Ahead Today
G3: US Initial Jobless Claims, US Trade Balance
Asia: Philippines CPI, Singapore Retail Sales, Taiwan CPI
Market Highlights
The collective message from the Fed’s Beige Book and also Chair Powell’s speech was an improving assessment of the US economy, even as there are continued uncertainties into a Trump 2.0 administration. In particular, the November Beige Book sees activity as rising slightly or modestly, with three regions exhibiting modest or moderate growth, offsetting flat or slightly declining activity in two districts. This assessment was an improvement from an overall assessment of slowing in the September report. Nonetheless, businesses continued to highlight that consumers remain price sensitive and hiring plans remain subdued, coupled with policy related uncertainty around Trump 2.0’s tariff plans. Meanwhile, Fed Chair Powell said that the economy is in relatively good shape, and that the Fed can afford to be a little more cautious as the Fed tries to find the neutral interest rate. It’s important to note that it was not Chair Powell, with the combined message from other FOMC members such as Mary Daly and Alberto Musalem saying there is no huge urgency to cut and it’s appropriate to slow the pace of rate cuts.
All these helped to offset political uncertainties both in Europe and also in South Korea, with the French government falling after a no-confidence vote ending PM Michel Barnier’s three-month old administration. With Elections in France unable to be called until July 2025, coupled with Germany holding its own elections in February, political uncertainty is one reason why we think EUR can continue to weaken (beyond the Dollar) together with the impact of Trump’s tariffs.
Regional FX
Asian currencies were stronger with MYR (+0.67%), PHP (+0.7%), and KRW (+1%) outperforming. The South Korean won’s performance comes as some uncertainty was eased in the very near-term with Martial Law being rescinded, even as the opposition pushed through an impeachment motion on President Yoon Suk Yeol together with pursuing charges of treason. South Korean President Yoon named a new defense minister on Thursday after accepting the resignation of Kim Yong-hyun following the opposition’s submission of motions to impeach the both of them. In Thailand, the headline CPI inflation numbers came in softer than expected at 0.95% from 0.83%yoy the previous month, which could raise some further pressure for the BOT to cut rates even as fiscal disbursement is expected to improve.
