Ahead Today
G3: Eurozone CPI
Asia: Singapore PMI
Market Highlights
US factory activity weakened further in November, with the ISM manufacturing PMI falling to 48.2 from 48.7 in October, missing market expectations of 49.0. The decline was broad-based, as the new orders sub-index dropped to 47.4 from 49.4, signalling a faster contraction, while the employment sub-index fell deeper into contraction at 44.0 compared to 46.0 previously. On the price front, the prices paid sub-index edged up to 58.5 from 58.0, driven by increases in steel and aluminium prices, suggesting some cost pressures remain despite overall weakness in demand.
Meanwhile, BOJ Governor Ueda hinted at the possibility of a rate hike in December, noting that real rates remain low, and any hike would only adjust the degree of easing. Ueda emphasized that even with higher rates, monetary conditions would remain accommodative, and the central bank will weigh the pros and cons of raising rates at the upcoming meeting. His hawkish comments triggered a market reaction, with USDJPY weakening, dragging the broader US dollar lower and providing support to Asian currencies. In the bond market, Japan’s 10-year yield rose about 6 basis points to 1.87%, reflecting expectations of policy normalization.
Regional FX
Asian currencies were broadly stable against the US dollar amid a softer dollar tone, though the Thai baht outperformed, gaining 0.6% to around 32.00, amid stronger gold prices. In contrast, the Indian rupee weakened to fresh lows despite GDP growth of 8.2%yoy in the three months ended September, which beat market expectations of 7.4%. The relatively higher US tariff rate on India, coupled with the absence of a trade deal with the US, may have contributed to the rupee’s weakness.
Meanwhile, Indonesia’s November CPI eased slightly to 2.72%yoy from 2.86% in the prior month, with price gains driven by volatile food items, while core inflation held steady at 2.36%yoy. On the external front, the October trade surplus narrowed sharply to US$2.4bn from US$4.3bn in September. Exports fell 2.3%yoy, outpacing the 1.2%yoy decline in imports.