Asian FX: Higher yields and Oil weigh – OCBC
OCBC strategists Sim Moh Siong and Christopher Wong report that Asian FX traded broadly softer as higher Oil prices and rising US Treasury yields hurt risk sentiment, with Indonesian Rupiah (IDR) underperforming and Philippine Peso (PHP), Indian Rupee (INR) and Thai Baht (THB) also weaker.
Asian FX markets experienced a downturn as higher oil prices and rising US Treasury yields dampened risk sentiment, according to OCBC strategists Sim Moh Siong and Christopher Wong. The Indonesian Rupiah (IDR) underperformed, while the Philippine Peso (PHP), Indian Rupee (INR) and Thai Baht (THB) also weakened. The Renminbi (RMB) momentum slowed as China's People's Bank of China (PBoC) fix trend stalled at a stronger level.
Holiday closures in China, South Korea and Taiwan were expected to reduce liquidity and potentially increase volatility. A stronger US dollar added to the pressure, while the Renminbi (RMB) momentum faded after a recent strengthening trend in the PBoC fix was halted. Market liquidity was forecast to decline sharply on the day, with China, South Korea and Taiwan closed for the Mid-Autumn/Chuseok holidays.
Next week, China's golden-week holidays begin on Thursday. In the near term, elevated oil prices and US Treasury yields could continue to weigh on Asian FX, with thinner liquidity potentially causing moves to become more erratic during the weekend.
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