Ahead Today
G3: US net TIC flows, BOJ policy rate decision
Asia: Malaysia trade, Thailand international reserves
Market Highlights
A key headline emerged from the tech sector, where Nvidia announced a $5 billion investment in Intel to co-develop chips for personal computing and data centres. This triggered a jump in Intel shares, while Nvidia shares rose, signalling market confidence in the strategic alliance. This partnership may help strengthen AI innovation and semiconductor design capabilities within the US, potentially attracting foreign capital flows and reinforcing investor appetite for US tech assets.
The US dollar index (DXY) rose 0.5% following the FOMC meeting, bouncing off long-term technical support around the 96.00-96.50 range. Despite the Fed cutting rates and the median dot plot shifting from one to two cuts for the rest of this year, its overall tone has not been overtly dovish. Continued strength in US tech equities may also offer temporary reprieve for the dollar, acting as a partial offset to market expectation for further fed funds rate cuts in the coming months. And on the macro front, initial jobless claims fell 33k to 231k for the second week of September, coming in below market consensus of 240k. Nonetheless, the medium term outlook for the US dollar likely remains titled to the downside, as concerns about US labour market weakness and the potential for deeper policy easing could continue to weigh on sentiment towards the US dollar.
Elsewhere, we expect BOJ to keep the policy rate unchanged at 0.50%, amid ongoing export weakness led by autos and steel. Core CPI (ex-fresh food and energy) eased to 3.3%yoy in August from 3.4% in July, in line with market expectations.
A temporary reprieve for the US dollar has been a drag on Asian currencies, which broadly weakened following the FOMC meeting. KRW and JPY led the losses, depreciating by 0.7% and 0.6% against the US dollar, respectively, followed by IDR, which declined by 0.5%
Indonesia’s government has revised the 2026 budget, now targeting a wider deficit of 2.68% of GDP, from 2.48% previously. Revenue is projected at IDR3,153.6 trillion while spending is set at IDR3,842.7 trillion. Notably, regional transfers were raised to IDR693 trillion, after being significantly reduced to IDR650 trillion in the previous budget version. Crucially, the budget deficit is set within the 3% statutory limit, in line with the commitment made by newly appointed Finance Minister Purbaya.
Meanwhile, Taiwan’s central bank held benchmark rate steady at 2.00%, which is widely expected and has had limited impact on USDTWD. Taiwan’s economy remains supported by strong performance in its electronics exports.