Weakness In U.S. Dollar Grants Reprieve To Asia EM FX Space

The greenback remained heavy, with Bloomberg/J.P. Morgan Asia Dollar Index (ADXY) creeping higher as a result. The region assessed Fedspeak & U.S. inflation expectations data from after hours Friday, which appeared to play down potential for a full-percentage point hike at the FOMC's August meeting.

• CNH: Offshore yuan started on a softer footing, as China's COVID-19 situation remained worrying, prompting Shanghai authorities to roll out mass testing in nine districts. The redback regained poise as the U.S. dollar lagged, while the PBOC fix came in slightly firmer than expected.
• KRW: The Korean won paced gains in the Asia EM basket, owing to its sensitivity to U.S. Tsy yields. Comments from FinMin Choo may have lent the currency some further support, as the official said inflation might top out in October, while recession this year is unlikely.
• IDR: Spot USD/IDR gapped lower at the re-open, trimming losses thereafter. Participants assessed the interest rate outlook ahead of this week's Bank Indonesia meeting, with most sell-side desks expecting no change to the key policy rate.
• MYR: Spot USD/MYR staged a round trip from its session low of MYR4.4330, reached as a result of the initial nosedive. Malaysian parliament reconvenes today and the focus is on the anti-party hopping bill as well as the cost of living debate.
• PHP: The peso firmed a tad. Domestic headline flow was limited, with participants awaiting the latest update on alert levels from the Philippines' main COVID-19 task force.
• THB: The baht oscillated around unchanged levels, after finishing last week as the second-worst Asia EM performer. The BoT is one of the last dovish holdouts refusing to raise interest rates despite building inflationary pressures.