Ahead Today
G3: US nonfarm payrolls, unemployment rate, housing starts, University of Michigan sentiment index; Germany industrial production; Japan leading index
Asia: China PPI, Malaysia industrial production, Thailand international reserves, Taiwan exports
Market Highlights
The US dollar (DXY) has held firm at the start of the year, after finding support around the 98.00 level, while EURUSD weakens further despite upbeat German data. Germany factory orders rose 5.6%mom in November, marking the third straight month of increase and the fastest pace in a year.
On the US macro front, nonfarm productivity rose 4.9%qoq (seasonally adjusted) in Q3, up from 3.3% in Q2, marking the fastest pace since Q3 2023. Initial jobless claims ticked up to 208k in the week ended 3 January from 199k previously but remain historically low. Meanwhile, the New York Fed’s one-year inflation expectations climbed to 3.4% in December from 3.2%, reinforcing the Fed’s cautious stance on monetary policy.
The focus now turns to the nonfarm payrolls report due later today, which could reshape market expectations for the pace of Fed rate cuts. Market consensus expects around 70,000 jobs added in December, but recent data suggests upside risk. Private payrolls rebounded after November’s contraction, while the ISM services employment index rose to 52.0 from 48.9, returning to expansionary territory.
Regional FX
Asian currencies broadly weakened against the US dollar yesterday. The Thai baht led losses, falling 0.8% amid ongoing efforts by the Bank of Thailand to slow the pace of currency appreciation. Domestic sentiment also softened as Thailand’s consumer confidence declined in December, marking the first drop in four months. Consumers could remain cautious ahead of the general elections scheduled for 8 February.
Meanwhile, the Indonesian rupiah faces downside pressure from widening fiscal deficits, higher inflation, and the prospect of further BI rate cuts. Indonesia’s fiscal deficit widened to 2.9% of GDP in 2025, exceeding the government’s projection of 2.78% and the 2.3% deficit recorded in 2024. Government revenue fell 3.3%yoy to IDR2,756.3 trillion, while state expenditure rose 2.7%yoy to IDR3,451.4 trillion, resulting in a budget shortfall of IDR695.1 trillion. Finance Minister Purbaya reiterated that the deficit will remain below the legal 3% cap, and sovereign credit default spreads have stayed relatively contained. On a positive note, foreign reserves increased by $6.4 billion to $156.5 billion, providing some buffer against external shocks.