USD/CNH Pushing Back Towards 7.2000

USD/Asia pairs have been mixed today. USD/CNH has pushed higher towards 7.2000, amid further equity headwinds. TWD and MYR have also underperformed. KRW has fared better, while mostly flat trends are evident elsewhere. Still to come is Taiwan unemployment and IP figures for June. Tomorrow, South Korea Q2 GDP is out, along with the BI decision in Indonesia (no change expected).

• USD/CNH has pushed higher today, the pair last in the 7.1980/90 region. Highs came in just above 7.1990, while an earlier dip sub 7.1800 was supported. We are seeing a weaker equity tone in HK and to a lesser extent mainland equities, as property related names underperform on the back of continuing liquidity concerns. The CNY fixing was stronger than expected, although the fixing error term less wide compared to late last week.
• The won has outperformed today, with the 1 USD/KRW month NDF last sub 1280, around 0.50% firmer in won terms versus Friday closing levels in NY. Better earnings from Posco have helped local equities track higher. The Kospi was last +0.70%. Offshore investors have still been net sellers so far today (-$136.3mn).
• USD/TWD has pushed higher again today. The pair sits just below session highs, last near 31.36 (earlier highs close to 31.39). The 1 month NDF is close at around 31.34. A break above 31.40 for spot would be fresh YTD highs in the pair and levels not seen since mid November last year. In NEER terms we are already at fresh YTD lows, last near 120.0 in terms of the J.P. Morgan index. The tail end of last week saw decent offshore outflows from foreign investors. Friday saw -$979.60mn in net outflows, bringing last week's outflows to -$1.24bn, representing roughly half the outflows seen in July to date.
• The Ringgit is softer in early trade as it continues to trim its post US CPI gains. USD/MYR prints at 4.5730/65 and is ~0.3% firmer in early dealing today. The pair sits ~1.4% above July to date lows. The June CPI print came in as expected at 2.4% Y/Y and there has been little reaction thus far in FX.
• 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 see-sawing around the $1.33 handle in a narrow range in todays dealing. On the wires a short time ago headline CPI printed at 4.5% Y/Y a touch firmer than the expected 4.4%. Core CPI was in line with expectations at 4.2% Y/Y. On Wednesday June Industrial Production is due, a rise of 3.8% M/M is expected. The June Unemployment Rate will cross on Thursday or Friday.
• USD/THB tracks back near 34.50 in latest dealings, around 0.10% weaker in baht terms versus closing levels from last Friday. A cluster of EMA sit between 34.60 to 34.70. Recent highs also rest above the 35.00 level, while on the downside, recent lows are near 33.76. The combination of a stronger USD trend, coupled with uncertainty around the election outcome, is likely weighing on baht sentiment. As we noted, earlier Pheu Thai will decide over the next few days on the PM candidate after consulting with the Senate and coalition partners. It remains to be seen if the Move Forward Party is part of that coalition. The next parliamentary PM vote scheduled for July 27th.
• USD/IDR sits little changed in the first part of trading today. The pair last at the 15025/30 level, which is close to where we opened. We did tick up to 15035 but had little follow through. On the topside, the 200-EMA isn't too far away, sitting at 15041. Earlier July highs came in above 15200. The 20 and 100 day EMAs are just below current spot levels, while further south is the 50-day 14981. The main focus from a macro standpoint will be tomorrow's BI meeting outcome, which is widely expected to deliver no change to the policy rate (currently at 5.75%).