USD/Asia Pairs Lower On Better Equity Sentiment, CNH Lagging Still

USD/Asia pairs are lower across the board, except for a steady CNH trend. The won has been the strongest performer in spot terms, while MYR and IDR have also posted solid gains. NDF markets have also shown USD losses, albeit to a reduced degree compared to spot markets. A positive regional equity backdrop has weighed on the USD, while a slightly weaker dollar against the Yen and AUD has also helped. We have Taiwan trade figures later, while tomorrow delivers China inflation data for Feb.

• USD/CNH sits near 7.2000 in latest dealings, little changed for the session. We did dip to 7.1946 in early trade, as the USD index sank to fresh multi week lows. However, there was no follow through. Onshore China equities are lagging the better regional trend for other Asia Pac markets, which may be weighing on the yuan at the margins.
• Looking ahead, Saturday delivers Feb inflation data. The CPI is expected to rise to 0.3%y/y from -0.8% in Jan. The PPI is expected to be unchanged in y/y terms at -2.5%. The headline CPI may be aided by higher food/restaurant services prices in the month, given the timing of LNY. Similar trends have been evident in South Korea and Taiwan Feb CPI prints. Next Friday we have the 1yr MLF decision. No change is expected in terms of the rate, currently, 2.5%. Expectations are for easier policy settings, but it may too soon for an adjustment in this rate. Also due on the same day is Feb house price data, which will be in focus given tentative signs in Jan of slightly better price trends. Next week should also deliver Feb new loans and aggregate finance data. This is expected to slow noticeably from Jan levels, but this is the typical seasonal norm.
• 1 month USD/KRW has broken lower, the pair last near 1318.5, which is very close to the 200-day EMA. In recent sessions the pair has broken down through the 50 and 100-day EMAs. A generally positive global equity backdrop, coupled with lower US yields, have been key won supports in recent sessions, along with the break lower in USD/JPY. We had earlier data on the Jan current account and goods balance, which showed reduced surpluses compared to Dec last year.
• USD/IDR spot is down around 0.30% in the first part of dealing on Friday, last at 15605. This is just up from session lows near 15590. IDRs pot gains largely reflect IDR NDF gains through US trade on Thursday. The 1 month USD/IDR NDF is only slightly stronger in rupiah terms, last near 15620. Broadly, IDR gains in recent sessions appears to reflect some catch up with a softer US yield backdrop. The real yield peaked back in late Feb, but month end USD demand may have delayed IDR reaction.
• As was the case at yesterday's open, USD/MYR was sharply weaker in the first part of trade. The pair touched 4.6768, fresh lows back to mid-Jan. We have stabilized somewhat since then, last just above 4.69. We are still +0.30% firmer in ringgit terms. The currency is still the top performer in the EM Asia space over the past week, up nearly 1.2%. The central bank characterized MYR as undervalued and that it continues to encourage government linked corporations to repatriate offshore earnings. The latter has been a key turnaround in MYR's fortunes since it became a focus point for the authorities and the Prime Minister.
• Elsewhere, THB is around 0.20% firmer, last near 35.50 for USD/THB, fresh lows back to the first half of Feb. USD/PHP is down by the same amount, the pair last near 55.73. Earlier data showed a tick up in the unemployment rate, back above 4%, but we are only back to end Sep levels from last year.