US TSYS: Cheaper Start

1 month USD/KRW finished the Friday session in NY around the 1266.60 level, close to recent highs. We are very close to the 50-day EMA at 1267.60, while the 20-day EMA continues to trend higher (around 1248 currently). Note onshore spot ended just under 1265 on Friday.

• The early focus will be on the first 10days of trade data for February, which is released a little later. The Korean authorities have stated they don't expect a better export picture to emerge until H2. January also saw a record wide trade deficit.
• On the equity front, the tech lead is negative for the Kospi today, with the SOX down 1.58% on Friday, the MSCI IT down 0.76%, as higher US yields weighed on broader sentiment.
• To recap, the Kospi lost 0.48% on Friday, while offshore investors sold $42.3mn of local shares.
• Elsewhere, South Korea resumed short term visas for China travelers on Saturday, although visitors still have to show a negative test result prior to arriving.

TYH3 deals at 112-22+, +0-00+, in line with levels seen late in Fridays NY session.

• Cash Tsys finished 3-8bps cheaper on Friday across the major benchmarks.
• Cross market flows pressured Tsys, a Nikkei report noted former BoJ board member Ueda will be nominated to the BoJ Governor position pressuring JGBs, which spilled over into wider FI markets.
• Further pressure was seen as Canada employment data printed stronger than expectations, with the spillover flow weighing on Tsys.
• BLS 2022 Seasonal adjustments to CPI were released. Core CPI was adjusted 0.1% higher in MoM terms for both November and December, however spring numbers were revised lower.
• US Consumer Sentiment climbed to a one year high, with 1 year inflation expectations also rising however they remain well below levels seen in the first half of 2022.
• Philadelphia Fed President Harker noted he favours getting rates above 5% then pausing. He also said it's more probable now that there will be a soft landing in the US.
• There is a thin data calendar today. Fedpseak from Gov Bowman provides the highlight of the day. Further out the focus is on Tuesday Jan CPI data.

(MNI Australia) USD/CNH spent most of the post Asia close on Friday maintaining a positive footing. The pair got close to 6.8300, before easing into the close. We are little changed in the first part of trading today, currently around the 6.8240/50 region. This was mostly in line with broader USD gains, with the CNY NEER down only slightly to 126.16 (J.P. Morgan index).

• Near term focus is likely to remain on the downing of alleged spy balloons. Additional balloons/objects were shot down over the US and Canada over the weekend. The China authorities also reported a flying object near a naval base late on the weekend (see this link for more details). The authorities are prepared to shoot down the object.
• These incidents have seen US-China tensions edge higher and there will be concern that further restrictions may be announced by the US authorities on technology related exports to China.
• The China Dragon Index fell 3.66% in US trade on Friday, as onshore equities ended Friday's session softer.
• On the data front, aggregate financing and new loans data, released late on Friday, beat expectations (5980bn yuan, versus 5400bn yuan forecast for aggregate finance), but didn't have a large impact on sentiment.