South East Asia Currencies Firm, Low CNH Volatility Continues

USD/Asia pairs are mostly lower in the first part of Wednesday trade. NEA currencies are underperforming at the margin though. CNH is steady, continuing to show very low volatility. USD/KRW 1 month climbed in early trade, but has reversed lower as equity sentiment has improved. In SEA, IDR, THB and PHP are higher, but we are yet to see key ranges broken. Looking ahead to tomorrow, China Feb trade data is out. Thailand consumer confidence is also out, then later on we have the BNM decision (no change expected), along with Taiwan CPI.

• USD/CNH sits unchanged, once again maintaining tight ranges. We were last near 7.2120. Onshore equities are marginally higher. We haven't seen much positive spill over from HK gains (amid tech earnings optimism). Onshore government bond yields are weaker, down -1 to -2.5bps, which is likely weighing at the margins. Reuters reported earlier that domestic capital outflows are very strong, which is bumping up against official limits (see this link). This may be a factor that keeps spot USD/CNY supported on dips, although we haven't breached 7.2000 yet.
• 1 month USD/KRW got above 1335 in early trade, but we now sit back lower, close to 1333, which is keeping us within recent ranges. Earlier we have Feb CPI print slightly stronger than expected, but core trends were steady. Onshore equities are weaker, but away from session lows, as broader equity sentiment has mostly improved throughout the region today.
• USD/IDR has tracked lower in recent dealings, last near 15720, around 0.30% stronger in IDR terms for the session. Recent highs from yesterday came in close to 15780. The 1 month NDF is also slightly lower versus end NY closing levels from Tuesday, near 15740. For spot we are still some distance above the 20-day EMA, near 15680, which is showing a modest uptrend. A better regional equity tone, led a HK rebound, has aided broader risk appetite in the FX space. Portfolio flows remain a net negative for the FX though. We saw nearly $50mn in equity outflows at the start of the week, while bond outflows on Monday were -$118mn.
• Spot USD/PHP is lower, last tracking close to 55.86, around 0.20% stronger in PHP terms. We are still above late Feb lows near 55.70. Earlier comments by BSP Governor Remolona suggested a rate cut was unlikely in the near term, as the central bank is unsure inflation is sustainably within its 2-4% target band. This follows yesterday's upside surprise for the Feb data.
• USD/THB has tracked lower as well, we were last near 35.75, up by the same amount as PHP. This is close to fresh lows in the pair back to the first half of Feb. Comments from the Thailand Business Group were marginally positive. The group is keeping its growth forecast for the year at 2.8-3.3%. The second half is expected to be firmer, amid more government support and tourism inflows (34-35mln visitors are expected this year).