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USD/Asia Pairs Higher, Won Weakens Amid Dovish BoK Signals

ASIA FX
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Most USD/Asia pairs are higher, although USD/CNH has tracked sideways. Spot won has been the weakest performer, with dovish BoK signals weighing on sentiment. MYR has also weakened as onshore markets returned. USD/SGD is higher, but SGD is not underperforming the rest of the region. The MAS maintaining tightening settings at today's policy meeting. Still to come is China trade data for Mar, while in India we see Feb IP and Mar CPI print later on.

  • USD/CNH hasn't drifted too far away from the 7.2550 level, while onshore spot has been steady near 7.2370. the CNY fixing was little changed from yesterday's outcome and remains sub 7.1000, thereby capping USD/CNY upside. Local equities are weaker, but this hasn't impacted sentiment much today. We still have March trade figures due, while we still wait for Mar new loans/aggregate financing data as well.
  • Spot USD/KRW has broken to fresh multi year highs, the pair last near 1374. The 1month NDF is around 1372. A slightly dovish undertone from the BoK (post an unchanged rate_)and not a great deal of concern around recent FX weakness, has likely aided higher USD/KRW levels. Importantly, BoK Governor Rhee noted the central bank can move independently of the Fed decisions. Still, the inflation trajectory is key to the rates outlook. Some local equity market weakness, the Kospi down, 0.80%, underperforming better US tech tones, is also an additional headwind. For the 1 month NDF, a clear break above 1370, could see 1383 targeted (Nov 10 2022 highs). Beyond that lies the 1400 level.
  • As widely expected, the MAS maintained its current policy settings. The prevailing rate of S$NEER appreciation was maintained, while there were no changes to its width or the level at which it is centred. Q1 GDP data came in weaker than expected (0.1% q/q, versus 0.5% forecast and 2.7% y/y, versus 3.0% forecast). USD/SGD sits a touch higher post the meeting outcome, last near 1.3555 but broader USD sentiment has ticked higher as the session has progressed. For the S$NEER, the Goldman Sachs Index remains around -0.65% from the top end of the band, slightly weaker compared to levels prior to the policy outcome.
  • USD/MYR has been on the front foot as onshore markets return after being out for the prior two sessions. This is clearly some catch up to USD strength, particularly post the CPI print on Wednesday. The pair was last 4.7680. Earlier highs were at 4.7775 per BBG. This puts us back close to the 4.8000+ highs from mid-February which drew a response from the authorities. There were efforts to encourage repatriation of offshore earnings and conversion into MYR, particularly from state-owned enterprises.
  • Indonesian markets remain closed until next Tuesday. The 1 month NDF for USD/IDR is continuing to climb though. The pair last around the 16100 level (per BBG). This is fresh highs back to early 2020 for the pair. Paring of Fed rate expectations this week, post the CPI print has clearly weighing on IDR sentiment.
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Most USD/Asia pairs are higher, although USD/CNH has tracked sideways. Spot won has been the weakest performer, with dovish BoK signals weighing on sentiment. MYR has also weakened as onshore markets returned. USD/SGD is higher, but SGD is not underperforming the rest of the region. The MAS maintaining tightening settings at today's policy meeting. Still to come is China trade data for Mar, while in India we see Feb IP and Mar CPI print later on.

  • USD/CNH hasn't drifted too far away from the 7.2550 level, while onshore spot has been steady near 7.2370. the CNY fixing was little changed from yesterday's outcome and remains sub 7.1000, thereby capping USD/CNY upside. Local equities are weaker, but this hasn't impacted sentiment much today. We still have March trade figures due, while we still wait for Mar new loans/aggregate financing data as well.
  • Spot USD/KRW has broken to fresh multi year highs, the pair last near 1374. The 1month NDF is around 1372. A slightly dovish undertone from the BoK (post an unchanged rate_)and not a great deal of concern around recent FX weakness, has likely aided higher USD/KRW levels. Importantly, BoK Governor Rhee noted the central bank can move independently of the Fed decisions. Still, the inflation trajectory is key to the rates outlook. Some local equity market weakness, the Kospi down, 0.80%, underperforming better US tech tones, is also an additional headwind. For the 1 month NDF, a clear break above 1370, could see 1383 targeted (Nov 10 2022 highs). Beyond that lies the 1400 level.
  • As widely expected, the MAS maintained its current policy settings. The prevailing rate of S$NEER appreciation was maintained, while there were no changes to its width or the level at which it is centred. Q1 GDP data came in weaker than expected (0.1% q/q, versus 0.5% forecast and 2.7% y/y, versus 3.0% forecast). USD/SGD sits a touch higher post the meeting outcome, last near 1.3555 but broader USD sentiment has ticked higher as the session has progressed. For the S$NEER, the Goldman Sachs Index remains around -0.65% from the top end of the band, slightly weaker compared to levels prior to the policy outcome.
  • USD/MYR has been on the front foot as onshore markets return after being out for the prior two sessions. This is clearly some catch up to USD strength, particularly post the CPI print on Wednesday. The pair was last 4.7680. Earlier highs were at 4.7775 per BBG. This puts us back close to the 4.8000+ highs from mid-February which drew a response from the authorities. There were efforts to encourage repatriation of offshore earnings and conversion into MYR, particularly from state-owned enterprises.
  • Indonesian markets remain closed until next Tuesday. The 1 month NDF for USD/IDR is continuing to climb though. The pair last around the 16100 level (per BBG). This is fresh highs back to early 2020 for the pair. Paring of Fed rate expectations this week, post the CPI print has clearly weighing on IDR sentiment.