USD/CNH Dips On Growth Hopes Post Politburo Meeting

Much of the focus today has been on China related asset performance, with CNH surging post yesterday's Politburo meeting. We have not gone beyond 7.1450 in terms of USD/CNH at this stage though. Spill over to other Asia FX has been evident but not strong at this stage. THB and MYR have lagged broader USD/Asia moves. Still to come is the BI decision, no change is expected. Tomorrow South Korean consumer confidence and Singapore IP are on tap. Thailand customs trade data is out also.

• USD/CNH got to lows of 7.1467 not long after the HK and local equity opening, where sentiment surged post yesterday's Politburo meeting. The CNY fixing was also much stronger than expected. USD/CNH did stabilize somewhat, but upticks above 7.1600 have been sold. Headlines have also crossed from Reuters that large State-Owned banks have been selling USDs in both the onshore and offshore markets.
• 1 month USD/KRW sits slightly down on NY closing levels from Monday, last near 1278. The won has underperformed firmer CNH levels. Local equities are close to flat, while earlier Q2 GDP printed better than expected, although the detail showed domestic expenditure was far from on a firm footing.
• Spot USD/THB sits above 34.50 in last dealings, around 0.15% weaker in baht versus terms versus closing levels yesterday. A cluster of EMAs remain higher between 34.60 and 34.70. Recent lows rest under 34.00. The Pheu Thai Party cancelled a scheduled meeting of coalition partners that had been set for today around forming a new government and nominating a new PM candidate. However, uncertainty rests over whether Thursday's PM vote will now go ahead.
• USD/INR has fallen ~0.4% this week breaking out of its recent range, last printing at 81.73/75. Broader USD trends are dominating in early dealing which has seen the Rupee print its strongest level since early May. Corporate inflows, which may be connected to a deal by Bain Capital to buy Adani Capital, may also be boosting the rupee at the margins. More on the deal here. A reminder that the domestic data calendar is empty this week.
• The ringgit is little changed in early dealing on Tuesday, with narrow ranges observed thus far in today's session. USD/MYR prints at 4.5635/65, in line with yesterday's closing levels. On Monday the pair was marginally firmer rising ~0.1%. Foreign investors have bought a net of $110.7 of local equities month to date, this puts July on track to be the first monthly inflow in 2023. The local data calendar is empty for the remainder of the week.
• The SGD NEER (per Goldman Sachs estimates) is little changed in early dealing, the measure sits a touch off cycle highs and is ~0.2% below the top of the band. USD/SGD is following broader USD trends, and is down ~0.2% thus far today. The pair sits a touch below the $1.33 handle. CPI ticked lower in June, the headline number printed at 4.5% Y/Y ticking lower from the prior read of 5.1%. The Core measure ticked lower to 4.2% Y/Y from 4.7%.
• PHP remains around 0.25% firmer versus closing levels from last Friday (FX markets were closed yesterday). We last tracked at 54.61, slightly above earlier session lows of 54.52. The pair remains sub all key EMAs, and wedged between recent lows at ~54.30 and 54.94 (a break down level from earlier in July). Finance Secretary Diokno stated the FX rate was in a comfortable place now in earlier comments. In terms of monetary policy, Governor Remolona stated inflation will be back within target by Q4 this year (2-4% band). Deputy Governor Dakila also stated the central bank is ready to resume rate hikes if the data warrants it.