Global Markets Daily

26 Oct 2015, Monday

GBL: Global Markets Daily		Saktiandi Supaat (65) 6320 1379 saktiandi@maybank.com.sg
FX Research: G7 Forex | AxJ Forex | Malaysia Rates | Singapore Rates | Indonesia Rates
The dollar strength is likely to be tentative and it has more to do with widening monetary divergence from ECB than any action from the Fed. With EUR being hammered by ECB, Asian currencies may be able to find strength against this particular funding currency. While we like to caution that this is more tactical trade, talks of stabilization in China has also given Asian players more courage to indulge in long EM Asia positions towards the end of the week. In addition, the possibility of further stimulus from BOJ is even supportive of risk sentiments, lending strength to the region, not to mention China’s latest interest rate cut (25bps) and RRR cut (50bps). Late Friday saw PBOC cut 1Y lending rate and deposit rate by 25bps. RRR was lowered by 50bps. The deposit rate ceiling was removed. This last move is the most significant interest rate liberalization in the long run but in the near-term, we see little material effect. Focus swings back to the Fed this week as the FOMC decides on Thu morning. If Sep is not a good time to hike, the recent spate of economic data has given the Fed even fewer reasons to act in Oct. Two other central bank meetings are also worth noting – RBNZ and BOJ. The recent recovery in milk prices and some signs of domestic stabilization may see RBNZ stand pat. On the other hand, we fully expect BOJ to expand stimulus on Fri along with the release of its semi-annual outlook. Other key data that markets would be watching includes US durable goods orders, consumer confidence on Tue, 3Q GDP and pending home sales on Thu, core PCE for Sep on Fri. Europe has IFO survey on Mon and CPI estimates on Fri. UK has 3Q GDP on Tue, followed by Gfk consumer confidence on Fri. Nearer to home, Australia’s 3Q CPI is due on Wed. Singapore’s Sep industrial product is due on Mon. Unlikely for Asia related factors to have an impact on regional currencies next week. §