Post CNY Fixing Gains Are Pared As HK Equities Weaken

Asia FX saw some USD selling coming through post the stronger than expected CNY fixing outcome. USD/CNH got to a low of 7.1676, but we sit higher now at 7.1740/50. 1 month USD/KRW set a fresh low of 1255, but now sits slightly higher at 1257/58, while USD/THB is back to 34.40 (earlier low was at 34.35). This is still fresh lows in the pair back to mid May. USD/TWD spot is back sub 31.00 (last 30.98). Elsewhere moves have been are more muted.

• Post the fixing outcome, HK equity market losses have accelerated, which has helped the USD at the margins, bringing USD/Asia pairs off lows.
• Headlines are crossing from US Climate Envoy John Kerry, who is telling China's top diplomat that President Biden is very committed to stability in the US-CH relationship.
• US equity futures are down a touch, while US yields have also continued to soften (2yr down a further 2bps to 4.72%). Some Asian currencies are outperforming the majors, which are struggling to hold on gains against the USD.