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USD/Asia Pairs Higher, THB Continues TO Unwind Earlier Outperformance


USD/Asia pairs are higher across the board today, in line with USD strength against the majors and equity market weakness throughout the region. KRW and THB are the weakest performers over the past week. Still to come is Indian IP figures for Dec. We also still waiting for China aggregate financing figures for Jan.

  • USD/CNH has generally traded on the front foot. The pair got close to 6.8200 this afternoon, we now sit slightly lower at 6.8100. Equity sentiment has softened, while northbound outflows have resumed. CPI data was close to expectations, but suggests underlying momentum is improving. The CNY fixing was close to neutral.
  • 1 month USD/KRW is still finding selling resistance around the 1265 level. Onshore equities have softened. Officials expect CPI pressures to moderate as we progress further into 2023.
  • USD/THB was already on the front foot in the first part of trade, but comments from the Finance Minister (reported by Reuters) that the strong baht is a risk to the economy have fueled further gains in the pair. We now sit at 33.71, down slightly from session highs just above 33.735. Still, this is around 0.70% weaker in baht terms for the session. Offshore investors remain net sellers of local equities though, -$367mn week to date, with -$100.9mn yesterday.
  • USD/INR has opened at 82.60/70, ~0.2% firmer from yesterday's closing levels. We sit slightly lower now, last around 82.55. The INR NEER is off early Feb lows, albeit modestly. We are close to 66.40 (J.P. Morgan Index), versus 65.91 on Feb 2. USD/INR has dealt in a narrow range this week, reflecting broader moves seen in the USD which has been relatively rangebound in recent sessions. Equity outflows continue, with ~$446mn of equities sold by foreign investors in the first half of the week.
  • USD/MYR is continuing to press higher, the pair moving above 4.3300, which is fresh highs back to mid Jan for the pair. The Jan 18th high around 4.3400 could be the next upside target, while note the 20-day EMA has bottomed and is drifting higher (last just under 4.3100). Earlier Q4 GDP came in weaker than expected at -2.6% q/q, (-1.9% forecast), which took y/y growth to 7.0%, which still firmer than the 6.7% forecast. We were at +14% in Q3 though, so growth momentum clearly slowed. BNM doesn't expect a recession this year, but is mindful of external risks. Inflation pressures are expected to ease further this year but stay at an elevated level.

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