Asia Open - Overnight Highlights

EMERGING ASIA
EM currencies perform mostly stronger against the USD as the greenback trades individually against peers on the last trading day of 2023. MYR saw the largest gains of 0.33%, followed by PHP 0.19%, KRW 0.47%, IDR and CNY 0.15% and HKD 0.03%; while the biggest loser is CNH 0.11%, INR 0.05% and TWD 0.01%.

USD/CNH is trading higher at 7.1258 compared to the 7.1183 at previous close. Onshore spot USD/CNY is trading lower at 7.1100 from 7.1105. 12 month NDF followed the offshore market and is trading higher at 6.9573 compared to 6.9513 previous closed.
USD/IDR spot market is trading lower at 15399 from 15418 previously closed. 1 month NDF is trading lower at 15390 from 15443 previous closed.
USD/INR onshore spot market is trading higher at 83.20 from 83.17. 1 month NDF is trading higher at 83.29 from 83.27 previously closed.

NA Session

NY trading has seen the divergence in the G10 currencies remaining with CHF and NOK the clear winner; EUR doing well and AUD/CAD and NZD on the defensive.  Traders indicate that this is flow related and not a wider view of divergence that will last into the first week of 2024. The JPY made a recovery towards mid morning NY trading, as the volatility of the past few days continued.  

As well as data, the FX market is focused on clues over policy, with some wanting to see if the Dec FOMC minutes on Jan 3 provide hints on timing. However, in reality money market are so aggressive in the scale of cuts discounted that Fed officials (Barkin on Jan 3) will likely try to temper the early rate cut, especially as data suggests that the U.S. economy is not slowing rapidly.  This could cause a partial USD correction early next week.