Non-Japan Asia: BI to cut, worsening trade, weaker currencies

Asian currencies are experiencing renewed weakness despite the pause in the USD's general uptrend in recent days. Fragile Stability, the outlook for EM FX, including Asian FX, is likely to remain downbeat into 2016. A mix of trade, inflation, and GDP data, as well as a policy rate decision by Bank Indonesia this week, will likely provide scant relief. The main event will be Bank Indonesia's policy decision on Tuesday. 

"We look for a 25bp reference rate cut to 7.25%, but acknowledge that it is a close call given concerns that a rate cut could trigger more pressure on the IDR. Meanwhile we project that GDP data in Thailand (0.4% q/q sa, 2.2% y/y) (Monday) and Singapore (-0.4% q/q, 1.3% y/y) (Wednesday) will be weak,, with Singapore set to tip into mild recession in Q3", says Barclays.

Much of the rest of the data slate for Asia will revolve around trade. Singapore exports (Tuesday) are unlikely to look much better, with a move back into negative territory, given the earlier high base (-3.0% y/y). Consequently, the SGD could remain under pressure. Indonesia is set to register a narrower trade surplus (Monday) in October (USD 750mn), although double-digit declines in exports and imports are likely to persist. 

India's trade deficit is set to widen in October (USD -11.5 bn) because of a seasonal pickup in demand for oil and gold despite a modest improvement in exports, while softer commodity prices and low core inflation should keep WPI inflation (Monday) deeply in negative territory for the twelfth straight month in October (-3.8% y/y). Meanwhile, inflation in Malaysia (Friday) looks set to record a temporary decline (2.2% y/y) due to a high base.