Onshore USD Sales Aids CNH, KRW & TWD Higher On Tech Optimism

Most USD/Asia pairs are lower today. CNH has been aided by reported state owned banks dollar sales onshore. KRW and TWD have also rallied on continued tech optimism. THB remains a laggard though with little progress around the election result.

• Headlines have crossed from Reuters that large state owned banks are reportedly selling USD/CNY onshore spot. The report notes the selling started on Thursday and has carried over to today. Offers emerged this morning when USD/CNH got close to 7.1000 (the high was 7.0986 per Bloomberg). Onshore spot USD/CNY is tracking lower last at 7.0600, -0.30% so far for the session. Earlier highs were close to 7.0800. USD/CNH is being dragged lower, last under the 7.0700 level. A recovery in onshore equities is also helping, the CSI erasing an earlier -0.9% loss.
• Won has outperformed in Asia FX over the past week. In spot terms the currency (last 1323/24) is the only one within the region to record a gain against the USD over this period (albeit a modest one at +0.2%). The 1 month USD/KRW NDF is back to 1321/22, around -0.55% sub NY closing levels from Thursday. Onshore equities are up modestly so far today, +0.20%, with tech sentiment remaining positive post Nvidia's results. We have seen chunky inflows from offshore investors in Korean shares, +487.7mn so far today, bringing weekly inflows to $881.6mn. For May we have seen $2054.5mn in inflows.
• TWD is also firmer, the USD/TWD 1 month NDF is back to 64.64, -0.40% so far for Friday's session. The Taiex is +1.20%, outperforming the rest of the region, as tech optimism continues.
• USD/INR is ~0.1% lower this morning, however narrow ranges are persisting after the pair printed its highest level since late February on Wednesday. The pair prints at 82.60/80, broader USD/Asia trends have dominated in May. The rupee has lost ~1% in May. Equity Inflows in May remain strong, with a further $374mn in Indian Equities bought by foreign investors this week to Wednesday. Looking ahead on the wires next week Q1 GDP headlines the data calendar, an increase of 5.1% is expected, ticking higher from 4.4% in Q4 2022.
• USD/THB sits just below recent highs, last around 34.65. We are around 0.15% weaker in baht terms versus yesterday's close. The currency is underperforming other USD/Asia pairs, which are seeing more downside so far today. This may reflect some carry over from USD strength post yesterday's onshore spot close. Election negotiations look set to continue into a third week, with no clear signs of a near term resolution.
• In Malaysia, April CPI printed at 3.3% Y/Y in line with expectations ticking lower from the 3.4% observed in March. The Ringgit pared early losses in recent dealing. USD/MYR is ~0.2% firmer today last printing at 4.6260/90. The pair has printed a fresh high for 2023 and is at its highest level since 11 Nov. MYR has lost ~4% so far in May.
• The SGD NEER (per Goldman Sachs estimates) is little changed this morning, we remain well within recent ranges. We now sit ~0.9% below the upper end of the band. USD/SGD is a touch softer this morning, the pair is down ~0.1% from opening levels. Broader USD trends are dominating flows in early dealing on Friday. April Industrial Production was weaker than forecast printing at -1.9 M/M vs 0.1% exp.