Ahead Today

G3: US Existing Home Sales

Asia: India CPI

Market Highlights

The US Dollar index remained firm at 102.20 level even as Treasury yields eased, with solid demand at the 10-year and 30-year Treasury auctions helping to cap long-end yields. Demand was strongest at the 10-year auction, where the bid-to-cover ratio rose to a 2026 high of 2.77. The 30-year auction also attracted firm demand at a bid-to-cover ratio of 2.54. However, the University of Michigan sentiment index fell to 46.3 in October, down from 48.1 in September, but the one-year inflation expectations edged up to 4.7%. Markets now turn to this week’s US CPI release for the next catalyst for the dollar and US rates.

For Asia FX, the mixed US consumer signal did little to dislodge the dollar, while somewhat lower long-end US yields provided limited relief to regional currencies. Continued foreign equity outflows from India and Taiwan last week added to the pressure on their currencies, reinforcing the link between softer risk sentiment and weaker regional FX. Wednesday’s US CPI provides the next cue for the dollar and rates.

Malaysia’s government announced its 2027 budget last Friday. The budget showed federal revenue at RM380.8bn and federal expenditure at RM459.8bn, which comprises RM376.8bn of operating expenditure and RM83.0bn of development spending. Notably, the fiscal deficit is targeted to narrow to 3.3% of GDP, down from an estimated 3.6% in 2026, maintaining further fiscal consolidation. Key measures include easing the cost of living through increased cash assistance and tax relief, raising minimum wages, and supporting micro, small and medium-sized enterprises.

For the MYR, sustained fiscal consolidation alongside growth-supportive investment should help anchor market confidence and demand for Malaysian assets. However, elevated US yields and a firmer USD could still limit the currency’s near-term currency appreciation.

The RBI announced a broad package of measures over the weekend to ease pressure on the INR, including a special dollar window to meet dollar requirements by three state-run oil companies. It also stopped the re-booking of any FX derivative contract involving rupee that had been cancelled, while introducing an FX risk reserve requirement on transactions that exceed $2mn. In addition, RBI also raised rates by 25bps to 5.50%. In all, the central bank continues to support the rupee, helping to slow the pace of currency depreciation. Markets will now turn to India’s September CPI data, with market consensus expecting inflation to rise to 5.57%yoy from 4.82%yoy in August.