Thai Baht Top Gainer Among Asian FX; Manila Stocks Rise Ahead Of Central Bank Meeting

Economic

Forex

Summary:

Thailand's baht emerged as the major gainer among a group of developing Asian currencies on Thursday, supported by the upbeat mood in the gold markets, while equities in Manila advanced ahead of an expected rate cut by the central bank.

Thailand is a major trading hub for gold and the metal's advance over the past week amid concerns of a global trade war helped offset currency volatility fuelled by US President Donald Trump's tariff plans.

The baht gained as much as 0.5% against the US dollar, while the Singapore dollar and its Taiwanese counterpart were mostly steady.

Poon Panichpibool, a market strategist at Krung Thai Bank, attributed the baht's gain to the rise in gold prices and improving sentiment over the prospects of a peace deal in Ukraine.

The South Korean won and Malaysian ringgit added 0.3% and 0.1% respectively.

Overnight, data showed January US consumer inflation rose at its fastest pace in nearly 18 months, reinforcing the Federal Reserve's message that it was in no hurry to resume easing rates.

"Currency markets are also waving risk-off flags — the US dollar has broken higher, moving above its 50-day moving average, suggesting higher levels ahead for the safe haven currency," said Jessica Amir, market strategist at Moomoo Australia.

Equities rose in Asia trade on Thursday, as investors looked past the US inflation data and bet on an end to the war in Ukraine after Trump held separate phone calls with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy.

Shares in Seoul added 0.8% while those in Taipei gained 0.2%.

The Malaysian benchmark index and the Indonesian stock market, meanwhile, lost 0.6% and 1% respectively.

The Philippine central bank is set to meet later in the day with markets expecting a 25-basis-point interest rate cut to bolster an economy that has missed its growth target for two straight years.

The Philippine peso was flat while equities in Manila gained 0.8%.

Source: Theedgemarkets

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FED

Remarks of Officials

On February 12, the Fed released Chairman Jerome Powell's semi-annual monetary policy report to Congress, which highlighted the following:

US economic activity in 2024 has continued to expand at a solid pace, bolstered by resilient consumer spending. Following weakness in the middle of last year, activity in the housing sector seems to have stabilized. Investment in equipment and intangibles appears to have declined in the fourth quarter but was solid for the year overall, suggesting the economic fundamentals remain strong.

Inflation has eased significantly over the past two years but remains somewhat elevated relative to our 2 percent longer-run goal.Market surveys and financial indicators suggest that long-term inflation expectations remain anchored, reflecting a high level of market confidence in the Fed's ability to control inflation.

In the labor market, conditions remain solid. Payroll job gains averaged 189,000 per month over the past four months. The unemployment rate has been steady since the middle of last year and, at 4 percent in January, remains low. Nominal wage growth has eased over the past year, and the jobs-to-workers gap has narrowed. Overall, a wide set of indicators suggests that conditions in the labor market are broadly in balance. The labor market is not a source of significant inflationary pressures. The strong labor market conditions in recent years have helped narrow long-standing disparities in employment and earnings across demographic groups.

With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance. As the economy evolves, we will adjust our policy stance in a manner that best promotes our maximum-employment and price-stability goals.

Powell's Speech

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Alex

Economic

Malaysia’s economic growth in the final quarter of 2024 could potentially exceed expectations, following a strong performance in retail and wholesale trade data.

Gross domestic product (GDP) in the fourth quarter could expand faster than the consensus’ prediction and the official advance estimate of 4.8% year-on-year, economists said. The full GDP data is expected to be released on Friday.

“Growth is expected to be supported by continued expansion in the services, manufacturing and construction sectors,” said Hong Leong Investment Bank. The research house expects growth to come in at 5.0% year-on-year for the fourth quarter.

Data out on Wednesday (Feb 12) showed that Malaysia’s wholesale and retail trade picked up and grew 5.7% year-on-year in December 2024. Distributive trade is part of the services sector that accounts for more than half of the country’s economic output.

The last month of 2024 benefitted from holiday season and school breaks that typically bring a surge in festive shopping and higher family spending. An influx of foreign tourists and an increase in civil servant salaries also boosted private consumption.

Going ahead, “we anticipate sustained consumer demand” in the first three months of 2025, supported by the long school holidays, civil servants’ salary increases, the new minimum wage, and cash handouts, said BIMB Securities.

With strengthening consumer demand, spending patterns have increasingly shifted towards retail that now hold the highest ever share at 43.3% of the total distributive trade, BIMB Securities noted. Wholesale is still the largest component, at 44.3%.

There are downside risks, however, going ahead, from subsidy rationalisation that necessitate gradual implementation and government assistance measures as buffers to cushion the increase in costs of living, the house added.

Source: Theedgemarkets

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Alex

Remarks of Officials

Fundamentals

The resilience of the US economy has exceeded expectations, with GDP growth remaining steady. However, future economic growth is still potentially affected by changes in trade and immigration policies. Against the backdrop of high policy uncertainty, the Fed has temporarily kept interest rates stable to observe further changes in economic data. According to the Fed's Monetary Policy Report, the FOMC will continue to monitor the implications of incoming information for the economic outlook.

Price pressures persist and are unlikely to decline significantly in the short term. Although market expectations suggest that inflation will drop to around the 2% target level by early 2026, the latest data indicates that price pressures remain stubborn. Data released by the US Department of Labor shows that the Consumer Price Index (CPI) rose by 0.5% MoM and increased by 3% YoY in January 2025, both higher than the previous month. Core CPI increased by 3.3% YoY, significantly above the Fed's long-term inflation target of 2%. Rising prices for housing, food, and energy are the main factors driving the persistence of high inflation.

Despite sticky inflation, the labor market remains robust, providing the Federal Reserve with room to pause interest rate cuts. Employment data indicates that the US economy still has resilience, with stable job growth and low unemployment rates. As long as the labor market does not show significant signs of slowing down, the Fed can adopt a more cautious monetary policy path. It is expected that by early 2026, when inflation falls to the 2% target level, the Fed's policy rate will be close to the "neutral level," between 3% and 3.5%, neither stimulating nor restraining economic growth. In comparison, the current target range for the Fed's benchmark interest rate remains at 4.25%-4.5%, indicating that future interest rate adjustments will still need to be carried out gradually.

Given the economy's resilience, the persistence of inflation in the short term, and the robust performance of the labor market, the Fed is not in a rush to adjust monetary policy. Until policy becomes clearer, the Fed will find it difficult to make judgments on the direction, speed, and pace of interest rate adjustments. Therefore, the Fed will maintain a wait-and-see stance until it has sufficient information and will take action at the appropriate time.

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ECB

Remarks of Officials

Fundamentals

Speaking at a lecture at the London School of Economics, Nagel detailed his stance as follows:

The monetary policy stance is currently 2.75%, slightly above the neutral rate range of 1.8%-2.5% calculated by Bundesbank staff. Given the uncertainties in the global economic environment, including potential economic shocks from U.S. tariff policies and the impact of an uncertain external trade environment on the euro area economy, the ECB should not adjust policy too quickly. This caution is necessary to avoid exacerbating market volatility, especially when economic growth momentum has not yet shown clear improvement.

Inflation is nearing the target but remains under observation. Nagel expressed confidence that the inflation rate would reach the 2% target by mid-year, with a low likelihood of it falling below the target. While interest rates are crucial for policy decisions, their forecasts still carry significant uncertainty. In the face of global economic changes, central banks need to adjust strategies flexibly and avoid easing policies too early, which could lead to an inflation rebound.

The labor market continues to grow robustly, with stable employment conditions in the euro area. However, risks of economic slowdown persist. As global trade uncertainties increase, some industries may face layoffs or hiring slowdowns. Therefore, the ECB must consider changes in the labor market when adjusting monetary policy to avoid adverse impacts on employment growth.

In the current complex economic environment, the ECB's monetary policy adjustments should not be overly aggressive and should be based on economic data to ensure the stable operation of the euro area economy. Moving forward, the ECB needs to closely monitor the dynamics of economic growth, inflation, and the labor market, and adopt more prudent policy measures in the face of increasing uncertainties to maintain financial stability and economic development.

Nagel's Speech

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FastBull Featured

Daily News

[Quick Facts]

1. US budget deficit hits record $840 billion in first four months of 2025 fiscal year.

2. Fed Chairman Powell: Don't over-interpret CPI data.

3. Austria, negotiations of Freedom Party to form a government fail, Austria coalition talks stall.

4. Nagel: Tread cautiously on future interest rate cuts as borrowing costs near a neutral level.

5. Fed's Bostic: Fed needs to be patient with Monetary Policy.

6. US House Republicans release tax cut and spending cut blueprint after intense talks.

[News Details]

US budget deficit hits record $840 billion in first four months of 2025 fiscal year

The US federal budget gap widened to a record US$840 billion for the first third of the fiscal year, propelled by spending increases in areas including health, Social Security, transfers to veterans and debt-interest payments. For January alone, the deficit grew by US$129 billion, the Treasury Department said on Wednesday (Feb 12). Adjusting for calendar differences, the cumulative deficit for October to January widened by 25 percent. The 2024 figure was inflated by deferred tax payments from 2023 related to natural disasters that year, a senior Treasury official told reporters. Spending totalled US$2.44 trillion for the past four months, up 7 per cent after adjusting for calendar differences.

Fed Chairman Powell: Don't over-interpret CPI data

According to Mars Finance news, Federal Reserve Chairman Powell warned on Wednesday that the data showing the largest month-over-month increase in the Consumer Price Index (CPI) in over a year should not be overly interpreted, while also acknowledging that the reading was significantly higher than expected. At the hearing of the House Financial Services Committee, Powell said: "The CPI reading was almost higher than all forecasts, but I just want to remind you of two points. First, we won't get excited about one or two good readings, and we won't get excited about one or two bad readings either. Second, our inflation target focuses on the Personal Consumption Expenditures (PCE) price index, because we believe this is a better indicator for measuring inflation. So you need to know the conversion from CPI to PCE, and we will get more relevant data from the Producer Price Index (PPI) tomorrow. We will know the PCE reading later tomorrow.

Austria, negotiations of Freedom Party to form a government fail, Austria coalition talks stall

On February 12, Herbert Kickl, leader of the Austrian Freedom Party (FPÖ), returned the mandate to form a new government to President Alexander Van der Bellen, plunging the formation of Austria's new government into deadlock once again.

Kickl visited the presidential palace in the afternoon to hand back the mandate to Van der Bellen. In a subsequent statement, he said that the coalition talks between the FPÖ and the People's Party (ÖVP) had failed due to an inability to reach a compromise on the allocation of ministerial posts. Kickl blamed the ÖVP for the failure. However, Christian Stöckl, leader of the ÖVP, later held a press conference, accusing Kickl of being responsible for the breakdown of the negotiations.

Nagel: Tread cautiously on future interest rate cuts as borrowing costs near a neutral level

Joachim Nagel, President of the Deutsche Bundesbank and a member of the European Central Bank's Governing Council, stated on Wednesday that as interest rates approach the neutral level, it becomes increasingly appropriate to adopt a gradualist approach to monetary policy. According to calculations by staff at the Deutsche Bundesbank, the neutral interest rate is estimated to be between 1.8% and 2.5%, slightly below the current deposit rate of 2.75%.

In the current environment of uncertainty, the ECB should not be hasty in further rate cuts, especially as borrowing costs are nearing a level that neither restricts nor stimulates economic activity. Data will guide the direction of policy. While we have not yet reached the inflation target, I am very confident that we will achieve it by mid-year, and the likelihood of inflation falling below the target level is low. Basing monetary policy decisions on uncertain estimates of the neutral rate is "risky," and he emphasized that the ECB utilizes a wide range of financial, real economy, and other indicators to make assessments.

Fed's Bostic: Fed needs to be patient with Monetary Policy

"My view is until we have more clarity, it's going to be impossible to make a judgment about where our policy should go and how fast and at what pace, and so we're just going to have to get more information before we're going to be able to move," Bostic said Wednesday in a question-and-answer session in Atlanta. "We'll move when we have enough information to move," he said.

Bostic expects inflation will be about 2% in early 2026, and he forecasts the neutral rate is around 3%-3.5%, likely to approach that level early next year.

US House Republicans release tax cut and spending cut blueprint after intense talks

House Republicans released the first blueprint for their "one big, beautiful bill" that would cut taxes, reduce spending and provide money for border enforcement.

Lawmakers created the outline after weeks of tense internal meetings among their competing factions, and some members indicated they weren't fully on board.

The budget proposal, which will be submitted to the Budget Committee for a vote on Thursday, calls for at least $1.5 trillion in spending cuts over the next decade and up to $4.5 trillion in tax cuts from the Ways and Means Committee. The proposal also includes an increase in the federal debt ceiling by $4 trillion, which is expected to be sufficient for approximately two years. Additionally, the plan mandates an additional $300 billion in spending, likely to be allocated towards immigration enforcement and defense.

[Today's Focus]

Utc+8 15:00 UK Q4 GDP Annual Rate (Preliminary)

Utc+8 15:30 Switzerland January CPI

Utc+8 17:00 IEA Releases Monthly Oil Market Report

Utc+8 21:30 US January PPI

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Warren Takunda

Cryptocurrency

Crypto market participants are expecting no change in the upcoming US Consumer Price Index, but a lower print is possible and could trigger an uptick in Bitcoin’s price, says a crypto analyst.

“There is a real possibility of a lower print, which could ignite another rally attempt,” 10x Research head of research Markus Thielen said in a Feb. 11 market report.

Bitcoin rally may emerge if CPI “surprises to the downside”

Thielen said that most market participants expect a 2.9% year-on-year (YoY) inflation rate in the US Bureau of Statistics report set to be released on Feb. 12.

However, he said that the US Truflation Inflation Index — a real-time inflation tracker — has declined from 3.0% to 2.1%, which suggests that inflation pressures “may be easing faster than expected.”

“If CPI surprises to the downside at 2.7% or 2.8%, Bitcoin could see a relief rally,” he said.

He explained that this was why Bitcoin surged in January — market participants had expected a “third consecutive month of rising CPI,” but the 2.9% inflation print, unchanged from December, caught them off guard.

He said this “relieved the market,” sparking a $10,000 surge in Bitcoin’s price and pushing it back above the key $100,000 level — until US President Donald Trump’s imposed tariffs on Canada, Mexico and China, which “halted the momentum.”

Another $10,000 Bitcoin rally will bring it closer to peak price

A similar $10,000 rally would send Bitcoin to $105,491, just 3.5% shy of its $109,000 all-time high, briefly tapped on Jan. 20 ahead of Trump’s inauguration. Easing Inflation Could Ignite Another BTC Rally: 10x Research_1

Easing Inflation Could Ignite Another BTC Rally: 10x Research_1

Bitcoin is trading at $95,490 at the time of publication. Source: CoinMarketCap

Bitcoin is trading at $95,490 at the time of publication, down 2.65% over the past seven days, according to CoinMarketCap.

Into The CryptoVerse founder Benjamin Cowen ran a Feb. 11 poll on X asking where Bitcoin’s price will go after the CPI release — 51.7% of the 12,397 voters had chosen “up” at the time of publication.

MN Capital founder Michaël van de Poppe recently said Bitcoin could hit new all-time highs within weeks, following gold’s recent streak of strong all-time highs.