MYR Top Performer In The Past Week, As Official Concerns Around FX Weakness Rises

Most USD/Asia pairs are lower, aided by an equity risk on tone, although moves have been modest overall. USD/CNH has remained steady, while South Korean markets have been out for Independence Day. IDR and PHP have rallied somewhat, while THB has lagged. USD/MYR tested below the 50-day EMA earlier before stabilizing (the ringgit is the top performer in the past week). Looking ahead to next week we have South Korean IP and the PMI print as the main focus on Monday. Later next week we have the BNM decision in Malaysia.

• USD/CNH has drifted a little higher in the first part of Friday trade, last near 7.2100. USD/CNY spot has also rebounded, back to 7.1970. Overall vols have remained low though. We had the official PMI prints for Feb, along with the Caixin manufacturing PMI. All printed better than expected, particularly the services official read. There was no meaningful CNH reaction though. Onshore equities have struggled for positive traction today.
• With onshore markets out, the 1 month USD/KRW NDF has been very steady, last near 1333. South Korean export data was stronger than expected, as was the trade surplus. The export recovery should support the growth backdrop in the near term.
• USD/IDR spot sits back at 15685 off recent highs in the 15730/35 region. The 20-day EMA sits near 15655, but arguably more important support is at the 100-day EMA down at 15570, a support level we haven't breached since late last year. The rupiah is still the worst performing EM Asia currency in the past week, down 0.60% in spot terms. Portfolio flows in the equity and bond space from offshore investors remain flat to negative. US real yields (10yr basis) are off recent highs, but domestic uncertainty around the new government and its fiscal outlook may be keeping some investors on the sidelines.
• USD/MYR sits up off earlier lows, last near 4.7400, down slightly for the session. Earlier (per BBG) we touched 4.7250, which was fresh lows back to early Feb for the pair. This also put us under the 50-day EMA (near 4.7310), although we haven't been able to sustain this break. MYR is now up around 0.80% for the week, the best performer in the EM Asia FX space. The clear step up in verbal rhetoric around concern for MYR weakness from the PM, BNM Governor and second Vice Finance Minister (who warned that the authorities were prepared to intervene) has been a key factor in the turnaround.
• USD/PHP sits lower, last near 56.00, around 0.30% stronger in PHP terms. There hasn't been a clear macro catalyst for the rebound but clear of month end USD demand may be helping.
• USD/THB has firmed slightly, but remains sub 36.00. The Feb PMI ticked lower to 45.3 from 46.7. This is close to recent cyclical lows and underscores the economic headwinds facing the Thailand economy at the moment.