US Dollar Outlook: Delta Covid Cases Inducing Risk Aversion. THB, PHP, IDR Wobble

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US Dollar, Singapore Dollar, Thai Baht, Indonesian Rupiah, Philippine Peso, ASEAN, Fundamental Analysis – Talking Points

  • US Dollar gains against ASEAN currencies amid Delta Covid variant rise
  • Extended lockdowns could boost USD/THB, USD/IDR, USD/PHP ahead
  • Watch US CPI, a higher print risks amplifying ASEAN market volatility

US Dollar ASEAN Weekly Recap

The US Dollar extended gains against ASEAN currencies this past week, making notable progress against the Thai Baht and Philippine Peso. This is as the Singapore Dollar and Indonesian Rupiah were relatively restrained. The Greenback’s performance has been closely aligning with weakness in ASEAN equities amid surging local coronavirus cases – see chart below. In fact, according to Bloomberg, countries like Thailand, the Philippines and Malaysia saw combined outflows in equities the most since the third quarter of 2020.

Covid Cases in Singapore, Thailand, Indonesia, Philippines – Averaged

US Dollar Outlook: Delta Covid Cases Inducing Risk Aversion. THB, PHP, IDR Wobble

Chart Created Using TradingView

Key ASEAN Event Risks – Delta Covid Case Growth, Lockdowns, US Inflation Report

With that in mind, the combined direction of USD/SGD, USD/THB, USD/PHP and USD/IDR could continue to be highly influenced by ASEAN coronavirus cases. The emerging Delta variant is proving to be a difficult headwind for most of these nations. According to Reuters, there have been enough doses administered in Indonesia, the Philippines and Malaysia to inoculate 9.1%, 5.8% and 16.3% of their populations respectively.

This is assuming that each person needs two doses. As such, ongoing lockdowns and the risk of tighter ones could continue clouding the outlook for currencies like the Indonesian Rupiah, Philippine Peso and Thai Baht. The former country recently expanded nationwide Covid restrictions, with Thailand’s government mulling a partial lockdown.

These lockdowns would likely continue eating away at economic growth prospects, perhaps pushing investors to pull their capital out of equities and increase capital outflows. This is something that the haven-linked US Dollar could benefit from. Meanwhile, another risk for ASEAN currencies is looming around the corner. That would be the next CPI report from the United States on Tuesday.

In June, headline and core consumer prices are expected to increase 4.9% and 4.0% y/y compared to 5.0% and 3.8% prior respectively. The Fed continues to look at near-term rising price pressures as transitory. But, a higher-than-expected outcome could bring forward monetary tightening expectations. That is a key risk for SGD, THB, PHP and IDR. A softer outcome on the other hand may help cool weakness in ASEAN currencies.

ASEAN, South Asia Economic Data – Chinese trade and GDP, Singapore GDP, Indian CPI

Focusing on ASEAN and South Asia economic event risk, the week will start off with Indian inflation data. Elevated price growth could limit to the extent the RBI may ease policy to support the economy as Covid cases climb. USD/SGD will be eying Singapore’s GDP on Thursday, with second-quarter growth estimated at 14.3% y/y. However, the pair may remain sensitive to overall market sentiment. China, a key trading partner for ASEAN countries, will be releasing trade and GDP data. As a vital regional economic powerhouse, signs of weakness there risk adding momentum to souring market mood.

Check out the DailyFX Economic Calendar for ASEAN and global data updates!

On July 9th, the 20-day rolling correlation coefficient between my ASEAN-based US Dollar index and my ASEAN ETF index changed to -0.93 from -0.97 one week ago. Values closer to 1 indicate an increasingly inverse relationship, though it is important to recognize that correlation does not imply causation.

ASEAN-Based USD Index Versus ASEAN ETF Index – Daily Chart

US Dollar Outlook: Delta Covid Cases Inducing Risk Aversion. THB, PHP, IDR Wobble

Chart Created Using TradingView

*ASEAN-Based US Dollar Index averages USD/SGD, USD/IDR, USD/THB and USD/PHP

— Written by Daniel Dubrovsky, Strategist for

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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