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Asia Weekly: What Asia investors need to know for the week ahead (October 28-November 1)

Market Analysis /
Stephen Innes / 28 Oct 2019

The FOMC rate decision takes centre stage

Wednesday's Federal Open Market Committee (FOMC) meeting will take centre stage amidst a packed economic calendar that will set the tone for market participants into year-end. With the Fed widely expected to cut interest rates another 25 basis points, the meeting statement and Chair Powell's communications on the policy outlook will be the focus.

But there are several data releases this week that may influence the FOMC meeting statement and Powell's press conference. Monday’s US Trade Balance could be a significant inflexion point as the September FOMC statement placed emphasis on “business fixed investment” and exports have weakened.

Given US consumers continue to do much of the US economy's heavy lifting, Tuesday’s October consumer confidence release will be essential to watch for any signs of rebound as phase one of the US-China trade talks could influence consumers.

The October ADP employment survey will be the last data releases Fed officials will see before concluding their meeting on Wednesday afternoon, so eyes could be on this release.

Given the FOMC pays very close attention to the manufacturing surveys, policymakers will likely focus more on the signals from Thursday's Chicago PMI and Friday's US manufacturing ISM as the positive news flow on the trade policy front could give a slight lift to these releases.

There’s a chance the Fed may adopt some form of average inflation targeting strategy which could imply an additional series of rate cuts if Chai Power suggests the "mid-cycle adjustment" is nearing its end, given the muted inflation outlook market continues to price in a probability that the Fed's easing cycle won't be ending just yet.

 

To view all the events, go to: AxiTrader Economic Calendar

 

 

Key dates and events on the ASEAN Docket

Chart of the Week ahead

Asia’s key bellwether USDCNH and phase one trade talk FX implications for the RMB.

The positive phase one of the trade talks continues to resonate with local currency markets and the Yuan. But the market remains leery about the removal of any existing tariffs, which is generally thought to be the key or a requisite for the Yuan and other local currencies to strengthen.

Source: AxiTrader

Taiwan

Economists expect Taiwan to report GDP growth of 2.5% year on year in Q3, up slightly from 2.4% reported in Q2. This sustained above-trend growth may be supported by a rebound in private consumption and a stronger net trade contribution.

 

Hong Kong

In divergence, economists expect Hong Kong is likely to report a relatively sharp GDP contraction of 5% year on year in Q3, vs 0.5% growth in Q2, amid the continued Hong Kong protests.

Vietnam

Vietnam may remain the shooting star of the region. Economists expect Q4 data to start with a bang, with double-digit growth in retail sales – 12.4% in October vs 11.6% in September – while industrial production remains steady and healthy at 10% vs 10.2% in the same period.

 

Expanded ASEAN Calendar

 

To view all the events, go to: AxiTrader Economic Calendar

The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.

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