China data, likely the focus of market

FX views: EM Asian currencies appreciated against the dollar amid the US dollar’s weakness and falling US treasury yields. Korean won led gains among regional currencies, followed by Philippines peso, Thai baht, Indonesia rupiah, Malaysian ringgit and Singapore. Chinese yuan rose marginally on a decline in dollar index, offsetting the negative impact driven by China’s weaker-than-expected PMI data for October.

Week in review: Asian economies’ October manufacturing PMIs continued to diverge last month: PMI for Hong Kong, South Korea, Thailand, Vietnam, Taiwan and Malaysia stayed in the contractionary territory. In contrast, PMI for Philippines, Singapore, India and Indonesia remained above the 50-mark in October. In South Korea, exports rose for the first time since September 2022 in October, while headline CPI inflation unexpectedly rose to 3.8%yoy in October from 3.7%yoy in September.

Central bank monitor: The Fed struck a more dovish tone last week, giving a nod to the sharp rise in long-term US rates tightening financial conditions, while playing down the possibility of another rate hike this year. Bank Negara Malaysia kept rates on hold at 3%, highlighting that the policy priority has shifted to weaker growth from inflation.

Week ahead: Asian calendar features 3Q GDP for Indonesia and Philippines, monetary data for China, industrial production for India and Malaysia, trade figures for China, Taiwan and Philippines, inflation reports for China, Taiwan, Philippines and Thailand.

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ASIAN ECONOMIES’ MANUFACTURING PMIS CONTINUED TO DIVERGE LAST MONTH

Sources: Bloomberg, MUFG GMR