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Asian FX seen firmer as softer US core CPI lifts USD, but oil caps gains

OCBC said relief from a weaker USD may not spread evenly across Asia, with higher oil prices likely to keep INR and PHP pressured.

Reported · Written up by our desk · Major Pairs

OCBC analysts Sim Moh Siong and Christopher Wong expect Asian foreign exchange to trade with a better tone after softer US core CPI reduced near term Fed hike expectations and weighed on the US dollar.

They cautioned that the upside is likely uneven because elevated oil prices can offset USD weakness. The note singles out the Indian rupee and Philippine peso as more vulnerable, citing energy sensitivity and India’s wider goods trade deficit as additional pressure.

By contrast, the analysts said the renminbi and Singapore dollar should remain relatively more stable, supported by stronger policy anchors and lower oil sensitivity.

Overall, they view softer USD momentum as providing some breathing room after a recent risk off move, but still high oil prices may limit how far Asian FX can strengthen.

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