Sharp Rebound in USD/CNH

Asian FX has been on the back foot for most of today, although there have been some pockets of strength. CNH and KRW have lost ground, while INR and IDR haven't been able to build positive momentum. Modest outperformance from THB and PHP.

• CNH: USD/CNH has tracked higher for most of the day. We are close to recapturing the 6.7100 handle, which is around 0.6% above the NY close. The CNY fix came out slightly weaker than expected, while equities have struggled to stay positive. Home prices also fell -0.17% in May. The rebound in USD/CNH from the overnight lows just below 6.6700 has been impressive.
• HKD: Spot USD/HKD has reluctantly decoupled from the upper end of its permitted trading band. On Wednesday, the HKMA increased its purchases of the local currency by a further HKD13.824bn after earlier buying HKD11.775bn for June 17 settlement. The size of purchases announced Wednesday (HKD25.599bn) is the largest for a single day since Oct 8, 2009, when the Monetary Authority bought HKD26.350bn in defence of its currency peg.
• KRW: USD/KRW has broadly followed USD/CNH higher. the 1 month NDF is back to 1286, around 0.60% above NY closing levels. The positive impetus from onshore equities has waned through the session. The government announced a number of reforms, including cutting the corporate tax rate and removing capital gains tax for most stock investors. It also cut its GDP forecast and raised the inflation forecast for 2022.
• INR: USD/INR is building a base above 78.00. The trade deficit for May hit a record wide, while onshore covid cases are trending higher, albeit from a low base.
• IDR: After opening weaker, spot USD/IDR is back to unchanged on the day at 14745. BI Gov Warjiyo said that the central bank expects 2022 inflation to reach +4.2% Y/Y, in breach of the target range, due to elevated commodity prices. Core price growth is expected to remain within the target range. His projections were reported by Investor Daily Indonesia. Note BI meets next Thursday.
• THB: USD/THB is back sub 35.00, around 0.20% lower for the session. The authorities announced they may extend trading hours for pubs and bars, as covid cases drop. Reminder that the BoT said Wednesday that it stands ready to "take care" of excessive THB volatility if needed.