Weaker Inflation Sees CNH Gains Reverse

USD/Asia pairs are mostly higher, although dollar gains are fairly modest at this stage. USD/CNH was offered early, but rebounded post the weaker than expected inflation data. We saw offers above 6.9500 though. Ranges elsewhere have been reasonably tight and within recent history. Tomorrow, we get India IP for Mar and CPI for Apr. Malaysia Q1 GDP is out, along with South Korea money supply. Note also China aggregate financing figures for Apr are also due out any day between now and the 15th.

• USD/CNH was near 6.9300 prior to the inflation data but rebounded on the miss for both headline CPI and PPI. We are likely to see continued calls for easing from the PBoC. We got to 6.9500/05, but now sit back at 6.9400, so within recent ranges, albeit with an upside bias. China equities are struggling to stay positive, while the 10yr bond yield isn't too far away from 2022 lows.
• 1 month USD/KRW couldn't get sub 1314 in early trade and rebounded towards 1322, as the pair was dragged higher by USD/CNH. The first 10-days of trade data for May continued to show negative export growth and an on-going trade deficit. Overall, USD/KRW remains wedged between its 50-day and 200-day MAs.
• Philippines Q1 GDP was better than expected at 6.4% y/y, versus 6.2% forecast (7.1% prior), with growth fairly broad based. The authorities see growth momentum continuing, while inflation pressures should come down from here. USD/PHP recovered from early lows, last tracking in the 55.65/70 region (55.55 was the low).
• USD/THB has shown a similar trajectory, with early dips sub 33.60 supported, the pair last 33.70/75. Apr consumer confidence climbed to 55.0 from 53.8 in Mar. The election is also coming into focus, which is held this Sunday (see this link and this link for more details). The recent break below 34.00 may offer some resistance on the topside if we see a further USD rebound.
• USD/IDR is holding above 14700, last near 14720. Onshore equities are down by more than 1%, but this hasn't weighed materially on FX sentiment today. Better cross-asset support has come from lower CDS levels and the tick lower in US real yields from Wednesday's session. Still, palm prices continue to track lower.