USD/Asia Pairs Lower, But Regional Equity Weakness Curbs Dollar Losses

Most USD/Asia pairs are lower for the session, but we are away from session bests, as regional equity sentiment has been weighed by on-going China property market concerns. This took the shine off earlier Q3 GDP/September activity beats in China. MYR and IDR have lagged the rest of the region, with both currencies modestly weaker. Tomorrow the focus is on the BI and BOK decisions. Both central banks are expected to hold steady.

• USD/CNH has climbed off session lows in recent dealings. After getting just under 7.3050, we last tracked just above 7.3160. We are still off earlier highs near 7.3275 and still +0.10% higher in CNH terms for the session. Spot USD/CNY still sits lower, the pair last near 7.3070. The better than expected Q3 GDP print was welcomed by the market, likewise in terms of the better retail sales y/y outcome and steady IP growth. Still, BBG notes that growth in both IP and retail sales slowed in the month of September versus August. The property side also remains weak, with investment off -9.1% ytd y/y, with new construction and funds for property development remaining weak. Local equities are around session lows, with the CSI 300 off nearly 0.60%. The property sub-index making fresh cyclical lows. The above data prints not helping, while a potential Country Garden dollar bond default is also a drag.
• 1 month USD/KRW sits below recent highs, the pair last near 1348. Onshore equities are around flat, modestly outperforming weaker trends elsewhere. Tomorrow the BOK decision is no due. no change is expected at this stage.
• The bias in spot USD/IDR remains a buy on dips strategy. Equally though, we aren't seeing a break higher in the pair. Latest spot levels deal at 15730, little changed versus Tuesday closing levels. Highs from last week around 15740 remain intact. Beyond that lies end Dec 2022 highs of 15763. Recent dips towards the 15680 level have been supported. The 20-day EMA continues to trend higher, last near 15600. The near term macro focus rests with tomorrow's BI policy meeting. No change is expected but IDR weakness may be in renewed focus. The weaker IDR doesn’t mean that there needs to be another hike when the economy doesn’t need it, BI has other tools it can use to strengthen the currency.
• Spot USD/HKD tracks near 7.8240 in recent dealings. This is close to unchanged for the session. Earlier lows in the week sub 7.8200 were support. Back to late September, the 7.8150/60 region has seen dollar support emerge. On the topside, offers have emerged on moves above 7.8250, so not too far from current spot levels. These shifts in USD/HKD broadly match short rate US-HK interest rate differentials. The 3 month spread was last at +20bps, above late September lows, but not showing a strong trend in October to date. HKMA Chief Eddie Yue reiterated yesterday that Hong Kong has no intention to change the HKD peg system
• The SGD NEER (per Goldman Sachs estimates) is little changed in early dealing on Tuesday and remains well within recent ranges. The measure sits ~0.6% below the top of the band. USD/SGD is holding in a narrow range above the 20-Day EMA ($1.3667) as of yet the pair has been unable to sustain a rally above the $1.37 handle. We sit at $1.3685/90. Looking ahead, a reminder that the local docket is empty for the remainder of the week.
• The Ringgit has been pressured in early dealing as participants digest Tuesday's rise in US Tsy Yields. USD/MYR printed at fresh YTD high at 4.7478 before marginally paring gains to sit at 4.7400/20. Palm Oil firmed to its highest level since mid-September yesterday rising as much as 0.7% as supply concerns and a rally in Soybean Oil in the US added a layer of support.
• The Rupee has opened a touch below Tuesday's closing levels, USD/INR remains well within the recent range as narrow ranges continue to persist. USD/INR sits at 83.2250/2350, the pair has been dealing in a narrow range between the 20-Day EMA (83.18) and 83.28 handle. A reminder that the local data docket is empty until 31 October when September Fiscal Deficit and Sep Eight Infrastructure Industries cross.