Ahead Today

G3: Germany CPI, France Industrial Production

Asia: Philippines Trade, Taiwan trade

Market Highlights

Asian currencies were weaker, led by a move higher in USDCNH, while tech-linked currencies such as TWD underperformed (-0.4%). China’s exports and imports both fell less than expected at -8.8%yoy and -7.3%yoy, and combined to a smaller trade surplus of US$68bn from US$81bn. Meanwhile, Taiwan’s equity markets and tech related stocks fell as markets digested the impact of restrictions of iPhone use in government agencies in China. Bank Negara Malaysia kept its benchmark rate on hold again as inflation remains quite contained in the country. Looking ahead markets will focus on Philippines and Taiwan trade numbers.

JAPAN'S CURRENT ACCOUNT SURPLUS ROSE TO ITS HIGHEST LEVELS SINCE THE 1990S

Source: Bloomberg

Regional FX

Asian currencies were more stable overnight, compared with the broader Dollar sell-off earlier in the week. Singapore’s COE premiums rose, raising some concerns about the possible impact to Singapore’s headline inflation down the road. Our base case is for MAS to keep its exchange rate on hold both in the October meeting and into next year. Looking ahead, China will release trade data, with the market expecting slower declines in both exports and imports. Meanwhile, Bank Negara Malaysia is expected to keep rates on hold at 3%, given manageable inflation and stable growth.