USD/Asia Pairs Firm Amid Weaker US TSYs, Less Supportive Equities

USD/Asia pairs are higher today, albeit to varying degrees. USD/CNH spot has firmed a touch, as the HK/onshore equity rally has lost some momentum. KRW gains have also stalled, while in SEA THB has lost around 0.40%. General push back from Fed speakers on early rate cuts is helping USD sentiment, although IDR is a modest outperformer. Next week starts off reasonably quiet from a data standpoint.

• USD/CNH has firmed modestly, last near 7.2080, up a touch from end Thursday levels in NY. Earlier highs in the week were above 7.2170. Yield differentials are shifting back in favor of the USD but the authorities are likely to guard against aggressive depreciation pressures. The local equity rally has stalled somewhat today. On the data front, the Jan house price drop was less than Dec, but it might be too early to turn more positive on the sector.
• 1 month USD/KRW has firmed a touch, but has mostly had a quiet session in the first part of Friday trade. Positive equity spill over to the FX has slowed, with the Kospi back to flat. The 1 month NDF was last near 1327, up from Thursday intra-session lows near 1322.
• USD/THB is firmer, back close to the 36.00 level. This is around 0.40% weaker in baht terms. We remain within recent ranges, with the recent test sub the 20-day EMA near 35.80, not proving sustainable. Recent highs rest at 36.185. Customs trade data showed a wider than expected trade deficit at -$2.8bn, which saw the baht weaken to 36.025, but there was follow through.
• Malaysian PM has commented on the weaker ringgit backdrop. The PM said the fall earlier this week (back to lows since 1998) was concerning and that the government has asked the central bank to monitor the situation. Spot USD/MYR has firmed modestly today, back above 4.7800, which comes after the pair briefly traded above 4.8000 earlier in the week. Note all time highs back in 1998 for the pair were at 4.8850. MYR's low carry and uncertainty around the growth outlook, may keep offshore inflows limited, at least until the Fed cycle turns more dovish. Still, with the currency now drawing the PM's focus, we may see the 4.8000 level as somewhat of a near term line in the sand. On the downside, note the 20-day EMA sits back near 4.7600.
• The rupiah has outperformed. Spot USD/IDR remains under 15600, not too far off Feb lows. Better risk appetite in the global equity space is likely helping at the margins. Onshore 5yr CDS is trending lower. Weakness in local equities isn't hurting sentiment.