What’s going on here?
Most Asian currencies stayed stable on Friday, positioning themselves for monthly gains that reflect improved market sentiment.
What does this mean?
The Thai baht and Taiwan dollar are expecting their first monthly rise since January 2024, signaling a much-needed recovery. Meanwhile, the Indonesian rupiah anticipates its first gain since February 2024. The Singapore dollar and Malaysian ringgit are also set for monthly gains. Despite minor daily fluctuations, with the Taiwan dollar, Thai baht, Malaysian ringgit, and South Korean won trading flat to 0.2% lower, overall trends remain positive. This is underscored by shares in Taipei, Seoul, Bangkok, and Singapore rising between 0.1% and 0.4% on Friday.
Why should I care?
For markets: Navigating towards stability.
Investors are closely watching the US personal consumption expenditures (PCE) data, set for release later on Friday, as it is a pivotal inflation indicator and could influence global interest rates. The upcoming week will also see a barrage of inflation data from Thailand, the Philippines, Taiwan, Indonesia, and South Korea, crucial for evaluating central bank policies. Analysts from Capital Economics suggest policymakers might adopt a hawkish stance due to currency weakness, but predict reduced growth and demand-side inflation may pave the way for interest rate cuts before year-end.
The bigger picture: Global economic shifts to watch.
Elections next week in India, South Africa, and Mexico could significantly influence market movements. While Japan saw a rise in inflation in May, excluding fuel effects, the timing of the Bank of Japan’s next interest rate hike remains uncertain. Japanese stocks rose 0.6%, with the yen stable amid hints of potential action against excessive currency movements. In China, despite a decline in manufacturing activity for May, stocks nudged higher, with the Shanghai Composite Index increasing by 0.3%, keeping the need for additional fiscal stimulus in focus.
