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Higher US Rates Weigh

ASIA FX

Asian FX is weaker across the board today, albeit to varying degrees. Recent outperformers like THB and PHP have weakened as higher Fed expectations weigh. INR is also weaker, along with KRW. USD/CNH has edged up but is finding some selling interest above 6.7700.

  • CNH: USD/CNH has edged higher through the session. We are seeing selling interest above 6.7700 but the pair hasn't corrected much to the downside. The CNY fix was in line with market expectations, while onshore equities are mixed. The weekend's record high trade surplus for July hasn't impact sentiment a great deal today, although is a strong buffer to capital outflow pressures from a medium term standpoint.
  • KRW: USD/KRW 1 month has traded a tight range, with offers above 1305, but unable to get below 1302. Onshore equities are weaker but are away from worst levels. Spot USD/KRW is up around +0.50% from last week's close, around 1305 presently.
  • TWD: USD/TWD is back above 30.00, in line with broader USD strength. Onshore equites are lower, but like Korea, are away from weakest levels. China also continued military drills near Taiwan, after early reports suggested drills had concluded. Note coming up later is July trade figures for Taiwan.
  • INR: The rupee is weaker in early trade today, with USD/INR up +0.30% to 79.50. Eyes will be on whether we can test above 79.80, which reportedly drew strong intervention flows last week.
  • IDR: Spot rupiah is weaker, with USD/IDR +34 figs to 14927, but the 1 month NDF is away from worst levels post the payrolls print on Friday. The pair is back to 14946. 5yr CDS is higher (last 116bps) but still well below mid-July highs of 165bps.
  • THB: Spot USD/THB has been creeping higher today and last changes hands +0.22 at THB35.79 (around +0.60% for the session). This is line with higher US yields from late last week. 23 of the 26 economists surveyed by Bloomberg expect the Bank of Thailand to lift the key policy rate by 25bp this week, while the three dissenters have forecast a 50bp rate rise.
  • PHP: Hawkish Fed repricing in response to the U.S. jobs report released Friday has lent support to USD/PHP as local markets re-opened. The peso is the worst performer in emerging Asia, with some linking its underperformance to a decline in the Philippines' stack of foreign reserves. USD/PHP was last at 55.59, nearly +0.70% for the session.

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