Week Ahead FX outlook:
Key FX views:
The US released a better-than-expected October ADP employment report and a 175%yoy for October challenger job cuts. Details indicate that the modest gain of 42,000 private-sector jobs was far weaker than a sharp increase in job cuts of 153,074, the highest October level in over 20 years - this implies that while some sectors are hiring, many companies are eliminating more jobs simultaneously due to cost-cutting and AI implementations. These and various statements by some Federal Reserve officials in the latter part of this week erased the dollar’s mild rally in the first half of the week. Most Asian currencies had a mild net change against the dollar, except KRW which depreciated by 2% due to foreign equity outflows.
This week, Bank Negara Malaysia (BNM) held its Overnight Policy Rate (OPR) unchanged at 2.75% in its November meeting. The policy statement suggests a broadly neutral tone from policymakers, with no immediate rush to adjust monetary policy. Looking ahead to 2026, we expect BNM to maintain its policy rate at 2.75%, even as the Federal Reserve potentially eases further, due to a favourable growth-inflation dynamics and improved external trade conditions of Malaysian economy. MYR was most resilient this week.
Look ahead, Dollar’s direction in near-term seems would remain lack of clarity, as uncertainties still linger with the ongoing US government shutdown and delayed major data release, the legality of President Trump’s sweeping global reciprocal tariffs pending for the US Supreme Court’s ruling. Asia FXs are likely dominated by region’s data releases. Next week, a flurry of key Chinese economic data for October will be released including PPI, CPI, money, and IP/retail sales/FAI/properties. Given the already released weak October exports numbers and weaker PMIs, China’s data releases likely portrait a picture of continued growth deceleration of Chinese economy in October.
What to watch also includes China’s Singles’ Day shopping data, Hong Kong and Malaysia’s GDPs, India CPI, Japan’s Sept. leading index, BOJ summary of opinions from its Oct. 29-30 meeting, and etc.
Domestic activity already moderating, making October data key for regional sentiment and PBoC policy direction
