USD/Asia Pairs Off Highs Amid Intervention Risks

USD/Asia pairs are off earlier highs. Intervention risks are more heightened amid the firmer dollar backdrop. Such flows are likely to have helped curb USD/CNH upside. 1 month USD/KRW is also down sharply from intra-day highs. THB and SGD are modestly firmer against the USD. Still to come is Taiwan CPI for August. Tomorrow, China August trade data is on tap. The BNM decision is also out in Malaysia, no changes are expected.

• USD/CNH is off earlier highs. We got to 7.3278 before retracing back towards 7.3100, we sit near 7.3130 in latest dealings. Headlines cross that state owned banks were selling USDs onshore and reducing liquidity in CNH (to make the currency more expensive to short). Spot USD/CNY sits back near 7.3100, after making fresh YTD highs earlier at 7.3217. Onshore equities are weaker despite more optimism around property stimulus.
• 1 month USD/KRW spiked in early trade. We got to 1335.40, before retracing sharply. We now sit back near 1328, close to session lows and under the NY close on Tuesday. Lower USD/JPY levels (amid intervention threats) and USD/CNH dipping have aided the won. Lower equities are weaker, down 0.65%, with offshore investors selling -$88.2mn of local shares so far today.
• The SGD NEER (per Goldman Sachs estimates) is little changed on Wednesday as the measure nudged away from late August's cycle highs yesterday. We now sit ~0.6% below the top of the band. USD/SGD printed its highest level since early December 2022 this morning before paring gains as the USD ticked away from session highs. The pair sits ~3.5% above July lows as broader USD trends dominate flows. In August S&P Global PMI ticked higher to 53.6 from 51.3 prior, this is the sixth consecutive month of expansion for the index.
• USD/MYR has extended recent gains rising ~0.2% today and printed its highest level since late June before paring gains. The pair sits at 4.6725/50, as broader USD trends dominated flows this morning. An early session high of 4.6783 was seen before gains were pared. Tomorrow's BNM policy meeting headlines the remainder of the week's docket, there is no change expected to the Overnight Policy Rate which sits at 3.00%.
• Higher Oil prices and broader USD flows weighed on the Rupee yesterday, USD/INR firmed above the 83 to sit at its highest level since 22 August. In early dealing on Wednesday the pair is little changed, last printing at 83.0650/0750. India’s central bank will remain vigilant for the second round effects of inflation, Governor Shaktikanta Das said Tuesday. The domestic data docket is empty for the remainder of the week.
• USD/IDR is holding above 15300, +0.25% firmer for the session, although we sit below session highs near 15320. The mid August surge in USD/IDR towards 15360 peaked out, so this could be levels to watch on the top side. The BI continues to view the currency on the cheap side, so intervention risks are likely to remain elevated. On the downside, the 20-day EMA sits back near 15244. Local equities are close to multi-month highs, the JCI last around 7000, with offshore inflows +$73.7mn so far this month. Firmer global commodity prices should be a positive for local equities, all else equal. Some offset is coming from bond outflows, with $-115.5mn in outflows month to date, and relatively light foreign participation at yesterday's debt auction.
• USD/THB sits off earlier highs, last in the 35.40/45 region. This is little changed on yesterday's closing levels. Not long after the open we gaped higher towards 35.60 but this move proved short lived. Like elsewhere in the region, the Thailand authorities may be on guard against a sharp rally in USD/THB through previous highs. The Federation of Thai Capital Market Organizations (FETCO) stated investor confidence surged in August to 141.27 from 83.45 prior. FETCO noted the new government has raised optimism around stimulus and the growth outlook.
• USD/PHP has tracked higher but hasn't breached the 57.00 spot level yet. The pair last near 56.96. 57.00 is the top end of the authorities assumed FX range (54-57), so intervention risks are likely to be elevated in the near term.