Ahead Today
G3: US Jolts Job Openings, US Durable Goods Orders
Asia: Hong Kong Retail Sales
Market Highlights
Certainly the focus this week in markets continues to be on the Japanese Yen, with a rebound in risk sentiment that followed and helped by also some signs that negotiations in the US-Iran conflict are progressing pushing oil prices lower as well. There were some additional interesting details around the joint FX intervention between the US and Japan, including the focus by Scott Bessent in his remarks on a possible expansion of the FIMA facility for foreign central banks to obtain short-term Dollar liquidity. The fact that this was discussed highlights the likelihood that concerns around possible forced selling of US Treasuries over the medium-term as a driver behind the joint FX intervention. Mechanically, Japan is unlikely to have to do so though over the near-term, given the existing US$160bn short-term deposits that Japan’s MOF has on hand.
Looking across the Asian FX complex, our analysis shows that the South Korea won, and to a smaller extent the Thai Baht, Singapore dollar and Philippines Peso in that order are more sensitive to Japanese Yen moves. This is true when we look across both simple correlation metrics, and also when we look at the conditional beta of each Asian currency to JPY movements – in other words how much Asia FX moves to USD/JPY after controlling for changes in the Dollar Index. For most currencies this sensitivity has come down since 2025, and certainly for the likes of CNH, TWD and INR. KRW is the one which stands out where both conditional beta measures and correlation have risen over the last 2 years.
As such, if the Japanese Yen strengthening moves continue, we would expect KRW, THB, SGD, and to a much smaller extent PHP to benefit in Asia FX context.
Overall, the Asia PMI numbers that were out yesterday suggests that export momentum remains quite robust, and this fits in as well with the lead indicators we track which tells us that export growth should slow into 2027 but remain at a high level overall.
