(March 8): Most Asian currencies and equities were set for weekly gains on Friday ahead of crucial US jobs data, buoyed by prospects of US rate cuts later this year, with equities in Taiwan heading for their best weekly performance in more than a year.
Optimism over artificial intelligence-linked stocks, which swept global markets recently, helped Taiwan stocks surge 4.5% this week and hit record highs, in what could be their best week since Feb 3, 2023.
Equities in South Korea climbed more than 1% for the week, eyeing their best week since early February.
MSCI’s gauge of emerging market currencies rose as much as 0.3% on the day to its highest level since early January.
Prospects of the start of a rate easing cycle by the US Federal Reserve firmed after chair Jerome Powell on Wednesday said that rate reductions will “likely be appropriate” later this year. He added on Thursday that the central bank is “not far” from gaining the confidence it needs in falling inflation to begin cutting interest rates.
“The Fed was very careful saying that while they are not in a rush to cut interest rates, the rate cut is still on the agenda. That was quite reassuring for the market,” said Sim Moh Siong, an FX strategist at Bank of Singapore.
Investors now await the US nonfarm payrolls report, due later on Friday, with expectations for job growth to slow in February.
Upbeat risk sentiment following Powell’s comments helped Asian currencies post broad gains, with the South Korean won climbing 0.8%, set for its best day since Dec 14. The Indonesian rupiah jumped 0.4%.
For the week, the Singapore dollar and Philippine peso ose 0.9% each, with the former eyeing its best week since Nov 17 and the peso on track for its best week since Nov 3.
The Malaysian ringgit advanced more than 1% for the week, eyeing its best week since July 14, 2023.
The currency rose 0.3% on the day to hit its highest level since Jan 16.
Bank Negara Malaysia (BNM) stood pat on interest rates for a fifth straight meeting on Thursday, reiterating that the currency was undervalued and did not reflect Malaysia’s positive economic fundamentals and prospects.
“BNM will remain a steady pair of hands for the rest of 2024 in our view. We expect no changes to the policy rate, at 3%, while BNM remains mindful of external (specifically currency) developments,” Lavanya Venkateswaran, a senior Asean economist at OCBC, said in a note.
Inflation data from China, due on March 9, and from India next week will also be on investors’ radar.
