower this morning. Broader USD trends dominated flows yesterday, the pair fell ~0.5% after the softer than forecast US PMI print. Looking ahead on the wires tomorrow we have July Industrial Production. A fall of 3.4% Y/Y is expected.