Ahead Today
G3: US Factory Orders, US Durable Goods
Asia:
Market Highlights
US ISM Manufacturing was weaker than expected at 46.7 in November, vs consensus for a bounce to 47.8. This also came with weakness in the employment component of the ISM measure, indicating continued headwinds to the manufacturing sector in the US. Meanwhile, Fed Chair Jerome Powell pushed back against expectations for interest rate cuts, saying it would be premature to speculate on when policy might ease. US yields pretty much brushed off Powell’s comments, with 10-year yields declining below 4.2% even as Powell spoke.
Across the Atlantic, Bank of France Governor Francois Villeroy said that “barring any shock, rate hikes are over”, while saying the “question of a cut may arise when the time comes during 2024, but not now”.
The US Dollar fell by 0.2% through the weekend, while US equities rose by 0.6%.
Regional FX
Asian FX pairs were generally stronger against the Dollar on back of USD weakness and lower US yields. China’s Caixin Manufacturing PMI rebounded to 50.7 from 49.5, which contrasted with the weakness in the official Manufacturing and non-Manufacturing PMIs. Overall, China’s economic recovery remains uneven, and we think Chinese authorities will likely push through more stimulus and measures to boost the economy, including in the property sector. Meanwhile, results from India’s state assembly elections showed that the incumbent BJP won 3 key states, while the opposition Congress party won 1 state. Overall, this result could raise market expectations for continuity in the government in the upcoming General Elections in 2024.
