USD/Asia Pairs Up From Earlier Lows, PHP Underperforming

The early offered tone in USD/Asia pairs has given way to more a cautious backdrop as the Monday session has progressed. USD/CNH dipped sub 7.2000 in early trade, but is back above this level on further local equity weakness. PHP has lost ground and is back close to earlier YTD lows. KRW and TWD are also off earlier highs, although TWD is still outperforming. Still to come today is Taiwan export orders and the unemployment rate. Tomorrow, Singapore CPI is out along with South Korean PPI.

• USD/CNH lows were close to Friday session lows near 7.1960. This proved temporary as the pair rebounded back above 7.2000, last near 7.2080. Onshore equities have struggled, amid further property led weakness, which has also been evident for Hong Kong's bourse. The Hang Seng mainland properties index is off by over 5% to fresh record lows. A number of China developers have seen wind-up petitions filled in Hong Kong courts. At the same time, analysts at J.P. Morgan have a presented a cautious outlook for the China property sector in 2024, with sales projected to fall a further 10%.
• 1 month USD/KRW tried to go lower in early trade, but found support ahead of 1328. The pair last near 1336, around 0.3% weaker versus NY closing levels on Friday (in won terms). The Kospi is only marginally higher, while the first 20-days of trade data for January saw some colling in export growth momentum.
• 1 month USD/TWD got to lows of 31.09, but we sit higher now, last near 31.21, little changed for the session. The pair is sub nearly all of the key EMAS, with the 20-day (around 31.10), the next potential test point. The 100-day sits back at 31.38. Local equities are off earlier highs, but still up around 0.80% on tech optimism. Higher USD/CNH levels are likely to have weighed on TWD as the session progressed.
• USD/PHP spot has surged, the pair last at 56.31, 0.60% weaker in spot PHP terms. This puts us to fresh highs for the past week, although earlier Jan highs rest higher at the 56.40 level for spot. There doesn't appear to be a direct catalyst for fresh PHP weakness. Correlations with broader USD moves aren't usually strong at the best of times for PHP. Local equity sentiment has been weaker in the past week but has stabilized today (PCOMP up 0.80%). Offshore investors were net sellers of local equities late last week as well. The BSP said earlier this year, there would likely be less FX intervention, so this again could be a factor. Still, 1 month implied USD/PHP vol is still range bound, last at 6.15%, up from recent lows.
• Elsewhere, USD/THB has been supported on dips, the pair last at 35.61 against earlier lows of 35.44. We aren't too away from recent YTD highs. USD/MYR has also drifted higher, the pair last near 4.7260, the Dec CPI print coming in as expected at 1.5% y/y.