USD/CNH Sits Above Session Lows, KRW Outperforming

USD/Asia pairs are mixed, with earlier USD weakness, (inspired by CNH gains on further policy support) giving way to a more cautious tone as the session progressed (we do have US NFP later). PMI prints were mixed, with China beating expectations, but the rest of the region mostly steady or weaker. KRW was the clear standout, with 1 month USD/KRW getting too fresh multi week lows.

• USD/CNH dipped sharply as the authorities cut the FX RRR for onshore banks, in a move designed to boost onshore foreign currency liquidity and increase the appeal of the yuan. The USD/CNY fixing error was also beyond -1000pips. However, USD/CNH couldn't sustain a break of 7.2400, we sit back near 7.2670 in afternoon trade. The better Caixin PMI print didn't help sentiment much. Onshore equities are modestly firmer following further support measures for the housing market, but we remain within recent ranges. For USD/CNH the 20-day EMA is just above 7.2700, and this zone was a support point in recent weeks, so it may act as a resistance zone now we have broken through to the downside.
• 1 month USD/KRW is tracking to fresh lows sub 1315 this afternoon, multi week lows. August 10 lows came in around 1304.50. The near term bias appears to fade upticks towards 1320. Earlier we had slightly firmer export and trade surplus figures for August. The worst of the export downtrend may now be behind us. Onshore equities are higher, while USD/CNH is lower on further policy support. These factors have also helped.
• The SGD NEER (per Goldman Sachs estimates) is little changed in early dealing and has consolidated August's gains in a narrow range in recent dealing. The measure is ~0.4% below the top of the band. Broader USD trends continue to dominate flows for USD/SGD, the pair was supported at the 200-Day EMA yesterday. Narrow ranges are persisting in today's dealing ahead of this evening's NFP print. Looking ahead over the weekend August Purchasing Managers Index will cross, S&P Global PMI is due on Tuesday.
• The ringgit is steady in early dealing holding little changed against the USD. USD/MYR prints at 4.6380/4.6425, the pair continues to consolidate in narrow ranges, support came in at the 20-Day EMA this morning after brief pressure. August S&P Global Mfg PMI was unchanged in August at 47.8, the index has been contracting since July 2022. Looking ahead, the next risk event is the BNM's monetary policy decision on 7 Sep, no change to policy is expected.
• The Rupee has firmed in early dealing USD/INR is down ~0.1%. The pair sits at 82.65/68, yesterday's low has been breached as onshore markets reopen after yesterday's Q2 GDP which printed at 7.8% Y/Y the strongest level in a year. Global investors purchased a net of $1.6bn in local equities in August, which marked a sixth straight month of inflows into Indian stocks. With this year’s inflows, foreigners are now just $137 million shy of reversing their record $17 billion exodus from the nation’s equities in 2022. S&P Global Mfg PMI ticked higher in July to 58.6 from 57.7.
• USD/IDR has drifted a little higher, last tracking near 15255, +0.15% higher for the session. We remain within recent ranges for the pair. July CPI came out close to expected in terms of headline, 3.27% y/y (3.34% forecast), while core moderate further to 2.18% y/y (2.33% forecast and 2.43% prior).