Ahead Today
G3: Germany IFO, Germany GDP, US PMI
Asia: Malaysia CPI, Singapore IP
Market Highlights
Oil prices fell after OPEC+ said its delayed meeting next week will be held online instead of in-person on November 30 as the cartel wrangles over production levels. This comes as Saudi Arabia and its allies are in dispute over output quotas with African members, and comes amidst stronger US oil supply trends. Meanwhile, Qatar’s foreign ministry said a temporary ceasefire and hostage release deal between Israel and Hamas would take effect on Friday.
Europe’s Manufacturing and Services PMIs remained in contractionary territory in November at 43.8 and 48.2 respectively, but was stronger compared with the previous month, at least indicating no further deterioration in what is still a weak economy. Germany bund yields rose as it said it will suspend a constitutional limit on net new borrowing, after Germany’s constitutional court said the shifting of spending into an off-budget fund violated the constitution.
Overall, markets movements were relatively muted overnight during the US Thanksgiving holidays.
Regional FX
Asian FX pairs were generally mixed against the Dollar on back of a stronger USD. Bank Indonesia kept its key policy rate on hold at 6%, while also saying that it will step up rupiah stabilisation measures, including a new dollar-denominated sukuk security which will be rolled out on 28 November. The 1st FX denominated securities for one and three-month tenors were quite well received, getting US$236 million exceeding BI’s target of US$200 million, while bids for BI’s local currency SRBI securities have been climbing in recent auctions. Overall, we continue to think that Indonesia’s macro fundamentals are good notwithstanding lower coal and palm prices, and see USDIDR at 15,600 in 3m and 15,200 in 12m. Meanwhile, Singapore’s MAS core inflation accelerated in October to 3.3%yoy from 3%yoy in September, amidst higher gas and electricity costs due to the lagged impact of oil price movements. With the fight against inflation not yet won, we continue to see MAS keeping its exchange rate policy on hold and USDSGD to move in line with broad Dollar trends.
