FW: RHB Rates & FX Market Update - 1/11/17

 

 

1 November 2017

 

 

Rates & FX Market Update

 

 

Investors Patiently Awaits the FOMC Decision Due Later Today

 

Highlights

 

¨   Global Markets: Relatively muted movements were observed yesterday as markets await major central banks meetings (Fed, BoE and BoJ). Nothing much is to be expected from the November FOMC beside a confirmation that a December rate hike is likely, against the backdrop of an expanding economy, since the Fed's succession race captures most of the attention; President Trump is expected to reveal his choice tomorrow. Lastly, developments on the tax reforms are likely to remain a pivotal catalyst for markets and uncertainties still linger at this juncture underscoring our neutral USD and UST stance.

¨   AxJ Markets: Over in Thailand, September trade growth (BoP basis) slipped slightly from August prints (exports: 13.4% y-o-y; imports: 6.5%), although overall pace of trade expansion remains firmly on track to deliver strong growth over 2017. Thailand's Finance Ministry remains optimistic over trade growth this year, with investors likely to shrug-off the sub-50 manufacturing PMI print due this morning (49.8; September: 50.3); stay neutral THB. Elsewhere, Malaysia and Indonesia manufacturing PMI for the month of October contracted (Malaysia: 48.6; Sep: 49.9; Indonesia: 50.1; Sep: 50.4), as conditions stagnated. Still, Malaysia remains on track to deliver robust growth over 2017, while Indonesia remains on a more fragile footing, where we eye the upcoming 3Q17 GDP print for any hints of an upward economic momentum, which should influence BI's decisions over the remainder of 2017; stay neutral MYR and IDR.

¨   In Europe, yesterday's data confirmed that, against the backdrop of an improving labour market,  the economy is on a robust track (3Q17 GDP growth: 2.5% vs. 2.4% expected and 2.3% in 2Q17) with however subdued inflation as CPI missed expectations, somewhat underscoring Mario Drahi's comments last week. We remain neutral EUR as developments on the other side of the Atlantic are likely to drive the EURUSD pair in the very near term.

 

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