ASEAN Weekly Outlook Talking Points

  • Renewed Fed rate hike bets put pressure on ASEAN bloc currencies like the Indonesian Rupiah
  • The markets face this week’s US GDP report which has high expectations. Risk trends as well
  • USD/SGD[1] has made a push higher after a reversal warning sign, but it faces key resistance now

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The Indonesian Rupiah and Singapore Dollar came under selling pressure against their US counterpart towards the end of last week. Hawkish Fed commentary from Board of Governors member Lael Brainard helped push local bond yields higher[3]. Simultaneously, the S&P 500[4] declined. This kind of trading environment also didn’t bode well for some other sentiment-linked ASEAN bloc currencies.

With the markets appearing to refocus on monetary policy developments out of the US again, the incoming week could bring with it more on this front. On Friday, we will get the first estimate of US GDP for Q1. The annualized rate of growth is expected to slow to 2.0% q/q from 2.9%. Keep in mind that data out of the country has been tending to underperform since this month began.

This opens the door for a downside surprise and may present a problem for the greenback. With Fed policymakers giving positive outlooks on the economy, they consequentially set higher expectations for incoming economic statistics. If the GDP figures do disappoint, then the Malaysian Ringgit and or the Philippine Peso might benefit from US Dollar[5] weakness

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