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Weaker As Equities Falter

ASIA FX

USD/Asia pairs are higher across the board, as equities falter on recession fears. Weakness in tech related stocks is quite apparent today, weighed by a softening chip demand outlook. USD/KRW and USD/TWD have climbed, while USD/CNH is back above 6.7250. USD/PHP is at fresh cyclical highs ~55.28, while USD/IDR is close to the 15000 level.

  • CNH: USD/CNH is higher, last tracking +6.7250. The CNY fixing was firmer than expected, while the Caixin PMI also beat market estimates comfortably. Broader USD sentiment has been stronger though, as recession fears rise. There was also speculation that reports of another delay to the publication of China Great Wall's 2021 annual report helped weaken the currency. A similar postponement by rival Huarong last year sent Asian credit markets into a tailspin. Note HK markets were closed today.
  • KRW: USD/KRW's dip at the open proved to be short lived. Spot got to 1287 before rebounding back to 1297. The Kospi tried to rally at the open but ran out of steam, we are now back down 1.6%.
  • TWD: Taiwan stocks continued to fall, the TWSE down a further 3%, putting the index into bear market territory. Headwinds continue to grow for the semiconductor sector, with TSMC noting lower chip orders. Spot USD/TWD has climbed to 29.80, which is close to YTD highs.
  • INR: Spot USD/INR has broken through 79.00, but didn't get much beyond 79.10. Lower oil, and a tax on gold imports (to help curb the import bill) have helped drive some INR outperformance on an intra-Asia basis. Indian equities are down sharply though. Other measures introduced, including fuel export taxes, have weighed.
  • IDR: Spot USD/IDR continues to trade at elevated levels, close to the psychological barrier at IDR15,000, even as Indonesia's CPI inflation accelerated to +4.35% Y/Y in June from +3.55% prior, exceeding expectations and breaching Bank Indonesia's +2.0%-4.0% Y/Y target range. BI reiterated it is in no hurry to raise rates post the data and stated core inflation remains the focus (core printed weaker than expected at 2.63% YoY).
  • PHP: USD/PHP has risen to fresh cyclical highs of 55.28. This +0.30 on the day. The local manufacturing sector grew at a slower rate as the Philippines' M'fing PMI slipped to 53.8 in June from 54.1 prior. Next week, focus turns to the Philippines CPI data, due for release Tuesday.

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