USDAsia crosses have failed to gain upward momentum in the past week after the ECB disappointed markets. Although the FX market is likely to consolidate ahead of the FOMC statement on 16 December, the risk to regional currencies if China allows the currency to fall more. China has in recent weeks been gradually allowing lower CNY fixings lower (vs. USD), and the fixing level before the ECB meeting was at the weakest level since 28 August. After the SDR inclusion last week, USDCNY has climbed above 6.40 and is on the verge of breaking above the post devaluation high (closing rate) of 6.4128. A further slide in the CNY is likely to drag other Asian currencies lower as well.

This week will be data intensive for China, starting with November trade report. Exports and imports are expected to remain sluggish (Tuesday; consensus: -5% and -11.8%, respectively) due to weak export orders and domestic demand. China's November CPI inflation (Wednesday) is likely to be flat versus October, but PPI is likely to edge lower (last: -5.9%). China's demand slowdown has been weighing on Korea's exports and growth. However, the BoK is expected to keep its policy rate on hold (Thursday), given increased expectations of Fed normalization at the December meeting. 

In light of the recent consumption boost due to temporary tax incentives, the tone of the governor's remarks are expected to be neutral. The BoK may also release a new inflation target, which is expected to be centered on 2%. In India, November exports growth is likely to stay negative although October industrial production could pick up (last: 3.6%).