Most USD/Asia Pairs Edge Higher

USD/Asia pairs have mostly been supported on dips today. Broader USD indices have tracked a touch higher, while regional equities have seen limited follow through from the positive US/EU session on Thursday, as tech headwinds today have weighed. Next week, the focus will be China markets returning from the LNY break, while South Korean IP prints on Monday as well.

• USD/CNH was weaker in the first part of trade, getting close to the 6.7200 level, amid optimism around improving growth amid strong travel/expenditure anecdotes from the LNY period. However, this proved short lived and we rebounded close to 6.7600, we last sit near this level. Tech headwinds around Japan and the Netherlands joining US chip export curbs has weighed on sentiment.
• 1 month USD/KRW dipped below 1227 in early trade but now sits back at 1230 in line with broader USD sentiment recovering. Equities are higher but away from best levels. A further $576mn in net equity flows has been seen today, bringing week to date net flows to +$2bn. Manufacturing sentiment data continued to point to growth headwinds though.
• Indian markets have re-opened after yesterday's holiday, with onshore equities under pressure. The NIFTY is bucking the more positive trends seen through the rest of the region and is tracking around 0.70% lower at this stage. The flow on effect to INR is limited so far, but may become more apparent if we see net equity outflows pickup. We had stabilized somewhat in terms of outflow pressures, but Wednesday saw resumed selling pressures from offshore investors. YTD we have seen -$1.6bn in net outflows. USD/INR spot was last tracking near 81.55, slightly lower for the session.
• USD/SGD printed fresh cycle lows in trading post Wednesday's December CPI print at $1.3104. We are slightly higher now, last around 1.3120/25. The SGD NEER (per Goldman Sachs estimates) is drifting higher post CPI, albeit a touch off yesterday's high. We sit ~0.5% below the upper end of the band. Headline was softer than expected, but core was sticky at 5.1% y/y. Technicals remain bearish for USD/SGD. We sit comfortably below the 20,50,100,200 EMAs. The next target for bears is the 2018 low at 1.3009, bulls first look to break 20-Day EMA at 1.3254 to halt the bear's momentum.
• USD/MYR continues to track lower. The pair is down a further -0.27% today, last at 4.2340/45, up modestly from earlier lows close to 4.2250. This brings ringgit gains in this holiday shortened week to 1.4%, comfortably the best performer in EM Asia FX. We are now back at levels that prevailed in mid April last year. MYR gains have accelerated since the 50-day MA fell below the 200-day MA, forming a so called death cross around a week ago. MYR has jumped ahead of IDR to be the second best performer (trailing only THB) within the region YTD to date.
• USD/THB has pushed higher, last near 32.90, +0.40% higher for the session. This pair continues to consolidate after a strong start to the year. The MoF maintained a 3.8% growth forecast for this year, which is close to the consensus. They do expect firmer tourism arrivals relative to BoT, with MoF forecasting 27.5mln arrivals in 2023.