Most USD/Asia Pairs Higher, CNH Outperforms

Asian FX has mostly been on the back foot today, despite the softer USD trend against the majors. CNH has remained an outperformer though.

• CNH: USD/CNH has tracked lower for much of the day, down around 0.35% to 6.7300 at this stage. The on hold MLF rate (at 2.85%), along with better than expected activity data for May have helped sentiment. China officials stated momentum would improve further in June. China/HK equities are also higher, by at least 1.5-2.0%.
• HKD: USD/HKD remains at the top end of the 7.75-7.85 trading range. The HKMA bought a further HKD9.255bn to prop up the local currency and defend its peg to the U.S. dollar, after earlier purchasing HK4.396bn. HK rates continue to climb with 12mth Hibor climbing to its highest level since 2008 (2.85%).
• KRW: The won has underperformed. Spot USD/KRW is close to 1293, slightly above mid-May highs. Onshore equities have fallen sharply today, off more than 2%. This reflects domestic rather than offshore drivers, still foreign investors have sold $450mln in equities so far today, bringing week-to-date outflows to over $1bn.
• INR: USD/INR remains above 78.00, not getting much benefit from the dip in oil prices. Yesterday's WPI came in slightly stronger than expected at 15.88% YoY, versus 15.30% expected. The 1 month USD/INR NDF sits just below 78.30
• IDR: Spot USD/IDR has pushed to fresh highs for the year, currently tracking just under 14750. Earlier, the trade data was slightly weaker than expected. The surplus dipped under $3bn. Jokowi is set to announce cabinet changes later today.
• PHP: Fresh gains for spot USD/PHP allowed the pair to lodge fresh cycle highs at PHP53.403. We are back slightly now from these levels at 53.370. There is a sense of concern about rising COVID-19 cases in Metro Manila. OCTA Research warned on Tuesday that daily infections could reach up to 500 by the month-end and called for reconsideration of flexible work arrangements.