Global Macro and Markets
Asian FX had a mixed day on Tuesday. The THB led the pack, gaining more than half a per cent. There were also smaller gains for the TWD and KRW. But the PHP lost ground and the RMB was also slightly weaker. USDCNY is now 7.2394.
Japan: Japan exports rebounded a stronger than expected 3.1% YoY in October (vs -1.7% in September and 1.0% market consensus). By region, exports to Asia grew 7.6% while exports to the US and EU dropped -6.2% and -11.3% respectively. By items, semiconductor machinery jumped 42.6% while motor vehicle exports declined -0.9%. The export data suggest that global demand for IT and semiconductors remains strong, but the weakness in car exports raises concerns about weakening consumer demand. However, we read this auto data cautiously as we believe the weakness was partly due to supply disruptions in Japan. The stronger-than-expected growth signals 4Q24GDP will stay on a recovery path.
China: China will announce its loan prime rates this morning. With no cuts to the benchmark 7-day reverse repo rate this month, the 1-year and 5-year LPR are widely expected to be held unchanged at 3.1% and 3.6% respectively. The odds of another rate cut within 2024 have declined, and we expect the PBOC to stand pat as the last two months of economic data have shown signs of stabilisation. Our current global scenario predicts that US tariffs on China will not start until 3Q25 at the earliest (and potentially as late as 1Q26) and are phased in. As a result, we are looking for just 20bp of cuts in 2025, with room for more cuts in the case of a full-blown trade war breaking out earlier than expected.
Indonesia: Bank Indonesia (BI) will conclude its rate-setting meeting today. Policy rates are currently 6.0%, which is high relative to both regional norms and the prevailing inflation rate which is below 2%. But the IDR has been fairly weak since early October, and until that changes, we probably won’t see any more easing from them. That said, there are a couple of forecasters taking a punt on a 25bp rate cut, so a cut remains a tail risk.
What to look out for: Australia Westpac leading index, Indonesia BI-rate, South Korea PPI
November 20th Australia: October Westpac leading indexChina: November 5-Year loan prime rate, 1-Year loan prime rateIndonesia: November BI-rateJapan: October exports, imports, trade balanceS. Korea: October PPITaiwan: October export orders, 3Q BoP current account balanceNovember 21stIndonesia: 3Q BoP current account balanceS. Korea: November exports 20 days, imports 20 daysNovember 22ndIndia: November HSBC India manufacturing PMI, composite PMIJapan: October national CPI, November Jibun Bank manufacturing PMITaiwan: October unemployment rateMore By This Author:U.S. State Payrolls Numbers Confirm The Cooling Jobs Narrative FX Daily: Focus On The Treasury Secretary Pick The Commodities Feed: Russian Gas Flows Continue
