USD/Asia Dips Supported, BI & BSP Decisions Coming Up

Asia markets have seen lighter interest today, with China and Hong Kong markets closed for holidays. Lower USD/Asia levels in the first part of trading has seen dollar support emerge, which is consistent with some weakness in commodity FX in the G10 space. Tomorrow, Hong Kong markets return, but China's remain closed until Monday. On the data front tomorrow is Singapore and Malaysian CPI prints. Still to come today is the BI and BSP decisions, both are expected to remain on hold.

• USD/CNH liquidity/interest has been impacted by the holidays outlined above, as such we have followed broader USD trends. Moves sub the 7.1700 level were supported and we last tracked above 7.1800.
• It has been a similar backdrop for USD/KRW, with the 1 month NDF sitting back in the 1291/92 region, against opening lows near 1285. Onshore equities are firmer, although off session highs. Offshore investor flows are slightly negative (-$20.3mn at this stage).
• USD/IDR is up from earlier session lows. We got sub 14900 in the first part of dealing back now sit back closer to 14935, in line with a stronger USD tone. Later we get the BI decision, which is expected to remain on hold. There is unlikely to be an easing signal in the June meeting statement while the economy is still “solid” and it is unclear how much the Fed still has to do.
• USD/PHP also sits a touch above earlier session lows, last near 55.60. Again, no changes are expected from the BSP. BofA noted that PHP could weaken to 57.50 in Q3 if the BSP doesn't follow the Fed with higher rates. The bank sees the currency vulnerable from a low real rates and twin deficits stand point. Elsewhere, local equities are weaker, down 0.70% with the PCOMP sub 6400 and we aren't too far off intra-day YTD lows. The index is also 10% down from its Jan highs. A plan to tax food and beverage companies is being cited as a source of weakness.
• USD/INR holds under 81.95 for now, slightly opened opening lows near 81.90. PM Modi's trip to US is generating optimism from an investment flow standpoint. Equity inflows remain strong, nearly $2.5bn month to date. For USD/INR the pair is still close to its 200-day MA. However, on a NEER basis we are close to YTD highs. CNH/INR continues to trend lower, last around 11.41, close to YTD lows.