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USD/CNH Dips 1% Amid Covid Optimism

ASIA FX

USD/Asia pairs are mostly lower, with CNH and KRW leading the way. High yielders, INR and IDR are laggards, likewise for MYR. Still to come today is Taiwan Q3 GDP revisions, while tomorrow the focus will rest on the official China PMI prints and the BoT decision in Thailand (+25bps expected). Indian Q3 GDP also prints.

  • USD/CNH is down over 1% from NY closing levels, last under 7.1650. The pair has unwound yesterday's gains and then some. Some slightly better domestic Covid case numbers and a press conference from the health commission later is spurring re-opening hopes. China/HK equities have rallied strongly today.
  • USD/KRW 1 month is down over 1.2%, although is finding some buying interest ahead of 1320 (last 1325). The Kospi has steadily climbed during the session, last up over 1%. Offshore investors have bought $61.1mn of local shares so far.
  • Spot USD/IDR is slightly higher, last 15732, with the pair seeing little benefit from lower USD/Asia levels elsewhere. We are close to recent cyclical highs around 15750. Equity market underperformance, coupled with higher US real yields are weighing.
  • USD/THB is back above 35.60, but well down on early session highs above 35.80. Recent lows in the pair have come in around the 35.50 level. Tomorrow the BoT is expected to hike rates by 25bps to 1.25%.
  • USD/MYR is back above 4.50 (last 4.5050, +0.50% for the session). Onshore equities are down around 1%. Some of the euphoria from Anwar's victory is coming out of markets, while Fitch notes that fiscal consolidation will be difficult for the new administration.

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