Fresh Highs In USD/IDR Prompt BI Intervention

Most USD/Asia pairs have tracked higher today, mostly notably USD/IDR, which prompted fresh intervention from the authorities. CNH has been steady, as has PHP. KRW and TWD has seen modest losses amid further equity weakness, although both currencies are away from earlier October lows. Still to comes is Taiwan IP. Tomorrow, South Korea's PPI is up early, followed by Thailand trade data later on.

• USD/CNH has had a relatively quiet start to the week. The pair tracking recent ranges and last near 7.3270, little changed versus closing levels at the end of last week. Local equities continue to weaken, although as we noted earlier, this perhaps less of a headwind for the local FX given equity losses elsewhere in terms of the major indices. The China to rest of the world equity trend only sits down slightly. In terms of rate differentials with the US, we have diverged somewhat recently. The US-CH 2yr government bond yield spread is down from recent highs back to +270bps, but the 10yr spread has continued to track higher, last at +228bps. This latter spread has had a higher correlation with CNH in the past 3 months (relative to the 2yr spread).
• 1 month USD/KRW has drifted higher amid broader regional equity losses. The pair was last near 1352, around 0.25% weaker in KRW terms versus end levels from last week. The Kospi is down a further 0.75%. This has offset further signs of an improved external demand backdrop.
• Spot USD/TWD is a little higher in the first part of Monday trade. The pair last at 32.37. We are sub earlier October highs closer to 32.45, but dips in the pair remain supported. The 20-day EMA sits back 32.23, with dips to and just under this level being supported in recent months. Coming up later we September IP. The market looks for -8.0% y/y, versus -10.53% prior. This follows last Friday's export orders data for September, which was a bit weaker than expected at -15.6% y/y (-13.9% forecast), with tech and IT related sub indices dipping further in y/y terms. This goes against the recent run of better than expected export data.
• USD/IDR is off highs, as the BI intervened to curb USD gains. The pair sits back near 15950, slightly below earlier highs of 15962. The earlier break above 15900 but the pair to fresh highs going back to earlier in 2020. Last week's surprise BI rate hike has done little to calm sentiment in the FX space at this stage.
• The SGD NEER (per Goldman Sachs estimates) has ticked higher in early dealing on Monday and sits a touch off the base of the recent ranges after ticking lower last week. The measure sits ~0.7% below the top of the band. USD/SGD continues to consolidate in a narrow range about the 20-Day EMA ($1.3686). The pair is unchanged from Friday's closing levels at $1.3725/30. September CPI is due this afternoon, headline inflation is forecast to tick marginally higher to 4.1% Y/Y from 4.0%. There is no estimate for the Core measure which came in at 3.4% Y/Y in August.
• The Ringgit has been pressured in early trade as onshore participants digest higher US Tsy Yields on Monday. USD/MYR sits a touch under YTD highs, the pair is up ~0.2% and last prints at 4.7775/7800. The local docket is empty this week.
• The Rupee has opened dealing a touch softer, USD/INR a touch firmer last printing at 83.16/17. USD/INR fell beneath the 20-Day EMA (83.1869) on Friday paring recent gains before support came in ahead of the 83 handle. RBI Gov Das noted on Friday that the bank needs to be extra vigilant on inflation and needs to see CPI easing to 4% on a sustainable basis.
• USD/PHP has largely ignored the more positive USD/Asia trends seen elsewhere today. The pair remains comfortably within recent ranges, last just under 56.84. This leaves the well established 56.50/57.00 range firmly intact for now. The simple 50-MA (56.73) has been somewhat of a support point in recent weeks and has trended higher over this period. The main local focus is on tensions with China. This comes after two Philippines vessels collided with China boats in the South China Sea. The Philippines government reportedly summoned the China Ambassador, while headlines also crossed that the Philippines was studying if the collision triggers its defense pact with the US.