Won Leads Gains In Mixed Trade, Yuan Firms After China's Inflation Miss

The market impulse generated by Tuesday's congressional hearing with Fed Chair Powell applied pressure to USD/Asia crosses in early trade but petered out as the session unfolded. China's inflation data provided the focal point within the region, as we await the U.S. counterpart due later today.

• CNH: Spot USD/CNH took a dive after China's inflation report for December showed an above-forecast deceleration in price growth, which was evident across both consumer and producer prices. The data will likely fuel expectations of more stimulatory policy out of China. Elsewhere, the PBOC set their daily yuan reference rate below analysts' forecast, but USD/CNH was unfazed in the lead-up to the publication of inflation figures.
• KRW: Onshore KRW outperformed in Asia, drawing support from overnight dynamics generated by Fed Chair Powell's comments. South Korea's unemployment rate jumped more than expected in December, but that came with a sweetener of considerably wider participation and a multi-year high for employment growth. Continued chatter surrounding North Korea's latest missile test failed to undermine the KRW to any material degree.
• IDR: Spot USD/IDR re-opened on a softer footing but virtually erased losses thereafter. Domestic headline flow was relatively subdued, with the government set to decide on lifting coal exports ban.
• MYR: Spot USD/MYR sold off after onshore Malaysian markets resumed trading. The rate printed a one-week low and stabilised, with participants looking for fresh catalysts.
• PHP: The peso gave up its initial strength and fell towards the bottom of the Asia EM scoreboard. The rapid spread of Covid-19 across the Philippines likely sapped strength from the currency, as the authorities tightened restrictions in Metro Manila and warned that they stand ready to raise its Alert Level.
• THB: The baht lost shine, even as the government expanded the quarantine-free travel programme to Krabi, Phang Nga and Koh Samui in a bid to provide some relief to the struggling tourism industry. Worth noting that the Federation of Thai Industries said that Thailand's key private industry groups would likely downgrade their economic growth forecast owing to the Omicron outbreak.