Ahead Today
G3: Europe Nov PMIs
Asia: Bank Indonesia Policy Meeting
Market Highlights
Brent oil prices fell sharply by up to 4% at one point, as the OPEC+ meeting scheduled for this weekend has now been delayed to 30 November. According to news reports, Saudi Arabia expressed dissatisfaction about other OPEC+ members’ oil production levels, effectively free-riding on the Saudi’s 1mn bbl/day production cuts even as US oil supply has been stronger than expected. While Riyadh has been widely expected to extend its production cuts through 1Q next year, it may well reverse them if other OPEC members don’t pull their own weight.
Overall, the Dollar strengthened by 0.3%, on the back of lower initial jobless claims, coupled with a pickup in inflation expectations from the University of Michigan survey.
Meanwhile, China is looking to provide more financing support to the most distressed property developers, including private-owned enterprises. Bloomberg News reported that Country Garden, Sino-Ocean Group and CIFI Holdings Group have been included on China’s draft list of 50 developers eligible for a wider range of financing support. This also comes the back of reports that Chinese regulators are pushing for faster loan issuance to private developers, while also encouraging smaller banks to increase credit to property developers.
Regional FX
Asian FX pairs were generally weaker against the Dollar on the back of a stronger USD. Singapore released its final estimates of 3Q GDP, which came in stronger than expected at 1.4% qoq sa (vs consensus of 1.1% qoq sa). The improvement in Singapore’s economic activity was driven by a pickup in manufacturing, wholesale trade and tourism, even as domestic sectors such as real estate experienced some growth moderation. Meanwhile, Singapore’s COE premiums for smaller cars fell to $85,001 from $95,689 previously, which could help lower headline inflation pressures down the road. We think that MAS is likely to keep its exchange rate policy on hold from here with gradual improvement in growth, while the fight against inflation has not yet been won. Looking ahead, we expect Bank Indonesia to keep rates on hold at 6% on the back of a more stable Rupiah and moderate inflation pressures.
