USD/CNH Lower Despite MLF Cut, KRW and IDR Weaker On Equity Losses

USD/Asia pairs are mixed in the first part of Thursday trade, as yen gains in the G10 space continue to dominate sentiment. We have seen weakness in higher beta plays for the likes of KRW and IDR. Steadier trends are evident elsewhere, Note markets for FX onshore in the Philippines and Taiwan have remained shut due to adverse weather conditions. Tomorrow we have the MAS decision in Singapore, although no change is expected. Thailand customs trade data is also out.

• USD/CNH is lower, testing the 7.2550 region at the time of writing (earlier lows came in just ahead of 7.2500). CNH's reasonable beta with respect to yen moves is aiding yuan sentiment. We had the surprise announcement of a 1yr MLF cut today, which was lowered by 20bps (the most since 2020 Covid) and an injection of CNY200bn. This is seen as a further step in terms of policy support. Still, China equity sentiment remains soft, at this stage the CSI 300 is down a further 0.75%, sub 3400. We are testing sub the 100-day EMA (near 7.2580) for the first time since May.
• Spot USD/KRW is around 0.45% higher, last near 1386. This leaves the pair comfortably within recent ranges. Today's Q2 GDP miss has weighed on front end yields, with BoK easing expectations firming. Equity losses have also been a factor, the Kospi sits back at early June levels close to 2700 amid on-going tech pressure. Offshore investors have sold -580mn of local equities so far today. Continued yen gains have provided some offset.
• USD/SGD has been relatively steady, last near 1.3445, holding within recent ranges. We have the MAS July meeting outcome tomorrow. No change is expected, with the SGD NEER holding close to the top end of the band per Goldman Sachs estimates.
• Spot USD/IDR is pushing higher, the pair last near 16270/75, around 0.35% weaker in IDR terms. General weakness in global equity markets will be weighing on rupiah sentiment. For spot, early July highs in the pair came in at 16400.