Dollar Steady as Markets Await U.S. Inflation Data 
Australia Housing Crisis Deepens as Worker Shortages Delay Homebuilding 
Canada, US Hold Fresh Trade Talks as August 19 Tariff Deadline Nears 
Trump Weighs Capital Gains Tax Cuts Ahead of Midterms 
Gold Price Holds Near $4,400 as Hormuz Risks and CPI Drive Markets 
European Stocks Flat as Oil Prices Rise, US CPI in Focus 
Asian Stocks Mixed as RBA Holds Rates, Oil Risks Rise 
Australia Sets New Minimum Pay, Insurance Rules for Gig Workers 
Gold Prices Hold Near Seven-Week High as Markets Await U.S. Inflation Data 
Wall Street Slips as Oil Prices Surge 5% on Iran-Hormuz Uncertainty 
The Indian rupee, Indonesian rupiah and Thailand baht is expected to weaken abruptly in response to the headlines on the general election in India, Indonesia and Thailand due April/May, April 17 and February 24 respectively, according to the latest research report from Scotiabank.
The market has been increasingly concerned about escalating risks of a synchronized global slowdown. Although ISM manufacturing index rebounded to 59.3 in November from 57.7 the previous month, Markit US manufacturing PMI slid to 53.9 in December from 55.3 in November.
Meanwhile, the Eurozone manufacturing sector activity extended its downtrend in December, with manufacturing PMI dropping further to 51.4 this month from 51.8 in November.
Data released earlier also showed cooling factory activity in China last month. Repeated US stock selloffs have dented risk sentiment and raised odds of the Fed easing rate hikes in 2019.
Fed Funds Futures, OIS, Eurodollar Futures and UST 5Y5Y forward breakeven are all indicating market expectations of fewer rate hikes in the year of 2019 compared to three rate rises predicted in the September "dot plot" forecasts.
PBoC Governor Yi Gang also said last Thursday that China’s economy is facing increasing downward pressure, and the nation’s monetary policy will continue to be supportive.
China is expected to consider more measures including greater fiscal spending and larger tax cuts to stimulate growth while lowering their headline growth target for 2019 at the annual Central Economic Work Conference that is likely to be held this week, the report added.
Global major central banks shifting stance and easing US-China trade tensions are expected to buoy EM Asian currencies in general next year. USD/CNY and USD/CNH will stay below the 7 resistance and trade towards 6.60-6.70.
The high-yielding INR and IDR and export-driven currencies such as the KRW, TWD and THB are expected to rally amid reflation policies next year, particularly if the US and China do agree to a trade deal by March 1, 2019.
"While the HKD is likely to rally further on narrowing yield advantage of the USD, the EUR’s near-term weakness will continue weighing on the SGD given the tight correlation. The MYR and PHP will likely underperform regional peers next year on account of soft oil prices and deteriorating current account balance respectively," Scotiabank commented in the report.
