PHP Continues To Underperform, Mixed Trends Elsewhere

It has been a mixed session. Some Asian currencies have struggled to follow the weaker USD seen against the majors. PHP weakness remains a feature. Those currencies that have risen have done so only modestly during today's session.

• CNH: USD/CNH has moved lower today but couldn't test sub 6.6700. The low came not long after the stronger than expected CNY fix. There is more talk of stimulus measures, particularly related to housing, but they look more micro rather than macro based. China equities are firmer but are lagging the better regional trend.
• KRW: Spot USD/KRW is back below 1290, but hasn't seen strong downside momentum. The first 20 days export data for June was disappointing in headline terms, but the details were better. The BoK warned its inflation forecast, updated just last month, may already be out of date. A 50bps hike at the July meeting can't be ruled out, but Governor Rhee is not following a predetermined path.
• INR: USD/INR is back above 78.00, but volatility remains very low. The recovery in oil prices has pushed the rupee slightly weaker in early trade today, while bond yields have firmed as well. Local equities are up close to 1.5%.
• SGD: The Singapore government unveiled a S$1.5bn package to tackle inflation pressures for low income households. The authorities also warned of higher inflation pressures in coming months ahead of Thursday's data for May. The SGD NEER continues to trend higher, although we are getting close to the top end of the MAS policy band.
• IDR: Spot USD/IDR has shed 25 figs so far as broader greenback sales have resumed. We remain above 14800 though. Participants look ahead to the monetary policy decision from Bank Indonesia, coming up this Thursday, with some calling for the inauguration of a tightening cycle.
• PHP: USD/PHP has continued to push higher today. Spot is up a further 0.50% to 54.335. Bangko Sentral ng Pilipinas is set to raise interest rates on Thursday, but consensus is split about the magnitude of the hike. Most expect a 25bp move, but a considerable minority still anticipates a 50bp rate rise. Yesterday's comments from incoming BSP chief Medalla decreased the odds of an outsized hike. The official said that a 25bp hike was "most likely" in light of the central bank's philosophy of "gradualism." See our full preview here.