Goldman Sachs: Heading Stronger Vs. USD, At A More Gradual Pace

Goldman Sachs "remain bullish on the Yuan, although the pace of appreciation should moderate after the PBoC's signal (via the hike in reserve requirements for foreign currency deposits), that it was becoming uncomfortable with the recent pace of gains. Within Non-Japan Asia (NJA) FX, we remain most constructive on KRW, where May exports remained robust and the BoK turned more hawkish at its most recent MPC meeting on May 27th. Our long KRW vs. short JPY trade performed well last week and we have kept it open. Meanwhile, MYR outperformed NJA FX last week despite renewed lockdown measures. Amongst the high yielders, we remain most bullish INR and maintain our long INR vs TWD trade. The RBI kept rates unchanged last week, revised lower their FY22 GDP growth forecast to 9.5% (from 10.5%) and announced another INR1.2tn of bond purchases in Q3-2021. Overall, the positive balance of payments picture should underpin INR strength on a multi-month view. The move lower in U.S. rates following the U.S. May NFP report should, at the margin, be positive for rates-sensitive markets such as Indonesia, at least in the near term. We remain bearish on THB as lacklustre tourism could push the current account into deficit this year."