Focus is on US CPI on 12 April

Market sentiment likely remains cautious before US March CPI report due this Wednesday, which will provide more clues on how much more hike the Fed will do to contain inflation and maintain financial stability. This week, Asian calendar also features March trade data for China, Taiwan, India and Philippines, inflation reports for China, Taiwan and India, as well as rate decision from BOK.

FX views: Asian FXs experienced divergence performances last week. KRW led losses among regional peers, falling 1.3% against the dollar, as risk sentiment deteriorated following a rise in crude oil prices after OPEC+ on 2nd April announced further oil production cuts of more than million barrels per day. In contrast, THB was the best-performing currency in the region, rising 1% against the dollar, followed by IDR, MYR and INR, with respective gains of 0.5%, 0.4% and 0.3% against the dollar.

Week in review: US manufacturing activity continued to contract at an accelerating pace last month. US private sector added 145k jobs in March, down from 261k in February, according to ADP National Employment Report. Most Asian economies’ manufacturing PMIs fell last month. March inflation continued to moderate in Asia.

Central bank monitor: We think the rate hiking cycle has likely ended or is close to ending for most EM Asian countries. The Reserve Bank of India surprised markets by keeping rates on hold at 6.50% in its April meeting (vs consensus for a 25bps hike).

Week ahead: The focus for next week from a global macro perspective will be on US CPI to be released on 12 April. Consensus is calling for a 0.4% mom increase in core, coupled with a 0.3% mom rise in headline CPI.

AS THE USD WEAKENED, ASIA FX HAVE BENEFITTED

Sources: Bloomberg, MUFG GMR