Asian currencies underperformed against the USD this week as higher US yields and negative carry triggered outflows. The market outlook remains focused on US labor data and regional activity indicators to gauge the direction of the 'high-for-longer' interest rate narrative.
Key Takeaways
- 1.Asian FX remains under pressure from a strong USD and higher-for-longer US yields.
- 2.Data focus shifts to US labor market and regional activity prints (China PMIs, trade data).
Table of Contents
- FX views
- USD/CNY: Stronger dollar pushed the pair higher
- USD/KRW: High volatility around KOSPI likely to persist in near term
- USD/INR and USD/VND: Navigating global risks
- USD/THB: Baht particularly vulnerable in a high-for-longer US rates environment
- Week in review
- Capital Flows
- Government bond yield spreads: Increased for 2y and 10y
- Central bank monitor
- The week ahead
- Forecasts
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Authors
Lin Li, PhDMichael WanLloyd ChanKhang Sek Lee
Securities
KOSPIDXY
Themes
AI-driven tech cycleHigh-for-longer US rates
Regions
Asia PacificChinaIndiaSouth Korea