USDAsia pullback likely temporary; regional activity to stay weak

The recent USDAsia pullback after the FOMC minutes is likely temporary, and possibly related to the unwinding of investors' long USD positions ahead of a Thanksgiving holiday week. Activity data this week will likely continue to paint a challenging growth picture for the region. Without a meaningful turnaround in China and EM demand, and with G2 policy divergence set to drive further EURUSD weakness, USDAsia is expected to resume its climb eventually.

In terms of data release, a moderate downward revision is expected in Singapore's final Q3 GDP release (Wednesday). The prolonged weakness in manufacturing and renewed slowdown in services activity in September may still tip Q3 GDP into a mild technical recession. 

In Singapore, both headline and core inflation for October are expected to fall further, due to distortions from administrative measures. The final GDP may thus reignite market discussions of the risk of further policy easing and drive SGD weakness, although the scope for SGD underperformance would be limited given that the SGD NEER is trading near the bottom of the policy band (around 0.7% above lower band). 

The Philippines also reports Q3 GDP (Thursday); real growth of 5.5% y/y is expected. October industrial production reports in Taiwan, Singapore and Thailand will show production growth remaining in contraction mode (on a y/y basis) for all three countries.