ASIA FX: USD Biased Weaker In SEA, PHP Outperforms
In South East Asia FX markets, the bias is for weaker USD levels. PHP is the best performer so far today, up around 0.40% in spot terms. Elsewhere, gains are modest, in the 0.15-0.25% range.
- USD/PHP sits close to 56.65 in latest dealings. Outside of broader USD weakness and optimism on trade deal progress, there doesn't appear a fresh catalyst for PHP gains. We are well above earlier 2025 lows of 55.15, so we may be seeing some catch up to broader dollar trends. The Philippines hopes to negotiate a tariff rate of 15% its envoy to the US stated.
- USD/THB has slightly lagged these softer dollar trends, the pair last near 32.15, little changed for the session. Still, we got to fresh multi year lows of 32.11 in the first part of trade. A clean break lower will see the 32.00 figure level targeted. June trade figures were a little bit below forecasts in terms of export and import growth, but the trade surplus was above, over $1bn. The authorities noted the H2 outlook is very uncertain given US tariff levels. The other focus point will be on Thailand-Cambodia border clashes, which have escalated over the past 24 hours. Broader markets fallout appears limited at this stage.
- USD/MYR is down close to 0.25%, last under 4.2200. Focus will be a re-test sub 4.2000 for this pair. USD/IDR is down less than 0.10%, last near 16280, exhibiting a low beta with respect to lower USD moves at this stage.
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NZD: Asia Wrap - NZD Back Above 0.6000
The NZD/USD had a range of 0.5963 - 0.6014 in the Asia-Pac session, going into the London open trading around 0.6005. The NZD has remained well supported all through the Asian session, +0.50%. With the USD back under pressure the NZD very quickly finds itself back on a 0.6000 handle, looking to build momentum for a test of the 0.6100 area.
- "NZ TREASURY: MAINTAINING ECONOMY MOMENTUM MAY BE CHALLENGING" - BBG
- “Among Group-of-10 commodity currencies, the Kiwi “is the only energy importer and most vulnerable if Middle East oil supply is impacted more severely,” wrote Bank of America.”
- A huge bounce from sub 0.5900 and we are again breaking back above the 0.6000 area this morning.
- Technically while the support around 0.5850 holds in NZD/USD it is still in an uptrend, this held perfectly overnight and should risk build on from this then focus will turn once gain back to 0.6050/0.6100.
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5690(NZD621m June 25)
- CFTC Data showed Asset managers paring back their shorts slightly once more over the week, the leverage community did likewise.
- AUD/NZD range for the session has been 1.0798 - 1.0817, currently trading 1.0805. The cross is struggling to get any momentum back above 1.0800 for now, it needs to hold above here and start extending higher to put a higher low in place. The longer it fails to extend the higher the chances it begins to drift lower again, a break sub 1.0750 will see downward momentum return.
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
JPY: Asia Wrap - USD/JPY Follows The Move Lower In Oil
The Asia-Pac USD/JPY range has been 145.30 - 146.15, Asia is currently trading around 145.45, -0.50%. USD/JPY continues to extend lower in Asia as it follows the capitulation in oil longs, which have reacted to the announcement of a ceasefire in the Middle East. The market is very quick to re-instate its USD shorts.
- (Bloomberg) -- The Bank of Japan shrank its balance sheet by 2.3% to 716.1 trillion yen in the past 10 days.
- Mixed Demand Metrics For 20Y Auction: Overall though today's result is likely to be seen as better than the performance observed in the 30-year JGB auction earlier this month.
- "AKAZAWA: STILL WORKING ON TIMING FOR NEXT ROUND OF TRADE TALKS" - BBG
- There would have been some paring back of JPY longs on the break above 147.00 overnight but the reversal from above 148.00 shows how quickly the market is to reinstate these positions.
- An ugly daily shadow points to a potential top being in place now, first support back towards 144.50/145.00.
- Price now back in a wider 142.00 - 148.00 range, I am not sure that the brief spike higher would have seen positioning altered too much and the long JPY trade is still alive and well.
- Options : Close significant option expiries for NY cut, based on DTCC data: 145.00($582m).Upcoming Close Strikes : 144.50($1.34b June 25), 143.00($1.41b June 26)
- CFTC data shows Asset managers maintained their already extensive JPY longs, while leveraged funds have pared back their own longs that had just begun to be rebuilt.
Fig 1 : USD/JPY Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
