INDONESIA: Inflation Contained, BI To Focus On FX Stability
Jan-02 05:21
To one decimal place Indonesian headline inflation picked up 0.1pp to 1.6% y/y but actually it was only 0.02pp higher. It continues to hover just above the bottom of Bank Indonesia’s (BI) 1.5-3.5% target band. Core CPI inflation was unchanged at 2.3% y/y. BI next meets on January 15 and with USDIDR up 1% since the last meeting to 16220, another rate cut is looking less likely.
- There was a pickup in annual inflation rates for food, drinks & tobacco, eating out and healthcare, while transportation fell to -0.3% y/y from 0% and personal care and recreation were also lower. All categories were either higher or unchanged on the month in December with food, drinks & tobacco and healthcare posting the largest monthly rises.
- Core was driven by higher gold jewellery, cooking oil, coffee and home rents.
- The central bank expects inflation to remain within its corridor in 2025 and so this data is unlikely to change its focus on FX stability. While it will be concerned about USDIDR staying above 16000, it should be reassured by the JP Morgan NEER rising 1.3% since December 19. A significant amount of the USDIDR move is due to the stronger greenback. The USD BBDXY index is up 0.3% since December 19.
- The December S&P Global PMI showed the weaker rupiah boosting cost pressures and firms maintaining margins by increasing selling prices for the third straight month.
- Headline inflation moderated 1pp over 2024 while core rose 0.6pp.
Indonesia CPI y/y%
Source: MNI - Market News/Refinitiv
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ASIA STOCKS: Stocks Perform Well on Less US Restrictions.
Dec-03 05:20
- A generally good day across Asian equity markets with the KOSPI the outperformer as the new restrictions from the Biden administration on tech exports were not as punitive as feared.
- The tech heavy KOSPI rose 1.60% as a weak CPI release suggested that the BOK may be forced to cut rates more than many expected.
- China equities were weaker as the Yuan fixing was at the weakest level in over a year, suggesting the economy is weaker than expected.
- China Equity markets were mixed today despite the supportive words from the PBOC Governor. CSI 300 flat, Hang Seng +0.36%, Shanghai +0.20% and Shenzhen -0.02%.
- Indonesia’s Jakarta Composite shrugged off four straight days of losses to bounce up by +1.35% today following comments by the BI governor that pointed to rates being stable.
- In Malaysia, following on from yesterday’s directionless day, the FTSE Bursa Malaysia KLCI faired only marginally better today up +0.22%.
- India’s NIFTY 50 is putting in a second day of performance up +0.60% following solid PMI data.
AUSTRALIA: Consensus Expects Strongest Growth In Over A Year Driven By Govt
Dec-03 05:07
Q3 GDP prints on Wednesday and Bloomberg consensus is at 0.5% q/q and 1.1% y/y up from 0.2% and 1.0% in Q2. This would be the highest quarterly rate since Q2 2023 and all major components should make a positive contribution except inventories. The RBA looks firmly on hold at its December 10 meeting but a GDP print in line with consensus or higher could delay easing further.
- Consensus estimates range from 0.3% to 0.7% q/q and 1.0% to 1.6% y/y. Of the large local banks ANZ is at consensus, CBA and NAB are lower forecasting 0.4% & 1.1% and 0.3% & 1.0% respectively.
- There are a number of forecasts lodged with Bloomberg today and on average they are in line with the consensus. Westpac revised up its forecast 0.1pp after the net exports and public demand data to 0.6% q/q and 1.2%. Macquarie also submitted a forecast to Bloomberg today and is at 0.6% & 1.3%.
- In terms of the Q3 data released, retail sales volumes rose 0.5% q/q. Services are also part of the household consumption number, which is not yet known. The ABS said that public demand contributed 0.7pp to growth with 0.3pp expenditure and 0.4pp capex. Private investment rose 1.1% q/q. Westpac estimates that domestic demand rose 0.9% q/q and inventories detracted 0.4pp from growth.
- The ABS said that net exports contributed 0.1pp to Q3.
- Productivity and unit labour costs are also included in this release and will be monitored closely. Productivity fell 0.8% q/q in Q2 and the RBA revised down its outlook in November.
FOREX: USD Ticks Up, Yen Down Modestly On Firmer US Yields/Higher Equities
Dec-03 05:03
The USD is up against all of the G10 currencies, albite to varying degrees. The BBDXY index was last +0.15% firmer, above the 1283 level, but still sub intra-session highs from Monday.
- Aggregate G10 moves have been fairly modest. Yen has given back some of Monday's outperformance, at the margins. USD/JPY was last near 150.15/20, up around 0.35%. Earlier lows were at 149.50.
- US yields have ticked higher as the session progressed, with the back end slightly firmer, up a little over 1.5bps. Regional equities have mostly tracked higher, aided by tech/chip stocks. US chip curbs on China were not as harsh as feared.
- This has likely aided higher beta plays against the yen, albeit at the margins.
- AUD/USD is still down for the session, last near 0.6470. NZD/USD is underperforming, off 0.20% to 0.5875/80, but is up from earlier lows of 0.5864.
- USD/CNH has broken higher, above 7.3000, reaching fresh YTD highs. This has been another constraint on AUD and NZD trends.
- On the data front, in Australia, Q3 net exports contributed 0.1pp, less than expected, and public demand 0.7pp to GDP growth. Q3 GDP is out tomorrow. In NZ the terms of trade improved, but good export volumes were weak.
- Looking ahead, the Fed’s Daly, Kugler & Goolsbee and ECB’s Cipollone speak. In terms of data, US October job openings and Spanish November unemployment print.
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