USD Remains In Control

The USD is firmer across the board in the Asian FX space. Some markets returning from holidays has driven catch up plays. Weaker equity sentiment, a firmer USD against higher beta majors and uptick in US yields has weighed throughout the session. The main focus tomorrow is the BoK decision, where a 50bps hike is likely to be delivered.

• USD/CNH was fairly range bound until the onshore spot open. The fixing error was -300pips, larger than yesterday but still well down on late September levels. Onshore USD/CNY spot surged in early trade and USD/CNH followed suit. Higher domestic covid case numbers are likely weighing. USD/CNH touched a high of 7.1955. Focus will be on intervention risks if we breach 7.2000.
• Spot USD/KRW is +1.5% to 1435, as onshore markets play catch up after yesterday's holiday. Onshore equities are weaker (Kospi -2.40%), while earlier data (first 10 days of trade for October) continued to suggest an export slowdown).
• USD/TWD onshore is back close to 31.90 (last 31.87), which is right on recent cyclical highs for the pair. Taiwan equities are off by over 3.5%, led by weakness in tech names (TSMC down by nearly 7%).
• Spot USD/IDR extended gains after ripping through resistance from Oct 4 high, as equity outflows continued on Monday, the commodity complex softened, while Indonesia's 5-Year CDS premium moved closer to cyclical wides.
• USD/MYR lodged its best levels since the 1998 Asian financial crisis as onshore markets re-opened after a public holiday. Palm oil futures snapped a seven-day winning streak, while high-frequency data showed a decline in shipments from Malaysia in the first 10 days of the month. Participants digested the dissolution of parliament, which terminates parliamentary debate on Budget 2023.
• Onshore PHP was the strongest performer in emerging Asia as firm resistance from the PHP59 record high limited gains in USD/PHP, days after the BSP admitted being "very active" in the FX market. The peso was steady even as the Philippines' trade deficit widened to a record, exceeding expectations.
• Spot USD/THB advanced after net equity outflows from Thailand accelerated, while the NESDC warned against domestic consequences of the global economic slowdown which may turn into a recession next year.