In line with our expectations, Asia-ex-Japan currencies led the recovery against the USD on Wednesday. The regional outperformance was fuelled by Brent crude prices declining below $80 from $100 since July 24, driven by hopes that the US-Iran conflict has shifted from tit-for-tat military attacks towards a diplomatic solution. Apart from lower oil prices alleviating pressures on oil-dependent Asian importers, most Asia-ex Japan currencies found relief in a softer USD triggered by the joint US-Japan interventions to stabilize the JPY, which US Treasury Scott Bessent also said was targeted at averting competitive devaluation in the region. The Trump administration’s transition from Section 122 to Section 301 tariffs was eroded by the lawsuits brought by 25 Democratic states. 
USD/PHP has retreated to 60.76 after failing to break above its May-June top of 61.80. The PHP’s 0.8% gain on Wednesday followed a strong CPI inflation print of 6.2% YoY in July. Despite declining for a third month, inflation remained well above the official inflation target of 2-4%, leading the Bangko Sentral ng Pilipinas to maintain a hawkish stance. BSP delivered two 25-bps-hikes to 4.75% in April and June. USD/PHP could extend its downside to its mid-June low of 60.2 following a more convincing break below its 100-day moving average around 61 yesterday.
USD/THB has retreated steadily to 33.1 after peaking at 33.9 on July 23. However, it remains to be seen if the USD/THB is ready to break key support levels at the psychological 33 level and the 100-day moving average around 32.8. Despite its optimistic 2H26 economic outlook from easing tensions in the Middle East and government stimulus measures, the Bank of Thailand is still looking for 2Q26 GDP growth to be slower than 1Q26’s 2.8% YoY growth. With the policy unchanged at 1% after February’s rate cut, the THB is still weighed by its negative interest rate differential; the BOT policy rate is 1% vs. the 3.75% Fed Funds Rate. Curiously, the BOT is also optimistic that the US Treasury Department may remove Thailand from its monitoring list for currency manipulation in its next report, citing trade and current account deficits in 2Q26 and limited interventions. That said, THB can also surprise if a renewed recovery in gold prices accompanies the decline in oil prices.
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