EM FX ended the week firm, and capped off a good week overall. Best performers last week were ZAR and KRW, while the worst were TRY and IDR. Until we get higher US rates, the dollar may remain under modest pressure. This would help EM maintain some traction, though we remain cautious.
Chile will hold elections Sunday. Former President Pinera is widely expected to win. If so, we expect policies that may be more business-friendly than outgoing President Bachelet enacted in her second term. Chile reports Q3 GDP and current account data Monday. GDP is expected to grow 2.2% y/y vs. 0.9% in Q2.
Thailand reports Q3 GDP Monday, which is expected to grow 3.9% y/y vs. 3.7% in Q2. Bank of Thailand is on hold for now, and the lack of price pressures should allow steady rates well into 2018. Next policy meeting is December 20, no change expected then.
Taiwan reports October export orders and Q3 current account data Monday. Export orders are expected to rise 8% y/y vs. 6.9% in September. Orders have been slowing in recent months, suggesting a softer export outlook in 2018. October IP will be reported Thursday, which is expected to rise 4.2% y/y vs. 5.2% in September.
Poland reports October construction and industrial output, retail sales, and PPI Monday. The data are expected to show continued robustness in the economy. Central bank minutes will be released Thursday. The MPC remains split but the doves have the upper hand for now.
Korea reports trade data for the first 20 days of November Tuesday. Signs of slowing growth in the mainland China economy do not bode well for the regional economies. Furthermore, won strength has pushed the key JPY/KRW cross down to 9.71, its lowest level since December 2015. Korean exporters like this cross to be above 10 for the sake of competitiveness.
Hungary central bank meets Tuesday and is expected to keep policy steady. The bank just eased at its September meeting and continues to send a dovish message. If the bank were to ease again, it would most likely be at the December 19 meeting.
