Fresh YTD Highs For Some USD/Asia Pairs, CNH Bucks Stronger USD Trend

With the exception of USD/CNH, all other USD/Asia pairs are firmer across the board. Equity weakness, for the most part, coupled with higher US yields, remain on-going headwinds. USD/KRW and USD/THB have made fresh YTD highs today. Tomorrow, we get South Korean business sentiment early, China industrial profits and later on the BoT decision. We look for a +25bps hike, but note it is a close call.

• USD/CNH has bucked the stronger USD trend seen elsewhere in recent sessions. Today we have spent most of our time near the 7.3100 level (range of 7.3059-7.3168 today). Spot USD/CNY tracks fairly close to 7.3100 as well in recent dealings. Earlier the CNY fix was set at 7.1727, the same level as yesterday's outcome. The USD/CNY fixing has been steady in recent sessions, despite higher USD index levels, see the chart below. We are approaching Golden Week, which kicks off this Friday and runs through all of next week. The authorities may wish to avoid a sharp move higher in USD/CNY ahead of this period. Local equity weakness has also been a headwind for CNY in recent sessions. Tight CNH funding is also a support point.
• Spot USD/KRW has broken to fresh YTD highs. The pair last just above 1348. A continued move higher could see the November 22 high from last year near 1363 targeted. Familiar drivers are in play for the won, with higher USD/JPY levels weighing, amidst a further rise in US yields. Local equities are under pressure, the Kospi off by nearly 1.25% at this stage to 2463 in index terms. This is lows going back to mid-May of this year.
• USD/IDR has pushed higher today, in line with broader USD gains and upside momentum in US yields. Spot was last near 15450, am IDR loss of around 0.33%. Headlines crossed earlier from BI that it is in the market to ensure FX supply/demand balance.
• The Rupee was pressured on Monday as rising US Tsy Yields and concerns over rising Oil prices weighed. USD/INR rose ~0.3% and finished dealing above the 83 handle albeit well within recent ranges. USD/INR has opened dealing ~0.1% above closing levels as the Rupee weakens in early trade. The pair last prints at 82.20/22. Data wise the docket is empty until Friday when the August Fiscal Deficit and Eight Infrastructure Industries survey crosses.
• The SGD NEER (per Goldman Sachs estimates) sits a touch off late August cycle highs after firming yesterday. We now sit ~0.5% below the top of the band. Broader USD trends continue to dominate flows for USD/SGD, the pair sits marginally below YTD highs and has observed narrow ranges in recent dealing. USD/SGD sits up ~0.1% at $1.3670/75 today. A reminder that yesterday CPI in August fell to 4.0% Y/Y from 4.1%. The core measure was also down to 3.4% Y/Y from 3.8%.
• USD/MYR continues to sit in narrow ranges a touch of YTD highs below the 4.70 handle. The data docket is empty this week, the next data of note is next Monday's S&P Global MFG PMI for September.
• USD/THB got to fresh highs of 36.415, before a surprise customs trade surplus print for August ($360mn, -$1761mn projected) helped calm sentiment. Dips back below 36.30 were supported. The pair last at 36.33. We expect a +25bps hike from BoT tomorrow, although note it is a very close call.
• USD/PHP sits above 56.90 in recent dealings, despite fresh hawkish rhetoric from BSP Governor Remolona (including the possibility of an off-cycle hike). The Governor stated resistance in USD/PHP is evident at 57.00.