Ahead Today
G3: Germany IFO Expectations, US NAHB Housing Market
Asia:
Market Highlights
New York Fed President John Wiliams said that it’s premature for officials to begin thinking about rate cuts as soon as March, while saying that markets likely reacted too much to the recent FOMC meeting and relative to their projections. Meanwhile, Chicago Fed President Goolsbee said it’s too early to declare victory over inflation, while noting the progress already made. US 10-year yields rose to 3.93%, while the US Dollar strengthened on the back of these Fed officials pushing back against US rate cut expectations.
China released key monthly indicators for the month of November on Friday. Industrial production surprised on the upside, while retail sales disappointed somewhat, with continued weakness in the property sector. Overall, we think that CNY should remain range bound in the near-term, but should improve more through 2024 as stimulus stabilises economic activity (see ChinaPulse: Mild recovery in November, but property sector remained a challenge).
Regional FX
Asian FX were weaker against the Dollar on the back of Fed push back against rate cuts and a stronger Dollar, together with mixed data out of China. USDCNH rose to 7.13, while SGD and KRW weakened by 0.4%. India’s trade deficit was smaller than expected for November, at US$20.6bn (vs consensus for a US$24.5bn deficit). This came as both imports and exports were weaker than expected, and on the back of the record high deficit in the previous month of US$31.5bn. USDINR fell quite sharply, before settling around 83.0 levels. Overall, we think that India’s trade deficit should widen in coming months with strong domestic demand, and looking past the month to month volatility in the data.
