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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
ASIA FX
With tomorrow's BoJ meeting coming into focus, below we look at the correlation between USD/JPY moves and major USD/Asia pairs. The table below reflects correlations since the start of the year based off daily percent changes between USD/JPY and the relevant USD/Asia pair.
- USD/SGD sits the highest, just under 70%, this is followed by USD/CNH at 56%. For SGD FX, largely being a deliverable currency (outside of hitting the MAS policy bands), leaves it reasonably strongly correlated with the yen.
- For USD/CNH there are trade linkages between the two economies. We have also seen both currencies used as funding vehicles for long carry trades. This helped explain USD/CNH's sharp retracement last week, as USD/JPY also dipped sharply.
- Other correlations are mostly lower and between the 15-30% region. KRW's correlation is not that high, despite the other trade competitiveness linkages.
- INR's is the lowest at close to flat. There are clearly less economic links between Japan and India, but the rupee also remains heavily managed by the Indian authorities.
- These correlations are worth being mindful of given tomorrow's BoJ outcome could induce yen volatility.
Fig 1: USD/Asia Correlations With USD/JPY - 2024 To Date
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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