USD/Asia Pairs Firm Amid Broad Dollar Gains, Regional Equity Weakness

USD/Asia pairs are higher, amid broad based USD gains (BBDXY +0.20%) and equity losses in the region. USD/CNH is back above 7.2900, while tech sensitive plays have unwound some of yesterday's outperformance. PHP has outperformed at the margins, but isn't too far away from recent lows. On Sunday China industrial profits print for July. Early next week is quiet though from a data standpoint.

• USD/CNH is tracking near session highs (around 7.2945) in recent dealings, last near the 7.2900 level. This puts CNH down around 0.15% for the session so far, in line with the BBDXY's 0.20% gain to date. Additional headwinds have come from a weaker onshore equity tone (the CSI 300 down close to 0.60% at this stage), despite further calls for fund/bank support for local bourses. Earlier headlines crossed from Reuters that the PBoC was asking some banks to limit Southbound Bond Connect outflows in the latest measure to curb potential yuan weakness. The Securities regulator also plans to meet with some of the world's largest fund managers to boost confidence (see this link).
• USD/HKD spot dips remain supported, the pair last near 7.8435, which is close to early June highs at 7.8440. Recent support points have been at 7.8380 yesterday and 7.8400 earlier today. In the USD/HKD outright forward space, the 12 month is still sub 7.7800, last at 7.7785, largely tracking sideways in recent dealings. 6 month is back around 7.8000, also showing waning upside momentum.
• USD/TWD spot has already unwound a good chunk of yesterday's losses, the pair last around 31.825, +0.12% firmer. We are still sub recent highs near 32.00, while yesterday's lows came in close to 31.74. The Taiex is tracking close to 1.35% weaker at this stage, also unwinding a good proportion of yesterday's rally. Broader tech equity sentiment faltered in US trade on Thursday, with the SOX off more than 3%, which has carried over into Asia Pac markets today. Such sentiment is likely to be key for TWD in the near term.
• USD/THB has recovered ground as today's session has progressed. The pair last near 35.14, down slightly from session highs of 35.18. Some of this has reflected catch up with broader USD gains in the past 24 hours, while the July customs trade figures showed a wider than expected deficit at near -$2bn, versus -$1.386bn projected (and a modest $58mn surplus in June). Earlier BoT Governor Suthiwartnarueput spoke on the sidelines of the Jackson Hole symposium in the US, stating the central bank is close to where it wants to be on rates, but it is watching the new government's fiscal stance. Cash handouts and other fiscal measures proposed by new PM Srettha could be inflationary the Governor noted, but it's too early to gauge any potential BoT response.
• USD/PHP is the only USD/Asia pair to be tracking lower in the first part of Friday trade. The pair was last near 56.70, down slightly on closing levels from yesterday. We opened in the 56.85/90 region. The Peso is outperforming generally firmer USD/Asia trends elsewhere and USD strength against the majors. Note though that USD/PHP hasn't been that strongly correlated with broader USD moves this week. USD/PHP is not too far recent highs around 57.00. Recall earlier in the week that Philippines Finance Chief Diokno stated the authorities working assumption on USD/PHP was a 54-57 range. Hence the closer we get to the top end of this range the potential for verbal jaw boning on FX and or actual intervention is likely to rise.
• USD/MYR prints at 4.6515/40, the pair is a touch higher on Friday. The pair sits a touch off its highest level since mid-July as August's gains are consolidated in a narrow range above the 4.65 handle. We sit ~3.2% above the opening levels from Aug 1. There was little reaction to the July CPI print which was a touch softer than expected.
• The SGD NEER (per Goldman Sachs estimates) is marginally softer in early dealing and has ticked away from its highest level since 3 Aug in recent dealing. The measure is ~0.6% below the top of the band. USD/SGD was supported at the 20-Day EMA yesterday and firmed ~0.3% as broader USD trends dominated flows. The pair sits at $1.3570/75, ~0.1% firmer today. In July Industrial Production fell 0.9% Y/Y, stronger than the expected -3.8% Y/Y fall.