Not Much Follow Through USD Weakness

Asian FX hasn't seen a great deal of follow momentum following the overnight weaker than expected US CPI reading. Some markets have seen solid spot gains, but this is largely catch up with overnight moves. NDF levels are mostly leaning towards a firmer USD versus NY closing levels.

• CNH: USD/CNH crept higher today. The pair is around +0.20% above NY closing levels. We pushed above the 6.7400 level before selling interest emerged, last tracking at 6.7385. Onshore equities are higher, although domestic covid cases continue to rise and further cities have been placed in lockdown.
• KRW: USD/KRW has rebounded, in line with the broader USD trend. Onshore equities are higher, but not outperforming overnight tech gains. The Kospi is currently +1.30%. USD/KRW 1 month is back to 1303, around +0.50% above NY closing levels.
• SGD: USD/SGD is back above 1.3700, around 1.3720 currently. GDP revisions for Q2 were disappointing, showing the economy contracted -0.2% in Q2, versus a market estimate of +0.2%. The Singapore authorities expect growth to be slightly positive in Q3 and Q4.
• INR: Spot USD/INR is weaker, down by -0.20% to be at 79.38. The 1 month NDF is back above 79.60, suggesting limited follow through USD selling since the NY close. Onshore equities are pushing higher, and equity inflow remains positive since the start of the week.
• IDR: Spot USD/IDR dropped to its lowest point since late June as the rupiah's traditional risk-sensitivity helps it become the second best performer in the Asia EM basket. Spot is sub 14800, -0.50% for the session. The 1 month NDF is steady though versus NY closing levels.
• THB: Spot USD/THB re-opened lower, playing catch up with overnight reaction to below-forecast U.S. CPI data and resultant greenback sales. The pair last deals at 35.372, -0.19 figs for the session, up from earlier lows sub 35.30. The Bank of Thailand raised the one-day bond repurchase rate by 25bp in its first hike since 2018. The decision was in line with our prediction and Bloomberg consensus forecast.
• PHP: USD/PHP is sub 55.50, but remains within recent ranges. Foreign investors were net sellers of Philippine stocks for the fourth consecutive day on Wednesday, but net daily equity outflows shrank to PHP119.4mn. OCTA Research group said that the current wave of COVID-19 infections in Metro Manila is expected to peak next week. Looking ahead, Bangko Sentral ng Pilipinas will deliver its monetary policy decision next Thursday.