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South East FX Outperforming North East Asia Amid Shifting Fed Expectations

ASIA FX

USD/Asia pairs are mixed, with some spot levels still firmer against the USD, but this likely reflects catch up to USD losses post the CPI print on Thursday. 1 month USD/Asia NDFs have mostly climbed though, as USD losses from Thursday have been pared somewhat. KRW, IDR and TWD NDF's are around 0.25-0.35% weaker against the USD. Weaker yen trends (albeit with large volatility), some softer equity tones and a tick up in US yields have contributed to some USD gains, at the margin today.

  • More broadly though, South East Asia FX has more USD/Asia pairs sub key EMAs relative to North East Asia FX. This is likely reflective of greater sensitive in SEA FX to the changing US Fed outlook, along with less sensitivity to still weak yen levels.
  • USD/CNH is back to 7.2770, against intra-session Thursday lows 7.2580. The USD/CNY fix was only set lower modestly, remaining above the 7.1300 handle, with the fixing having a very low beta to the recent USD sell off. USD/JPY supported on dips today has likely weighed on the yuan at the margin, after Thursday's suspect intervention driven dip in the pair aided North East Asia FX. Local equities are down a touch, although property sub indices are higher. June trade headlines are starting to trickle out, with export growth close to expectations, but imports weaker, which may raise domestic demand concerns.
  • USD/KRW spot is back to 1377/78, unable to sustain the sub 50-day EMA breach. Recent lows rest at 1370.65. Similar factors will be in play to CNH, in terms of some yen weakness and the equity pull back. The Kospi is off 1.2% so far today.
  • 1 month USD/TWD is up 0.30%, last back near 32.50, while spot is relatively steady, around 32.52. The Taiex is down nearly 2%, following sharp tech losses in Thursday US trade.
  • Spot USD/IDR has gapped lower to 16145/50, fresh lows in the pair back to late May. The 1 month NDF has lost around 0.30% though. Spot USD/THB is back under 36.20, also fresh lows back to mid-May. This leaves the pair sub all key EMAs except the 200-day (near 36.08).
  • USD/MYR has broken lower, last near 4.6700, levels not seen since January this year. Late yesterday the central bank in Malaysia held rates steady at 3.0% as expected.
  • USD/PHP has been relatively steady though last near 58.35, not seeing much downside.

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