Markets Overview

HIGHLIGHTS AHEAD

    Wednesday looks to be a relatively quiet session as far as theglobal economic docket is concerned. We will be receivingGermany’s trade report during the European session, whilstthe October wholesale trade report is the only major releasein the US.

    Another day of Chinese data for today and all eyes will be onChina’s consumer price index (exp: 1.4% y/y, prev: 1.3% y/y)and producer price index (exp: -5.9% y/y, prev: -5.9% y/y) forthe month of November. South Korea will report Novemberbank lending and October money supply.

    CENTRAL BANK OUTLOOK

    First thing tomorrow morning in New Zealand, the focus willbe on the RBNZ. The decision is due at 4.00am Singaporetime. RBNZ Governor Graeme Wheeler then speaks at apress conference at 4.05am and four hours later, will headon over to parliament to front a committee. We expect a25bps cut in the official cash rate (OCR) to 2.50%, largelyon the back of the weaker outlook for inflation, dairy andjobs, alongside a higher New Zealand dollar. The risk to ourcall will be that the RBNZ might want to extend its pause togather more information on the economy. Even if it choosesto stay pat this, we believe a rate cut would be needed atsome point.

    Bank of Korea 7-day repo rate (12th Dec): 1.5%(unchanged).

    FXIt was a generally quiet session for currencies. EUR firmed asbourses slumped and as US data disappointed. GBP dippedas UK BRC retail sales was down 0.4% y/y in November,manufacturing output unexpectedly contracted in October,and November house prices eased very slightly. Commoditycurrencies remained pressured on fears of further crudefalls.

    Asian currencies fell against the USD yesterday for the 2ndday. Commodity-related currency such as the MYR fell bythe most (-1.1%) to 4.2615/USD, while the KRW declined0.9% to reach 1178.52/USD. Meanwhile, the SGD alsoclosed 0.5% lower at 1.4109/USD while the TWD was down0.3% to 33.037/USD. The THB lost 0.2% to 35.95/USD.

    The USD/SGD was trading at a higher range of 1.4028