NJA: Scope for Asia FX outperformance vs EUR

Surprisingly, USDAsia has traded sideways despite the EURUSD tumbling after ECB's signalled more easing to come. This may be related to the improvement in global risk sentiment and the recent pick-up in portfolio inflows into the region after the sharp sell-off in Q3. With China exerting a tight grip on the CNY ahead of the SDR review and Asia macro data stabilizing at low levels, Asian currencies may find stability in the near term. 

"We see scope for regional currencies to outperform versus the EUR in the coming weeks as the market sees renewed interest in using the EUR as funding currency in anticipation of QE extension and a deposit rate cut by the ECB", says Barclays.

The data calendar for Asia is light. September IP reports are due for Singapore, Korea and Thailand. IP growth (y/y) for Singapore and Thailand are expected to remain in negative territory, although Korea's IP could edge higher to post a modest expansion of 1.2%y/y. In Thailand, weak global and regional demand and drought like conditions will continue to weigh on exports (last: -6.7%).