USD/Asia Pairs Mostly Higher, But Intervention/FX Rhetoric Curbs USD Gains

USD/Asia pairs sit higher for the most part, albeit away from session highs. We saw strong risk off flows, which supported the USD on headlines that Israel has launched a missile strike on Iran. Sentiment has calmed somewhat as reports suggest the strike was limited in nature, while Iran headlines also looked to play down the significance of the event. Intervention/FX rhetoric from various authorities stepped up as well. At this stage, CNH is back to flat, while KRW, PHP and IDR spot all have losses of around 0.60%.

• USD/CNH got to highs of 7.2629, but we now sit back at 7.2490, little changed for the session. We did see a further set higher in the overnight Hibor CNH rate in Hong Kong to 6.14% (+69bps), which will raise the cost of shorting the CNH in the near term. Also the authorities have reiterated over recent sessions of the desire keep the yuan basically stable. USD/CNY spot got above 7.2400, but hasn't been able to sustain these gains.
• Spot USD/KRW got to highs near 1393, but we now sit back at 1381, still 0.60A% weaker in won terms. Still the 1 month NDF is little changed for the session, last near 1380. Local equities are down 1.7% amid broad region losses. The FinMin was on the wires earlier stating that they are closely monitoring markets in light of Middle East tensions,. It was added that they will take immediate, firm steps on excessive volatility.
• Spot USD/IDR sits only marginally sub earlier highs, the pair last close to 16275. Rhetoric from the BI has been firm around intervening in FX markets boldly to maintain market confidence. The 1 month NDF is near 16300, still sub earlier highs of 16366.
• Spot USD/PHP is above 57.50, slightly off session highs. USD/THB is around 36.88, close to fresh highs back to Oct last year.
• MYR has outperformed, the pair last near 4.7825, slightly down for the session. MYR could benefit from the spike in energy prices, although the authorities may also be guarding against a break above 4.8000 in the pair. Q1 GDP printed as expected at 3.9% y/y. The March trade data was also close to expectations.