THB & KRW Rally, More Modest Gains Elsewhere

Most Asia FX currencies are higher today, although outside of the standouts of THB and KRW, the gains have been fairly modest elsewhere. USD/CNH has been range bound, with positives in terms of efforts to drive higher consumption growth and a firmer CNY fixing, offset by renewed property developer concerns. THB has rallied on hopes the political impasse may be getting closer to an end. The local data calendar remains light tomorrow.

• USD/CNH sits slightly lower for the session, last near 7.1750. The CNY fixing bias firmed back to 200pips today, while the authorities are aiming to boost household consumption. This has been overshadowed somewhat by renewed concerns over China property developers, although China mainland shares are doing somewhat better after the break. The HSI is still off by ~2% though.
• 1 month USD/KRW got to fresh lows of 1255 not long after the stronger than expected CNY fixing result printed. We steadied from there, but the pair has mostly stayed under 1260 since. Earlier highs were just above 1264. 1250 is the next downside target. Won gains go against equity market weakness (Kospi - 0.51%, but Kosdaq +1.45%), but the majors are higher against the USD, with USD/JPY also lower, as US yields have pulled back further today.
• THB is the standout in Asia FX so far today. The pair last tracked near session lows in the 34.25/30 region, gains of ~1% in the session to date. We were last at these levels back in mid-May. This is sub all key EMA levels. In the first half of May we reached the 33.55/60 region, which could be a downside target for baht bulls. Recent highs come in just above the 35.00 level, which would also put us back above key EMAs (100 day is the nearest at 34.66). Optimism that Thailand may be closer to forming a new government, with Pita prepared to step aside if he fails to win support again, is aiding sentiment (this would see Pheu Thai PM candidate stand, most likely Srettha). This drop may take some of the risk premium out of the baht outlook, indeed it was one of the factors Goldman's highlighted as underpinning a fresh long recommendation in the currency.
• The Rupee is little changed thus far today as broader USD/Asia trends dominate early flows. USD/INR is a touch above the 82 handle, the pair has see-sawed around 82 in recent dealing with little follow through on moves. In RBI's latest monthly state of the economy report the bank noted that after an uptick in CPI in June the fight against inflation is far from over and monetary policy must remain tight to return inflation to target.
• The Ringgit is little changed from yesterday closing in early dealing. USD/MYR prints at 4.5340/4.5380, and has been dealing in a narrow range thus far. The Ringgit is held onto the majority of last week's post-US CPI gains sitting ~3% below last week's opening levels. Looking ahead the only data on the docket this week is June Trade Balance which crosses on Thursday. A surplus of MYR16.65bn is expected.
• The SGD NEER (per Goldman Sachs estimates) is little changed in early dealing, the measure sits a touch off cycle highs and is ~0.3% below the top of the band. USD/SGD is a touch lower in early trading, the pair is consolidating above the $1.32 handle in a narrow range and last prints at $1.3210/20. Broader USD trends continue to dominate flows. Looking ahead the local data calendar is empty for the remainder of the week.