Risk On Sees Most Asia EM FX Bid

Risk on tone has been supported by a number of developments overnight. The PBOC injected funds to help alleviate the liquidity crunch, a senior Chinese diplomat said the relationship between the US and China should be put back on a more constructive track and in the US officials are said to have made progress towards a coronavirus relief bill. This saw the greenback recede while EM FX caught a bid.

• CNH: Constructive risk tone has seen USD/CNH move lower as the yuan advances, the pair last 6.4659 – down around 82 pips. The bank fixed USD/CNY at 6.4736, another fix above sellside estimates for the eleventh straight session, bringing total misses in Feb to +33 pips (Jan +284 pips, Dec +133 pips)
• SGD: Singapore dollar advances ahead of PMI data. The index is expected to rise to 50.9 from 50.5 which would show further improvement in the manufacturing sector.
• TWD: The Taiex saw further gains as foreign investors are on track to be net buyers again. Elsewhere Taiwan has taken steps to join the CPTPP.
• KRW: The won strengthened, the government are reportedly considering an extra budget to facilitate cash handouts to citizens and support for businesses impacted by the pandemic.
• IDR: USD/IDR remained within a familiar range but bucked the trend of lower USD/Asia crosses, last trades +15 pips at 14,042. FinMin Indrawati informed that her ministry, Bank Indonesia and the financial services regulator have joint forces and are designing a policy package to boost financing for businesses.
• MYR: The ringgit declined, markets await a government decision on whether to extend the current MCO/lockdown order beyond Feb. 4.
• PHP: Peso saw some modest strength, Philippine President Duterte pledged to keep the economy afloat amid the coronavirus pandemic, and kept GDP forecasts unchanged at 7.5% for 2021.
• THB: USD/THB oscillates around neutral levels, last changes hands at 29.98. The BoT's Business Sentiment Index deteriorated to 44.2 in Jan from 46.8, falling to the worst level since Jul 2020.