Fresh Highs For USD/CNH, But No Negative Spillover To The Rest OF the Region

USD/CNH hit fresh highs post the PBoC rate cut. However, there was very little negative spill over to the rest of the region. Indeed USD/KRW slumped further to fresh multi-month lows. Tomorrow, we get South Korea trade prices early, while India wholesale prices print later on. We are also still waiting for China May credit/new lending figures.

• USD/CNH surged post the PBoC's 7-day reverse repo cut by 10bps (to 1.90%). The first cut since August last year. We got just above 7.1780 before selling interest emerged. Dips back to the low 7.1600 region were supported, we last tracked above 7.1700. Onshore yields are weaker across the board, 2yr bond yield -2.5bps to 2.07%, the 10yr to 2.64%, -4bps. The 5yr NDIRS is down by 6.5bps to 2.375%, fresh lows back to Sep last year. Today's PBoC move has seen expectations rise for a 1 yr MLF cut on Thursday. Technically, there doesn't appear much preventing a move towards 7.2000 in USD/CNH.
• USD/KRW 1 month NDF has broken down through 1270 today, last slightly above session lows, with the pair near 1271. We saw a brief rise to 1283 after China cut the 7-day repo rate but this was used as a selling opportunity by the market. The won continues to ride the better tech equity sentiment wave. Offshore invesors have bought $105.5mn of local shares so far today, while the Kospi is up 0.40% at this stage. There is also some domestic optimism that the economy will be better in the second half.
• USD/INR prints at 82.41/44, little changed from yesterday's closing levels in early dealing. On the wires late yesterday May CPI printed at 4.25% Y/Y below the expected 4.31% Y/Y ticking lower from 4.70% in April. This was the lowest CPI print since April 2021. Industrial Production for April also crossed, the measure rose 4.2% Y/Y greater than the expected 1.4%. Looking ahead the domestic data calendar is empty today, however tomorrow May Wholesale Prices will cross. A fall of 2.50% Y/Y is expected.
• The SGD NEER (per Goldman Sachs estimates) has firmed in early dealing printing a fresh cycle high. We now sit ~0.5% below the upper end of the band. USD/SGD is a touch lower this morning, the pair firmed in the wake of the PBOC's 7 day repo rate cut, but resistance was seen ahead of the 20-Day EMA and gains were pared. Data-wise the only data of note this week is May Export data on Friday. Non-Oil Domestic Exports are estimated to have fallen 1.9% M/M and 7.7% Y/Y. Electronic Exports are also due, there is no estimate for the release.
• The Ringgit printed its weakest level since 26 May this morning before marginally paring losses. USD/MYR sits at 4.6200/30 up ~0.1% marginally paring gains after printing a high of 4.6283. Technically the uptrend remains in place, bulls now target the high from 26 May at 4.6398. Bears first look to break the 20-Day EMA (4.5812) to turn the tide. A reminder that the domestic data calendar is empty for the remainder of the week.