Weaker Since Month End, But All USD/Asia Pairs (Except INR) Still Sub 20-day EMA Resistance

The Asia versus dollar index sits off end August highs. The Bloomberg index last near 92.33, after ending August at 92.78, fresh highs back to early January of this year.

• Asian currencies moving away from highs versus the USD (or USD/Asia pairs up from lows) has likely reflected several factors. Firstly, US yield sentiment has stabilized to a degree, amid resilient US data outcomes. Looking forward, a lot will depend on how US payrolls unfolds later this week, given the emphasis Fed Chair Powell put on the labor market at his recent Jackson Hole Speech.
• Clear of month end may have also reduced some exporter related USD selling, which has likely been a feature in markets like USD/CNH through the tail end of August.
• Renewed China growth amid property woes and underperforming manufacturing PMI (official index) has hurt China asset sentiment in recent sessions, which may be spilling over to the rest of the region to some degree.
• Coming back from oversold conditions for some USD/Asia pairs is also potential encouraging some squaring of USD shorts.
• Still, as the table below shows, outside of USD/INR, all USD/Asia pairs are sub their respective 20-day EMAs. The largest percentage deviation rests with some South East Asian (SEA) currencies, rather than North Asia (where USD/TWD is back close to this resistance point).
• SEA FX is arguably more sensitive to US yield developments/Fed outlook. This brings extra focus onto the US NFP report this Friday.

Table 1: USD/Asia Pairs -Deviation From 20-day EMA

Source: MNI - Market News/Bloomberg