USD/EM Crosses Move To Multi-Month Highs

Risk assets and EM currencies lose ground as slow progress in vaccination programmes amid fresh worries over elevated coronavirus case numbers hinder economic recoveries.

• CNH: Offshore yuan is slightly stronger, USD/CNH pulling back from the 6.50 handle. The rate initially moved higher after data showed CPI softened but the move was reversed.
• SGD: Singapore dollar is weaker, USD/SGD approaching its 2021 highs. Singapore Health Minister Ong said Singapore was on track to achieving mass vaccination targets and was in discussions with Hong Kong on air travel channel.
• KRW: The won is weaker, USD/KRW making a fresh 2021 high. After tightening restrictions South Korea reports another record high daily COVID-19 cases of 1,316. The KDCA warned cases could peak at over 2,000 per day before they start dropping and predict approximately 1,400 per day by the end of July.
• TWD: : Taiwan dollar is weaker, the government made the decision to extend the soft lockdown until July 26 from the previous July 12 deadline, while partially easing curbs as case numbers decline.
• MYR: Ringgit declined, speculation about the future of PM Muhyiddin's cabinet has been doing the rounds since UMNO President Zahid dropped the bombshell, announcing the withdrawal of support for the government. Despite Muhyiddin's meetings with some key cabinet members, it remains unclear if anti-Bersatu quarters within UMNO will be able to bring him down.
• IDR: Rupiah fell. The World Bank downgraded Indonesia to lower-middle income status after naming it an upper-middle income country last year. The revision came on the back of the economic hit from the Covid-19 pandemic.
• PHP: Peso is lower, the trade deficit shrank to $2.755bn in May from $3.085bn prior, vs. exp. of a $2.621bn shortfall. Exports grew 29.8% Y/Y, missing forecast of a 33.6% Y/Y increase. Imports rose 47.7% Y/Y, while analysts expected a growth rate of 49.0%.
• THB: Baht weakened, USD/THB hitting the highest since April. Thailand's Covid-19 task force will consider Health Ministry's proposal to implement a partial lockdown in regions most affected by the latest outbreak. These include Bangkok Metropolitan Area, which is home to 10mn people and contributes 45% to the Thai GDP.