Asian equities, FX rise; markets brace for US inflation data

MOST Asian currencies and equities edged higher on Thursday, as minutes of the U.S. Federal Reserve’s last policy meeting indicated rates may have peaked, although caution prevailed ahead of key inflation data that may offer further rate clues.

The Singapore dollar and the South Korean won appreciated 0.2% each, while the Philippine peso advanced 0.1%.

The Thai baht rose 0.8%, hitting its highest level since Sept. 25.

Minutes of the Fed’s last policy meeting showed that uncertainty around the path of the U.S. economy pushed policymakers into adopting a cautious stance last month. That was backed by recent dovish comments from Fed officials, suggesting U.S. rates may have peaked.

“It looks like the Fed will require a trend of reacceleration of inflation before adding to rate hikes, given that the market is already tightening conditions for them,” Eugenia Victorino, head of Asia strategy at Skandinaviska Enskilda Banken said.

Investors are now awaiting the U.S. inflation data for September, due at 1230 GMT, to see if the Fed’s interest rate campaign has had the desired effect on the economy and for further clues on the monetary policy trajectory.

“We think price pressures could bump up a little bit for core inflation and that’s likely to keep the dollar supported and Asian currencies somewhere on the back foot going to the November meeting,” Wei Liang Chang, macro strategist (FX and credit) at DBS Bank said.

Most stock markets in the region advanced with Singapore’s key index rising 1.1% to hit its highest level since Oct. 2. South Korean shares jumped 1.2%, hitting their highest level since Sept. 26.

Equities in Taiwan gained 0.9% to hit a peak since Sept. 18.

Shares in China rose 0.9% after a state fund increased stake in the nation’s biggest banks.

Elsewhere, market participants kept a wary eye on developments in the Middle East conflict and its implications for the global economy. The Israeli shekel was largely unchanged.

Oil prices retreated on easing supply concerns and larger-than-expected crude and gasoline stockbuild in the U.S., providing some relief to Asian countries, which are net importers of the commodity.

A high oil price could create inflationary concerns for oil-importing countries. Investors are also watching out for the September inflation data from India later in the day.

A Reuters poll showed that India’s retail inflation likely eased last month on moderating food price rises and government subsidies that offset a surge in the cost of crude oil.

HIGHLIGHTS:

** Thai 10-year benchmark yields fall 2 basis points to 3.26%

** South Korea household debt growth slows in September

** Mainland Chinese banned from opening new offshore trading accounts with local brokers – Reuters