USD/Asia Pairs Find Support Post Early Dip

Most USD/Asia pairs are away from session lows, after a softer USD tone was evident in the first part of trade. This has been most evident for USD/CNH, which climbed nearly 300pips from earlier lows., USD/PHP and USD/IDR have also struggled for further downside. Thailand politics are in focus, but THB has been quiet so far. Tomorrow, we get South Korean business confidence early, along with Singapore CPI, then Taiwan IP later.

• USD/CNH is bucking the softer USD trend elsewhere (BBDXY down 0.10%), with the pair back above 7.2900 this afternoon. Highs for the session sit just under 7.2975. Earlier lows were at 7.2691. Local equities unable to generate positive upside traction into the break has been a factor, after showing positive signs in early trade. The CNH's Hibor rate also shot higher, as the authorities sold CNH bills in Hong Kong to drain liquidity (35bn yuan total). The market may be taking a buy on dips mentality for USD/CNH given broader US-China policy and growth differentials currently in play. Northbound outflows via the stock connect continue, with a further -4.3bn yuan so far today. Since late July we have seen -65bn yuan in cumulative outflows.
• USD/THB has tracked tight ranges today. The pair saw early support sub 35.10 emerge and we last tracked near 35.12. BoT vowed that it will curb excessive THB volatility. The new PM vote is currently underway with Pheu Thai's Srettha the only candidate put forward. PM candidate Srettha may struggle to gain support from the 61 senators he needs to become PM as the senate review into his tax affairs has raised more questions. Srettha denies the accusations. Pheu Thai’s commitment to reform the constitution is also putting some offside. Another senator has said that Srettha should receive around 190 votes from the senate, as they want the impasse to end. If he fails, Pheu Thai has two other candidates. Former PM Thaksin has also returned from 15yrs in exile but will serve a total of 8 years in prison per a Supreme Court statement.
• USD/IDR sits slightly above earlier lows, the pair last near 15330. The rupiah is modestly underperforming the softer USD trend seen elsewhere. Earlier lows in the pair came in at 15318. Recent highs from mid August recent around 15360, while support has been evident around 15280/85 in recent sessions. The nearest EMA is around 15207, for the 20-day. On the data front, the Q2 current account was weaker than expected, printing at -$1.9bn, versus -$268mn expected. The Q1 print was just under +$3bn. As a share of GDP the deficit was -0.5% in Q2. While the market expected the current account to shift back into deficit, the worst than expected result is likely weighing on IDR sentiment at the margins, particularly given the continued move higher in US real yields.
• USD/MYR prints at 4.6490/4.6525, the pair is little changed from Monday's closing levels dealing in a narrow range on Tuesday. The pair sits a touch off its highest level since mid-July as August's gains are consolidated in a narrow range. USD/MYR is up ~3.3% month to date. On the wires today we have Aug 15 Foreign Reserves, there is no estimate for the print and the prior read was $112.9bn.
• The SGD NEER (per Goldman Sachs estimates) sits a touch off its highest level since 10 Aug, we sit ~0.7% below the top of the band. USD/SGD is holding a narrow range below the $1.36 handle, broader USD trends continue to dominate flows in recent sessions. Tomorrow's July CPI print provides the highlight this week, headline CPI is expected to tick lower to 4.2% Y/Y and Core to 3.8% Y/Y.
• USD/PHP has rebounded from earlier lows, the pair last near 56.25. Earlier we touched below 56.10. The pair isn't too far away from the 20-day EMA near 55.96. Earlier August highs rest at 57.00. This week's data calendar is light with just the July budget balance on tap this Friday. The BSP expects economic growth this year to miss the government's target. HSBC also notes that the 57.00 level may be a firm intervention point to protect PHP from further depreciation pressures.