USD/Asia Pairs Higher Across The Board, Fresh YTD Highs For USD/CNY

USD/Asia pairs are higher across the board, albeit to varying degrees. In spot terms, KRW, PHP and IDR have been the weakest performers. Spot USD/CNY continues to move higher in line with the higher USD/CNY fixing outcomes. Regional equity sentiment has been mixed, while the USD is firmer against the majors, leading to positive spillover for USD/Asia pairs. Tomorrow, we have the Caixin services PMI on tap in China, while the Indian services PMI prints later on.

• USD/CNH sits around recent highs, the pair last near 7.3078. USD/CNY spot is above 7.2700, close to its upper daily trading limit. The onshore CY fixing was close to 7.1300, fresh highs back to Nov last year. Follow through equity gains have been limited so far, likewise for onshore bond yields following yesterday's PBoC announcement. Broader USD gains have been evident against the majors, a likely yuan headwind, albeit with a much lower beta with respect to such moves.
• Spot USD/KRW got to 1390 in earlier trade, but couldn't extend gains beyond this level. Earlier data showed weaker than forecast June CPI figures, which if continued is likely to pave the way for a BoK easing in H2. Note the central bank meets next week, although a change at that meeting is unlikely. the authorities may be on guard against a sharp rally in USD/KRW through the 1390/1400 region.
• Spot USD/PHP sits near 58.80/85 in latest dealings, down a little over 0.3% in PHP terms for the session so far. We aren't too far away from recent highs (58.93) see towards the end of June. The 20-day EMA is close by (58.63), while the 50-day sits further south (close to 58.12). Upside focus is likely to rest around the 59.00 level, which marked 2022 highs. Whilst BSP Governor Remolona stated they don't intervene in FX markets every day, a sharp move through 59.00 may prompt a response from the authorities. Like elsewhere in the region, the PHP is seeing headwinds from broader USD gains, amid a firmer yield backdrop. The recent rebound in USD/PHP has coincided with a rise in US real yields (the 10yr back to 2.16%). Locally, the main focus will rest on Friday's June CPI print.
• USD/IDR spot has also gravitated higher, with similar factors in play, the pair last near 16380. Spot USD/THB is also higher by around 0.25%, last near 36.80. We remain sub recent highs near 37.00. Earlier headlines crossed that foreign tourism arrivals are up 35% y/y for the first 6 months of 2024.