HKD Away From Weak Side of Peg Band, KRW and IDR Stronger

High beta Asian FX has outperformed the majors in the G10 FX space today. 1 month USD/KRW is back below 1299, closing some of the wedge with stronger equities. USD/IDR has slumped through 14700 on the back of higher commodity prices and continued portfolio inflows. HKD has moved away from the weak side of the band. USD/CNH has edged down to 6.7300. INR and PHP are laggards though.

• CNH: USD/CNH has drifted lower today, albeit within recent ranges. The pair is back close to overnight lows just under 6.7300, last tracking at 6.7315/20. China equities are off a touch, as focus is on worsening domestic covid case numbers, but losses in the equity space are minimal for now.
• KRW: 1 month USD/KRW is down -0.50% and is testing back below 1300 at the time of writing. Korean equities have managed a small gain today, despite negative overnight leads from US markets. This does close some of the gap between the won and onshore equities, with FX still lagging the better equity tone.
• HKD: USD/HKD is down quite sharply to the low 7.8300 region (-0.15% for the session). This shifts the pair away from the top end of the HKMA peg band at 7.8500. Bloomberg notes that the unwinding of option hedges (around 7.81-7.85 strikes) may be playing a role. A sense of peak US inflation and therefore peaking Fed outlook is also likely to be helping at the margin.
• INR: USD/INR is trying to push higher in early trade trade, although some interest is evident above 79.70. We were last at 79.67. Onshore equities are down a touch, with rebounding energy prices likely not helping.
• MYR: USD/MYR is lower, spot back sub 4.4400. Note the 50-day MA comes in at 4.4278. Q2 GDP comfortably beat expectations (+3.5% QoQ versus +1.% expected). BNM stated H2 growth should be even firmer, but stated policy adjustment will remain gradual.
• IDR: Spot USD/IDR has slumped. The pair is back under 14700, over 0.6% down on yesterday's close (last at 14670). The risk backdrop is also unlikely to be underpinning such a notable swing, with U.S. equity benchmarks paring gains late doors Thursday. However, firmer commodity prices may be lending some support to the rupiah. Inflows into local equities and bonds will also be helping.
• PHP: The Peso remains a laggard, spot is around 0.30% weaker. USD/PHP is back to 55.49. Higher energy prices not helping at the margin. Bangko Sentral ng Pilipinas will announce its monetary policy decision next Thursday. Policymakers are hesitating between a 25bp and a 50bp rate rise.