Ahead Today
G3: US retail sales and PPI
Asia: Malaysia’s Q3 GDP, China activity indicators, Thailand international reserves, HK GDP
Market Highlights
President Trump has signed the government funding bill, officially ending the government shutdown, and allowing markets to shift focus back to the release of delayed US macroeconomic data, which will be key in reassessing the Federal Reserve’s policy path. The US dollar has retreated modestly from resistance at its 200-day moving average, while US equity indexes fell as investors scaled back expectations for a December rate cut to about 50%, compared to full pricing just a month ago. Economic advisor Kevin Hassett noted that the October jobs report will be released without the unemployment rate but emphasized that the data remains consistent with further policy easing.
In contrast, several Fed officials struck a cautious tone. Hammack highlighted the need to keep rates on hold to reduce inflation, Daly said it was too early to decide on a December move, and Kashkari said that economic activity has been more resilient than he had expected.
In Japan, USDJPY has eased in line with the modest decline in DXY, though the yen remains weak at the 154.00–155.00 level compared to around 146.00 level at the start of October. Expansionary fiscal policy signals and hints of continued monetary accommodation from Japanese authorities continue to weigh on the yen, while the risk of potential BOJ intervention persists.
Regional FX
A flurry of key Chinese activity data for October will be released, including retail sales, industrial production, fixed asset investment, and property investment. Given the weaker PMI readings, these releases may highlight slowing growth momentum in October. Broad moderation across activity indicators could prompt further policy easing in Q4 to revive credit growth. The upcoming prints will be critical for regional risk sentiment and for shaping the outlook on the CNY, as well as other Asian currencies with close correlations to it.
For now, the CNY has continued to strengthen against the USD, supported by the PBOC’s lowering of the daily fixing rate and aided by the recent modest pullback in the dollar. This resilience in the CNY has provided positive spillover effects particularly for the ringgit.
The Malaysian ringgit remains a regional outperformer against the USD, with the final Q3 GDP reading expected to confirm robust growth at 5.2%yoy. The combination of domestic strength and the modestly firmer CNY has underpinned its performance.
In contrast, the Indonesian rupiah has lagged regional peers, weighed down by net government bond outflows from foreign institutional investors. These outflows appear to reflect concerns over inflation and fiscal risks as the country heads toward 2026, leaving the rupiah under pressure relative to other Asian currencies.