China key activity data in focus

FX views: EM Asian currencies were mixed last week, amid the background of a 0.8% gain in the Dollar Index. Vietnamese dong led gains among regional currencies, followed by Korean won, Malaysian ringgit, Philippine peso and Indonesia rupiah. In contrast, Singapore dollar and Thai baht underperformed, and Chinese yuan and Taiwan dollar rose marginally.

Week in review: Indonesia’s economy grew 4.94%yoy in the third quarter, down from a 5.17%yoy growth in the prior quarter, while Philippines’ GDP growth rose more than expected to 5.9%yoy last quarter from 4.3%yoy in previous quarter. The latest exports data for China, Taiwan and Philippines missed market expectations. Philippines’ headline CPI inflation cooled more than expected to 4.9%yoy in October. In China, headline consumer prices fell 0.2%yoy in October after staying flat in the prior month. Elsewhere, Thailand’s headline CPI inflation moderated to -0.31%yoy in October from 0.30%yoy in September. On the contrary, Taiwan’s headline CPI inflation rose to 3.05%yoy in October from 2.93%yoy in September.

Central bank monitor: China will release its 1-year Medium-Term Lending facility (MLF) decision, where consensus is expecting no change in the rate at 2.5%. Meanwhile, the Philippines central bank is expected to keep rates unchanged at 6.5%, but maintain a hawkish tone and keep its commitment to its inflation target.

Week ahead: The key focus for markets will be China’s macroeconomic indicators for October, including IP, retail sales, FAI and property investment. On the global front, US CPI and retail sales will be key market movers. We will also have 3Q GDP for Malaysia, unemployment rate for South Korea, trade data for India, Indonesia and Singapore, as well as rate decisions from PBOC and BSP.

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MARKETS WILL WATCH CLOSELY TO SEE IF RECENT STABILISATION IN ECONOMIC ACTIVITY CONTINUES IN CHINA

Sources: Bloomberg, MUFG GMR