Weaker China April Activity Data Aids USD Sentiment

USD/Asia pairs are mostly higher, with weaker than expected China activity data for April the main headwind today. THB has also unwound a good part of yesterday's early bounce as election outcome uncertainty continues. Tomorrow, China new homes prices data is out for April, while Singapore exports are also due.

• USD/CNH couldn't sustain early downside, with weaker than expected April activity figures weighed. IP and property related sentiment was quite soft, while retail sales, while much higher in y/y terms, still came in below market expectations. Onshore equities are softer, with Northbound stock connect flows negative. USD/CNH was last around 6.9730, we saw earlier lows at 6.9555.
• 1 month USD/KRW was weaker in early trade but couldn't see further downside beyond the low 1331 region. We now sit back at 1335/36, slightly above NY closing levels. Equities has lost momentum as the session progressed, while offshore investors have been small net buyers today (+$32.4mn). Higher USD/CNH levels post the China data outcomes has weighed on the won.
• USD/THB sits just below session highs. The pair last 33.85/90 (33.935 was the earlier high). Yesterday lows came in between the 33.70/75 region. Recent highs rest near 34.00. Sell-side analysts were mostly positive in the aftermath of the result, albeit waiting to see how government is formed and who is the new Prime Minister. A contested election result and or significant delay in announcing the new PM will be seen as negative for Thailand related assets. Local newswires reported that some senators oppose Move Forward PM candidate Pita due to question mark around his loyalty (see this link).
• USD/PHP has continued to climb this afternoon, heading back towards earlier highs at 56.20. We were last 56.16. We are now threatening highs from back in mid-April, which came in at 56.385. At this stage we are through the simple 200-day MA around 56.10. Earlier comments from BSP Governor Medalla were noteworthy, with the governor noting that there are other ways to loosen policy besides cutting rates. One such option is a RRR cut. Market speculation has risen around a potential RRR cut around the middle of this year. These comments come after the Governor stated yesterday the central bank may pause at Thursday's policy meeting.
• USD/MYR prints at 4.4980/5020, pair rose ~0.4% yesterday printing its highest level since 17 March. MYR was pressured yesterday as concerns over the slowing global economy weighed. Palm Oil futures fell ~1% on Monday and are down a further ~1% today. Bulls now target the high from Mar 9 at 4.5317. Bears first look to break the 20-Day EMA (4.4471) to turn the tide. Looking ahead, Friday's April Trade Balance provides the only data of note this week. A surplus of MYR21.20bn is expected.