Ahead Today
G3: US ISM manufacturing, eurozone manufacturing PMI
Asia: China RatingDog manufacturing PMI, Indonesia trade and CPI, India manufacturing PMI
Market Highlights
US ISM manufacturing could remain in contraction territory, underscoring ongoing weakness in the industrial sector. In particular, market attention will focus on the ISM prices paid index, last recorded at 61.9, for signs of persistent input cost pressures. Fed Chair Powell struck a hawkish tone in his October press conference, stating that a December rate cut is far from a forgone conclusion, with US dollar extending gains. This reflects divergence in views within the FOMC, with some members concerned about inflation remaining above the 2% target.
Meanwhile, dovish voices within the Fed continue to advocate for easing. Fed Governor Waller has called for a December rate cut, citing labour market softness as a more pressing concern than inflation. He noted that core PCE inflation, excluding temporary tariff effects, is estimated around 2.5%, and it is expected to come down.
Labour market indicators will be closely watched, particularly the ISM employment sub-index, given the absence of nonfarm payrolls data due to the government shutdown. Later in the week, the ADP employment report and ISM Services survey will offer further insights into labour market conditions.
Meanwhile, OPEC+ has decided to increase oil output by 137,000 barrels/day in December, continuing the gradual reversal of the 1.65mn barrels/day in voluntary production cuts introduced in 2023. However, the cartel will pause output hikes in Q1 2026, signalling a cautious stance aimed at preserving market stability without hugely weighing on oil prices. The decision to raise output comes in the wake of new US sanctions on Russia’s two largest oil producers, which have led to a recent pickup in crude prices.
Regional FX
Asian currencies could broadly stay on the backfoot, largely on the back of recent hawkish rhetoric by Fed Chair Powell, which has lent support for the US dollar. JPY, KRW, and INR led regional losses following the FOMC. While the recent meeting between President Trump and Chinese President Xi in Busan signals a mutual willingness to stabilize trade relations for now, it has provided limited relief for Asian FX, but at least there has not been an escalation of trade tensions.
A key highlight today is China’s RatingDog (formerly Caixin) manufacturing PMI, which could ease to 50.5 from 51.2, but still staying in expansion territory. This could continue to provide support for the Chinese yuan.
Indonesia’s CPI and export data will also be in focus, with inflation expected to remain around 2.6%yoy, underpinned by food prices, while exports could accelerate to 7.4%yoy, reflecting resilient external demand. However, any upside CPI surprise may further weigh on IDR.