2016.05.1709:27:00UTC+00Fxwirepro: Hedging Baskets in Asian Crosses ahead of Economic Data Turbulence

The Thai economy grew by 0.9% on a QoQ seasonally adjusted basis in the March quarter of 2016, compared to a 0.8% growth in the previous quarter and above market consensus of a 0.6% expansion, mainly supported by private consumption and net exports while government expenditure and investment slowed.

Thailand Q1 GDP (Mon) is expected to be stable at 2.8% yoy, while the regional growth standout (Philippines) is expected to show acceleration from already lofty levels (6.7%yoy vs 6.3% in Q4). Bank of Thailand kept rates on hold in May monetary policy at 1.5% as widely expected.

As a result, THB’s depreciation against USD is upheld and advised to be hedged through initiating longs in next month futures for indicative levels of 35.75. BI (Thu) and BNM (Thu) are widely anticipated to be on hold again.

Malaysia CPI (Fri) is expected to drop to 2.1%yoy from 2.6% while Indonesia’s trade surplus is set to moderate. We remain short MYR-IDR on carry, political risks being underpriced in Malaysia, and a constructive entry point.

Non-oil domestic exports in Singapore are set to improve, but remain in contractionary territory, highlighting the challenging backdrop for EM from weak external demand. We remain short SGD-INR.

Taiwan’s Q1 current account surplus (Fri) will remain in a healthy surplus. Short TWD-INR remains attractive on carry. There is no economic data in Korea this week and we continue to remain long USDKRW through a credit call spread.