Investing.com-- Most Asian currencies edged lower on Monday as the dollar remained near a three-week high ahead of the Federal Reserve meeting, while China's weaker-than-expected retail sales data stoked concerns about the country’s economic recovery. 

The U.S. Fed is expected to cut interest rates by 25 basis points this week, however, the dollar has been bolstered by expectations of a slower rate cut path by the Fed in 2025.

In Asia, although interest rates are also expected to decline, the cuts are projected to be more gradual, limiting the degree of currency appreciation relative to the U.S. dollar.

The US Dollar Index inched slightly lower in Asian trade on Monday but was hovering near a three-week high mark. The US Dollar Index Futures marginally lower.

Chinese yuan slips after weak retail sales data

The Chinese yuan’s onshore USD/CNY pair rose 0.2% and remained near a two-year high mark, while the offshore pair USD/CNH edged 0.1% higher.

Chinese industrial production grew as expected in November as recent stimulus measures from Beijing supported business activity, data showed on Monday.

However, retail sales for November were much lower compared to forecasts, and below last year’s reading, reflecting ongoing weakness in consumer spending despite policy support.

“Household confidence clearly remains soft, and it remains to be seen if the ‘vigorous support’ for consumption promised next year will be effective in stimulating a recovery. We expect the rollout of supportive policies could take some time, but overall retail sales growth should recover in 2025,” ING analysts said in a note.

The lingering slowdown in China is weighing on regional currencies. China's weaker-than-expected retail sales and ongoing challenges in its recovery are creating uncertainty across the broader Asia-Pacific region.

Dollar near 3-week high, Asia FX dips

The dollar index was hovering near its highest level since November 26, even as traders positioned for a Fed rate cut next week.

With the U.S. dollar remaining and slower adjustments in rate policies across Asia, the outlook for regional currencies remains pressured. Also, incoming President Donald Trump’s policies to impose additional tariffs on China or competitive devaluations in response to tariffs are both seen as dollar-positive.

The Japanese yen’s USD/JPY pair inched up 0.1% as the Bank of Japan was likely to keep interest rates unchanged this week, in contrast to earlier expectations of a hike.

The Singapore dollar’s USD/SGD pair inched slightly higher, while the Australian dollar’s AUD/USD pair gained 0.3%.

The Indian rupee’s USD/INR pair was largely unchanged, remaining near an all-time high hit last week.

The South Korean won’s USD/KRW pair inched marginally higher. Country’s President Yoon Suk Yeol was impeached in a second vote by the opposition-led parliament on Saturday, over his attempt to impose martial law in the country.

South Korea's finance ministry vowed on Sunday to continue to swiftly deploy market stabilizing measures as needed to support the economy after the impeachment.

BEIJING (Reuters) -China's new home prices fell at the slowest pace in 17 months, official data showed on Monday, as the government scaled up stimulus measures to lift the crisis-hit property sector.

New home prices were down 0.1% month-on-month after a 0.5% dip in October, the slowest pace since June last year, according to Reuters calculations based on National Bureau of Statistics data.

In annual terms, new home prices fell 5.7% after a 5.9% drop the previous month.

China's policymakers in recent months doubled down on their efforts to revive the country's property sector, which crashed in 2021 after a government-led campaign to rein in developers' leverage left them cash-strapped.

The country's top leadership vowed in a meeting of the Politburo on Dec. 9 and the Central Economic Work Conference, held on Dec. 11-12, to stabilise the property market.

Among 70 cities surveyed，month-on-month home prices rose in 17 cities, an increase of 10 from the previous month.

Recent measures aimed at encouraging homebuying included cutting mortgage rates and minimum down-payment ratios, as well as tax incentives to lower the cost of housing transactions.

The biggest cities, including Beijing and Shanghai, have since implemented the tax breaks to spur housing sales.

Last month, home prices rose 0.6% and 0.3% on month in Shanghai and Shenzhen, separately, and fell 0.5% in Beijing.

Investing.com -- The end of the year is coming into view but before then the Fed will deliver its final policy decision for 2024, along with the Bank of Japan and the Bank of England. Here's your look at what's happening in markets for the week ahead.

1. Fed decision

The Fed is widely expected to deliver another 25-basis point rate cut after its final meeting of the year on Wednesday, in what would be its third straight reduction.

With the cut already fully priced in, investors are focusing on any guidance around how much further rates could be cut in 2025.

The Fed's updated summary of economic projections released at the meeting will provide one indication of where policymakers see rates heading. In a sign of possible support for a slower pace of rate cuts next year Fed Chair Jerome Powell said this month the economy is stronger now than the central bank had anticipated in September.

“In our view, risks for the meeting skew dovish relative to market expectations,” analysts at Citi said in a note on Friday.

“Chair Powell will likely repeat that rate cuts can slow if inflation picks up, but they can also speed up if the unemployment rate continues to rise and the soft jobs report together with slowing inflation may have officials once again paying a bit more attention to the employment mandate.”

2. BOJ meeting

The Bank of Japan is to hold its final meeting for 2024 on Thursday and while market expectations have swung widely in the past two weeks as the decision draws nearer a consensus is forming that officials will hold steady.

Reuters reported on Thursday that policymakers are leaning towards a pause, waiting for further data on wages and clarity on Donald Trump's policies before hiking rates for a third time.

A day earlier, Bloomberg reported that BOJ officials see "little cost" from delaying additional tightening.

But market volatility could be high going into the meeting with the outcome still uncertain. One potential risk is that the Fed holds off cutting rates on Wednesday, triggering a jump in the dollar-yen exchange rate.

But analysts have noted that it would be very rare for the Fed to go against the grain when market expectations for a cut are so strong.

3. BoE expected to hold

The BoE is widely expected to keep rates on hold at 4.75% on Thursday and is seen holding off from delivering a third rate 25-bps rate cut until February. Markets are currently pricing in three quarter-point rate cuts by the end of next year.

Data on Friday showed that the UK economy contracted for the second month in a row in October, adding to concerns over the outlook after recent business surveys pointed to weakness and retail sales flatlined.

The BoE is unlikely to be sufficiently concerned over GDP to cut rates this week.

Last month the central bank trimmed its annual growth forecast for 2024 to 1% from 1.25% but forecast a stronger 2025 with 1.5% growth, reflecting a short-term boost to the economy from Chancellor Rachel Reeves' budget.

4. PMI data

Global PMI numbers this week will give investors fresh insight into the health of the world’s economy after data in November indicated that sluggishness in the manufacturing sector is spreading to service sector activity.

The November eurozone composite PMI, seen as a good gauge of overall economic health, sank to 48.3 from October's 50.0.

Britain's all-sector PMI fell to its lowest in a year at 50.9 - just above the marker that separates contraction from expansion. Even U.S. services sector activity slowed.

Uncertainty over U.S. tariff along with political turmoil in France and Germany have the potential to hurt business activity.

5. Oil prices

Oil prices ended Friday at the highest level in three weeks amid expectations that additional sanctions on Russia and Iran could tighten supplies and that lower interest rates in Europe and the U.S. could bolster the demand outlook.

Brent gained 5% for the week, while WTI posted a 6% gain for the week and closed at its highest since Nov. 7.

The European Union has agreed to impose a 15th package of sanctions on Russia over its war against Ukraine, targeting its shadow tanker fleet. The U.S. is considering similar moves.

The European Central Bank cut interest rates again on Thursday and indicated further rate cuts were on the cards in 2025 provided inflation settles at the bank's 2% target as expected.

Meanwhile, investors are betting that the Fed will cut rates again on Thursday with further cuts to follow next year.

Lower interest rates can boost economic growth and demand for oil.

By Maria Martinez

(Reuters) -German exports fell more than expected in October, an indication that the long-awaited recovery in external demand has been delayed.

Exports fell by 2.8% compared with the previous month, data from the federal statistics office showed on Friday.

The result went beyond the 2% decrease forecast in a Reuters poll.

The foreign trade balance showed a surplus of 13.4 billion euros ($14.02 billion) in October, down from 16.9 billion euro the previous month and 18.9 billion euros in October 2023.

Exports to EU countries dropped by 0.7% on the month and exports to third countries declined by 5.3%, data from the statistics office showed.

Most German exports in October went to the United States, although exports of goods to the U.S. were down 14.2% compared with September.

Exports to China decreased by 3.8% on the month and exports to the U.K. rose by 2.1%, the statistics office said.

($1 = 0.9559 euros)

By Florence Tan and Siyi Liu

SINGAPORE (Reuters) - Oil prices stabilised on Friday, heading for their first weekly rise since the end of November, as additional sanctions on Iran and Russia ratcheted up supply worries, while a surplus outlook weighed on markets.

Brent crude futures edged up 7 cents to $73.48 a barrel by 0434 GMT, while U.S. West Texas Intermediate crude was at $70.11 a barrel, up 9 cents.

Both contracts are on track for a weekly gain of more than 3% as concerns about supply disruption from tighter sanctions on Russia and Iran, and hopes that Chinese stimulus measures could lift demand in the world's No. 2 oil consumer support prices.

Recent stabilisations came after oil defended a key technical level of $71, said Yeap Jun Rong, market strategist at IG.

"But there has not been much conviction to prompt a stronger price recovery just yet," he added.

Chinese data this week showed crude imports grew annually for the first time in seven months in November, driven by lower prices and stockpiling.

"We have seen a bit of a recovery in refinery margins since the September lows, but don't think it's anything to justify the November crude import volumes," said Warren Patterson, ING's head of commodities research.

Crude imports by the world's largest importer are set to stay elevated into early 2025 as refiners opt to lift more supply from top exporter Saudi Arabia, drawn by lower prices, while independent refiners rush to use their quota.

The International Energy Agency increased its forecast for 2025 global oil demand growth to 1.1 million barrels per day (bpd) from 990,000 bpd last month, thanks to China's recent stimulus measures, it said in its monthly oil market report.

However, it forecast a surplus for next year, when non-OPEC+ nations are set to boost supply by about 1.5 million barrels per day (bpd), driven by Argentina, Brazil, Canada, Guyana and the United States.

"I guess with an outlook for a fairly comfortable balance (there is) little reason (for prices) to break out of this range for now," ING's Patterson.

Three of Canada's biggest oil producers forecast higher output in 2025. Building on record U.S. production, Goldman Sachs expects Lower 48 shale oil production to grow by 600,000 bpd in 2025, although growth could slow if Brent falls below $70 a barrel.

Investors are also betting that the Fed will cut borrowing costs next week and follow up next year with further reductions, after economic data showed weekly claims for unemployment insurance unexpectedly rose.

By Stella Qiu

SYDNEY (Reuters) - Asia shares fell on Friday as a strong dollar kept risk sentiment fragile, while longer-dated Treasury yields are heading for their biggest weekly rise this year as expectations for deep U.S. rate cuts in 2025 recede.

A top level meeting in Beijing pledged to increase debt and boost consumption but failed to boost Chinese equity markets. Policymakers are girding for more trade tensions with the U.S. as Donald Trump's return to power approaches.

It has been a week of rate cuts from Switzerland, Canada and the European Central Bank, which had rate differentials working in the favour of the U.S. dollar.

The other main point of the week has been the rise in long-term treasury yields. Markets are still confident of a cut from the Federal Reserve next week but suspect it will sound cautious about next year. Futures imply little chance of a move in January, with just two more easings priced in to 3.8% by end-2025.

Thirty-year yields have jumped 22 basis points so far this week, their biggest since October 2023.

In contrast, rates in Europe are seen at 1.75% compared with 3% currently, while those for Canada are expected to fall from 3.25% to 2.7% by then.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.5% in Friday morning trade. Japan's Nikkei fell 1% but is still on track for a weekly gain of 0.9%.

China's blue chips dropped 0.7% and Hong Kong's Hang Seng lost 1.2% after the Central Economic Work Conference did not offer details on new stimulus measures. A subindex of Chinese property firms listed in Hong Kong slid 2.6%.

Jian Chang, chief China economist at Barclays (LON:BARC), said the CEWC likely disappointed markets as a Dec. 9 Politburo statement had raised hopes of more aggressive easing.

"We maintain our view that incremental and reactive policy is more likely than pre-emptive and 'bazooka' policy," he said.

On Wall Street, stocks closed lower overnight as some investors booked profits from the Nasdaq's relentless run to record highs. That said, Nasdaq futures rose 0.4% in Asia.

Data on U.S. producer prices came out a little hotter than expected in November at 0.4% but that was due to a 50% jump in egg prices. The core reading was softer and led Goldman Sachs to lower their forecast for the Fed's prefered gauge of inflation - the core personal consumption expenditures price index due next week - to a monthly rise of 0.13%.

In the foreign exchange market, the dollar is on track for a weekly jump of 1% against its peers. [FRX/]

It gained 1.8% on the Japanese yen this week as markets scaled back the chance of a rate hike from the Bank of Japan next week to just 22%. Sources said the BOJ is leaning towards keeping rates steady..

The dollar also rose 1.6% on the swiss franc to 0.8919, just within a whisker of a five-month high of 0.8957, after the Swiss National Bank surprised economists by cutting by 50 basis points.

Treasuries were steady on Friday but headed for heavy weekly losses across the curve. The two-year yield rose 9 basis points to 4.1906%, while the ten-year benchmark yield jumped 17 bps to 4.3219%.

Oil prices edged lower on Friday, but were set for decent weekly gains after the European Union agreed to new round of sanctions threatening Russian oil flows. U.S. West Texas Intermediate (WTI) eased 0.1% to $69.95 a barrel and is up 4% this week. [O/R]

Gold gained 2% this week to $2,690.21 per ounce, still some distance from its record of $2,790.

(Reuters) - Stifel expects the S&P 500 index to peak in the first half of 2025, then fall 10% to 15% in the second half of the year, the brokerage said on Thursday citing concerns about slower economic growth and sticky inflation.

The brokerage expects the U.S. stocks benchmark to drop to mid-5,000s late next year, a bearish view on the market when compared to Goldman Sachs and Morgan Stanley (NYSE:MS), which see the index end 2025 at 6,500. It was last trading at 6,075 points.

A correction in stocks could be triggered by the U.S. real gross domestic product slowing to 1.5% in the second half of 2025 and core personal consumption expenditure inflation staying above the Federal Reserve's target, Stifel strategists noted.

"The environment does not appear conducive to continued equity mania and we prefer more defensive sectors," they added.

The S&P 500 has had a strong run this year, rising about 27% so far, boosted by the so-called 'Magnificent 7' stocks rising on the artificial intelligence boom and anticipation of lower interest rates.

Stifel expects the Fed to pause its rate-cutting cycle, holding rates at 4% at its January policy meeting, posing risks to the markets around mid-2025.

WASHINGTON (Reuters) - U.S. mortgage rates dropped to the lowest level in nearly two months this week, a trend that if sustained could boost home sales in the coming months.

The average rate on the popular 30-year fixed-rate mortgage fell to 6.60%, the lowest level since the week ending Oct. 24, from 6.69% last week, mortgage finance agency Freddie Mac (OTC:FMCC) said on Thursday. It has now declined for three straight weeks. The rate averaged 6.95% during the same period a year ago.

"The combination of mortgage rate declines, firm consumer income growth and a bullish stock market have increased homebuyer demand in recent weeks," said Sam Khater, Freddie Mac chief economist. "While the outlook for the housing market is improving, the improvement is limited given that homebuyers continue to face stiff affordability headwinds."

Investing.com-- Most major Asian stocks rose on Thursday tracking an overnight rally in technology shares on Wall Street, as U.S. inflation data cemented bets for an interest rate cut by the Federal Reserve next week.

U.S. consumer price index data on Wednesday showed inflation rose at its fastest pace in seven months in November, but was largely in line with expectations. This led to markets pricing in a 98% chance for a 25 basis point rate cut next week, up from 81% seen last week, according to CME Fedwatch.

U.S. stock indexes closed higher overnight, with the NASDAQ Composite hitting a record high above 20,000 points. Gains were fueled largely by technology stocks.

Wall Street futures fell slightly in Asian trade.

Chinese shares rise, CEWC awaited for stimulus cues

China’s Shanghai Composite index was 0.4% higher, while the Shanghai Shenzhen CSI 300 index gained 0.6%. Hong Kong’s Hang Seng index jumped 1.3%.

Focus was on China’s China’s Central Economic Work Conference (CEWC), a two-day meeting set to conclude later on Thursday. Markets hope to get details on fresh stimulus measures from the meeting, after China's Politburo offered its most dovish signals yet on plans support economic growth.

Elsewhere, stock markets were largely mixed, with Philippine’s PSEi Composite index inching 0.3% lower, and Thailand’s SET Index rising 0.4%

India’s Nifty 50 Futures indicated a slight dip at open, while Indonesia’s Jakarta Stock Exchange Composite Index fell 0.4%.

Japan, S.Korea stocks buoyed by tech gains

Japan’s Nikkei 225 jumped 1.6% and TOPIX climbed 1.1%, with gains in heavyweight technology stocks. Sony Corp (TYO:6758) was up 2.7%, while Panasonic (OTC:PCRFY) Corp (TYO:6752) rose 1.5%.

South Korea’s KOSPI index rose 0.4%, with major tech stocks on the rise. However, ongoing political unrest in the country still kept investors on edge.

Media reports stated that South Korean police tried to raid President Yoon Suk Yeol's office on Wednesday, after he became subject to a criminal investigation over his attempt to declare martial law in the country.

Australian shares fall after jobs data spurs rate uncertainty

Australia’s S&P/ASX 200 fell 0.3% on Thursday after data showed that the country’s employment rose more than expected in November, as the labor market remained strong, while unemployment unexpectedly fell.

The data resulted in market participants further paring bets that the Reserve Bank of Australia would cut interest rates in the near term. Broad consensus is that the RBA will begin cutting rates in the second quarter of 2025.

The RBA on Tuesday had held rates unchanged, citing tight labor market conditions and stubborn underlying inflation in the county, although it did note that inflation was easing in line with expectations.

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By Hyunjoo Jin, Lisa Barrington and Heekyong Yang

SEOUL (Reuters) -From plastic surgery clinics to tour firms and hotel chains, South Korea's hospitality sector is wary of the potential impact of a protracted political crisis, as some overseas travellers cancel trips following last week's brief bout of martial law.

South Korea's travel and tourism industry, which generated 84.7 trillion won ($59.1 billion) in 2023, around 3.8% of GDP, has held up through previous bumps in the road, including a 2016 presidential impeachment and periodic tensions with North Korea.

But more than a dozen hospitality and administrative sources said the army's involvement in the latest political crisis was a serious development that could deter leisure and business travel, when the sector is approaching a full recovery in visitor numbers, which stood at 97% of pre-COVID levels as of October.

"There are concerns that safety issues in Seoul would throw cold water on the tourism industry," Seoul mayor Oh Se-hoon said on Wednesday while meeting tourism industry officials to discuss a fall in travel demand.

"There is a growing number of examples of foreign tourists cancelling visits to Seoul and shortening their stays," Oh said, before declaring "Seoul is safe", in English, Chinese and Japanese to the media.

Daily life and tourist activities have continued as usual, despite ongoing large protests, since President Yoon Suk Yeol rescinded his six hours of martial law on Dec. 4 after parliament voted it down, with analysts noting that South Korea's institutional checks and balances seem to be holding up.

Some tourists have since cancelled bookings, albeit not in great numbers, while others are enquiring whether they could pull out should the situation change, travel and hospitality sources said.

Accor (EPA:ACCP) hotel group, which includes the Fairmont and Sofitel brands, said it noted a "slight increase" in cancellation rates since Dec. 3, around 5% higher than in November.

The Korea Tourism Start-up Association said on Friday bookings for the first half of 2025 had already seen a sharp decline.

Rooms in previously fully-booked hotels in the capital Seoul have become available due to cancellations with some hotels "even lowering their rates and offering special deals to attract more bookings", said an inbound travel agency that asked not to be named due to the sensitivity of the matter.

A plastic surgery clinic in Seoul's upmarket Gangnam neighbourhood also said some foreign patients had cancelled visits since the martial law incident.

"We are not worried now, but if this situation continues, that would have an impact on foreign visitors," a clinic representative said, declining to be named.

South Korea is a top global destination for medical and plastic surgery tourism.

SOFT POWER

The latest political crisis also threatens to deal a major blow to the country's brand, which has been improving thanks to Korean culture and economic success, said Kim Wou-kyung, head of a government brand promotion agency.

The explosion to global prominence of South Korean drama, music and beauty, known as the "Korean Wave", plus a reputation for safety and global brands such as Samsung (KS:005930), are key forms of soft power that the government leverages to grow tourist numbers.

South Korea hopes to almost double the number of annual tourists by 2027 from 2019 levels to 30 million.

Part of the strategy is also to focus on group business travel for events including conferences and exhibitions, a sector known as MICE tourism, which could be impacted if the political crisis continues into early next year, said Ha Hong-kook, secretary-general at Korea MICE Association.

The parliament plans to vote on a motion to impeach Yoon on Saturday, a week after its first impeachment vote was defeated.

"If we get through this immediate, unprecedented period ... into a clear route to new elections, then I think actually the impact won't be that bad," said Andrew Gilholm, Director at risk consultancy Control Risks Group.

He said the country's reputation "might even be improved" long-term by displaying how it comes through the problems.

Su Shu, founder of Chinese firm Moment Travel in Chengdu, is also sanguine about travel demand for South Korea.

"No matter where there is chaos, there will be people who dare not go," Su said.

China is the largest source of foreign visitors to South Korea, followed by Japan and the U.S.

($1 = 1,433.0700 won)