USD/CNH Breaks Higher

Yesterday's pause in the USD uptrend has given way to fresh weakness today. Except for USD/PHP, all pairs are higher. Much of the focus rested with USD/CNH, which broke to fresh cyclical highs above 7.2000. Still to come is the BoT decision, where it is a close call between a 25bps or 50bps hike. Tomorrow the data calendar is light for the region.

• USD/CNH hit as high as 7.2386, post the 7.2000 break. USD/CNY is above 7.2200 as well, fresh highs back to early 2008. The fixing outcome wasn't as strong as recent sessions, while the introduction of the countercyclical factor didn't shift market estimates too much.
• USD/KRW is now close to 1440, with spot 1.2% weaker in the session. Onshore equities have slumped (-3%), with tech under pressure following reports Apple will ditch plans to ramp up iphone production due to softer demand. This afternoon BoK also announced it will conduct direct purchases of bonds to curb interest rate volatility.
• USD/INR is just shy of 81.90, another record high. India's inclusion in the J.P. Morgan EM debt index will be delayed until 2023. Coming up on Friday is the RBI decision, where a 50bps hike is expected.
• IDR is the second weakest performer within the region today, after the won. Spot USD/IDR is up close to 15250. Yesterday's intervention flows have been digested by the market.
• Spot USD/PHP sits at 58.986, within touching distance from record highs (59.001), but little changed for the session. BSP Gov Medalla sought to discourage buying dollars way before use as he warned that it would add pressure to the beleaguered peso. He stopped short of announcing any measures to that effect, noting that the central bank will not raise any barriers to dollar purchases for domestic companies.
• Spot USD/THB has climbed in line with regional trend, as the BBG/J.P. Morgan Asia Dollar Index prints 20-year lows. The rate changes hands +0.15 at 38.077. The Bank of Thailand will announce its monetary policy decision within a few hours (see our preview here). Most economists expect the Committee to raise the key policy rate by 25bp, but broadening price pressures and weak exchange rate support the case for a more aggressive move.