South East Asia FX Outperforms On UST Real Yield Pullback

The bias for most USD/Asia pairs remains skewed to the downside. South East Asian FX has outperformed today, likely on account of catch-up with the overnight sharp pullback in UST real yields. There has been some recovery in nominal UST yields today, along with a weaker tone in equity markets, but this hasn't impacted regional FX sentiment a great deal. On Monday, the China Caixin services PMI prints, along with South Korean FX reserves.

• USD/CNH has continued to track recent ranges, last sitting around 7.05. The CNY fixing was close to neutral once again, while China equities are generally trading on the soft side.
• USD/KRW 1 month hasn't made fresh lows, last close to 1300. Onshore equities are down 1.6% at this stage, while offshore investors have sold in excess of $300mn of local shares. Earlier November CPI came in softer for the headline but core pressures remain sticky at 4.8% y/y.
• USD/THB continues to track lower, spot last under 34.80, fresh cyclical lows back to June for the pair. Some of this is likely catch up with overnight USD weakness, although baht been an outperformer in recent weeks.
• IDR has played some catch up today, the pair last around 15430, up from earlier lows near 15400, but still +0.85% firmer for the session in IDR terms. The BI Governor stated inflation expectations are coming down and the core inflation trend remains fairly benign.
• USD/PHP is back under 56.00, with the peso around +0.50% stronger for the session so far. The BSP Governor stated that the board is likely to consider a 25bps or 50bps move at the mid-December policy meeting. Tuesday's inflation data could dictate how much the BSP tightens by. A 2.3% pullback in Philippines' equities hasn't impacted FX sentiment.