Asian Currencies and Stocks Rally as Dollar Softens, Eyes on China Data

Asian currencies and stock markets experienced significant gains on Monday as the US dollar weakened. Market sentiment was buoyed by the dollar's decline, while investors eagerly awaited economic data releases from key regional economies. This data is anticipated to influence the direction of Asian markets.

The South Korean won led the surge among Asian currencies, while stocks rallied, riding on the back of the dollar's slump. The dollar index, which saw a drop of over 1% last week, reaching a six-week low, was trading with little change at 105.1.

This week, a slew of economic data points from major regional economies is expected to set the tone for Asian markets. Key Highlights:

- China, the world's second-largest economy, is poised to unveil its import and export figures for October on Tuesday, along with crucial data on bank lending, credit, and consumer price inflation (CPI) on Thursday. HSBC analysts suggest that Tuesday's trade data will likely reflect subdued imports due to the sluggish economy, and Thursday's CPI report is expected to reveal mild price pressures.

- The Indonesian rupiah surged by 1.2% to 15540 and was on track for its best performance since March 24. Stocks in Jakarta also gained 1%. Analysts at ING anticipate steady growth in Indonesia over the next few quarters, with growth picking up early next year ahead of a presidential election in February.

- The Philippines began allowing short-selling on Monday, a practice that aims to profit from declining stock prices. This move comes two weeks later than initially planned and is seen as an attempt to attract more foreign equity inflows. It could have a positive impact on the Philippine peso while introducing additional two-way risk to both the currency and equity market.

- The peso gained 0.5% against the dollar, and Manila's stocks surged by 1%.

- Thailand reported its first decrease in inflation in 25 months. This decline is attributed to lower energy prices due to government support measures and reduced food prices, as stated by the commerce ministry. The baht traded 0.1% higher, while the Thai stock market remained flat.

- The Malaysian ringgit strengthened by 1.4% against the dollar, reaching its highest level since September 6. The Singapore dollar also added 0.3%.

- South Korean shares jumped by 4.1% after authorities reinstated a ban on short-selling through the first half of 2024.

Asian currencies and stock markets rallied as the US dollar weakened. Key economic data releases from major Asian economies, including China, are expected to shape market sentiment in the coming days.