Ahead Today
G3: Ueda Nagoya Speech
Asia: Thailand GDP
Market Highlights
The Dollar strengthened further as markets continued to price for the priorities of the second Trump administration, and was also helped further along by resilient US economic data and mixed activity numbers out of China. On the data front, the New York’s Empire Manufacturing index for November surged to 31.2 – the highest level since end 2021 – and could partly reflect some front-loading of orders to avoid tariffs and perhaps some reduction in near-term election related uncertainty. Other data such as retail sales and industrial production for October were mixed, with underlying US retail sales disappointing consensus and industrial production impacted at least temporarily by strikes and hurricanes.
For Asia markets, the US Treasury Secretary is one of the most consequential Trump appointments given the importance of that role in implementing tariffs and fiscal policy. While Scott Bessent was initially the clear favourite, news reports suggest significant lobbying behind the scenes, with prediction markets somewhat lowering Howard Lutnik’s odds over the weekend. While both candidates support higher tariffs, Scott Bessent seems to be viewed by the market as a more market friendly outcome perhaps due to his comments of using tariffs as a negotiating tool. A clear negative for Asia would be the appointment of Robert Lighthizer as Treasury Secretary
Regional FX
Asian currencies were mixed with IDR (-0.5%), MYR (-0.6%), and THB (-0.4%) underperforming, and KRW (+0.7%) and SGD (+0.3%) outperforming. Bank of Japan Governor Kazuo Ueda will speak today at an event in Nagoya at 1:45pm Japan time. Markets will watch closely for any clues around a near-term Bank of Japan rate hike for December, and also any comments around weakness of the Japanese Yen on the path of policy. China released its macroeconomic data for October last Friday which was uneven and mixed, with stronger than expected retail sales, but with growth deceleration for industrial production and property investment. We think China’s macro data for October would require further forceful stimulus especially on the fiscal side, with the Ministry of Finance last weekly jointly announcing policies to support the housing market. We forecast USD/CNY to grind higher to reach 7.30 by year-end and 7.50 by 3Q2025, with our numbers assuming a 20pp increase in US average tariffs on China’s products (see ChinaPulse – Another month of persisting uneven economic recovery).
