Korea's industrial output, retail sales and facility investment dropped from a month earlier in October, data showed Friday, further raising concerns over a potential economic slowdown.

Industrial production went down 0.3 percent last month, marking the second consecutive month of decline, according to the data compiled by Statistics Korea.

Retail sales, a gauge of private spending, also dropped 0.4 percent from a month earlier, marking the second consecutive monthly decline.

Facility investment saw a sharper decline in October, tumbling 5.8 percent from the previous month, largely due to a slump in construction activity.

This marks the first simultaneous decline across all three indicators since May.

"While manufacturing and service sector production remained relatively steady, retail sales showed a decline," said Gong Mi-sook, an official from Statistics Korea. "Facility investment is performing relatively well, but the construction sector is facing significant challenges."

The decline in the output came as the production in the construction sector tumbled 4 percent on-month, and that in the public administration field dropped 3.8 percent.

The output in the construction sector has posted on-month declines for six consecutive months as of October, the longest losing streak since 2008.

In contrast, the service sector posted a 0.3 percent on-month increase, supported by a strong performance in the financial and insurance segments.

In on-year terms, overall industrial output went up 2.3 percent in October.

Retail sales showed a mixed performance. Sales of home appliances and other durable goods fell 5.8 percent from a month earlier in October, offsetting a 4.1 percent increase in semidurable goods, such as clothing.

In on-year terms, retail sales lost 0.8 percent.

Facility investment weakened, primarily due to a downturn in construction-related investments. Construction orders plunged 11.9 percent from a year earlier in October, the data showed.

The finance ministry said the government plans to make every effort to boost economic vitality amid persistent challenges and uncertainties due to factors, such as the incoming U.S. administration (Yonhap)

Source: Koreatimes

(Nov 29): Stocks in Asia are poised to open lower on Friday, while US equity futures gained ahead of markets reopening following the Thanksgiving holiday.

Contracts for Japanese shares fell around 0.2% with those in Australia dropping 0.3% early Friday. Hong Kong futures bucked the trend, drifting slightly higher, after Chinese benchmarks fell in the prior session. Treasury cash trading resumes in Asia following the US holiday.

The yen was steady after weakening slightly Thursday ahead of Tokyo inflation data due later Friday. The gauge is expected to show a slight increase in consumer prices in the monthly year-on-year gauge. Japan may also delay a decision on raising taxes to help cover rising defense spending, a senior ruling coalition official said.

Elsewhere in currency markets, Brazil’s real tumbled to a record low on disappointment over a government plan to cut spending, while Mexico’s peso rallied amid thin trading due to the US holiday. 

The Bloomberg Dollar Spot Index was steady but remains on course to break an eight-week winning streak, as traders begin to look past the threat of tariffs that’s boosted the greenback since Trump’s victory. Bitcoin traded below US$96,000 (RM426,055) after a rally on Wednesday.

In Australia, core inflation is “too high” to consider interest-rate cuts in the near term, Reserve Bank Governor Michele Bullock said. Elsewhere in Asia, data set for release includes gross-domestic product for India and so on.

European stocks

In Europe, stocks snapped two days of declines, with technology leading the advance amid hopes that US curbs on chip equipment sales to China may prove lighter than feared. The US is considering measures on sales of semiconductor equipment and AI memory chips to China that would stop short of stricter limits previously under discussion, Bloomberg News reported. 

Political turmoil in France weighed on the nation’s stocks and bonds. The yields on benchmark French bonds traded near 3%, briefly on par with those of Greece for the first time on record. The nation’s stocks are set for their worst under-performance against European peers since 2010 as a budget standoff threatens to topple the government.

While French bonds rallied after Finance Minister Antoine Armand said he is prepared to make concessions on the 2025 budget, that did little to shore up months of underperformance. 

“The problem with France is it’s one of the largest issuers in Europe and now you’ve got a bit of a buyers’ strike,” Jordan Rochester, head of macro strategy at Mizuho International, said in an interview with Bloomberg TV. “Our head of EGB trading was just in France recently talking to investors, and their interest in buying OATs was extremely low. You’ve got other options, Italy and Spain, and their data’s actually fantastic.”

As trading of treasuries reopens on Friday, investors will be monitoring for any signals on the pace of future Federal Reserve interest rate cuts.

In PCE data released earlier this week, “core services came out quite strong,” said Kevin Thozet, a member of the investment committee at Carmignac. “We are not heading for double-digit inflation but the disinflationary trend is stalling. The result of the US elections could prolong this cycle with tax cuts.”

In commodities, oil held steady as trading thinned during the US holiday, with the market now looking ahead to an upcoming Opec+ meeting that has been delayed until Dec 5. Gold edged higher on Thursday.

Source: Theedgemarkets

The USD/JPY pair loses traction to around 150.95 during the early Asian session on Friday. The Japanese Yen (JPY) edges higher after the hotter-than-expected Japan’s Tokyo Consumer Price Index (CPI) inflation report for November. Data released by the Statistics Bureau of Japan on Friday showed that the headline Tokyo Consumer Price Index (CPI) climbed by 2.6% YoY in November, compared to 1.8% in the previous month. Meanwhile, the Tokyo CPI ex Fresh Food, Energy rose by 2.2% YoY in November versus 1.8% prior. Tokyo CPI ex Fresh Food increased 2.2% YoY in November, compared to a 1.8% increase in October, and was above the market consensus of 2.1%. The core CPI has stayed above the Bank of Japan’s (BoJ) 2% target and kept alive market expectations for a near-term interest rate hike.

This, in turn, boosts the JPY and creates a headwind for USD/JPY. BoJ Governor Kazuo Ueda stated the Japanese central bank will keep raising rates if inflation remains on track to stably hit 2% as it projects.On the other hand, Wednesday's US PCE data indicated that the progress on lowering inflation appears to have stalled in recent months, which could diminish the expectation for the Federal Reserve (Fed) to cut interest rates in 2025. This might trigger a modest bounce in the US bond yields, which provides some support to the Greenback. The markets are now pricing in nearly 62.8% odds that the Fed will cut rates by a quarter point in December, up from 55.7% earlier this week, according to the CME FedWatch Tool.

Japanese Yen FAQs

What key factors drive the Japanese Yen?

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

How do the decisions of the Bank of Japan impact the Japanese Yen?

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

How does the differential between Japanese and US bond yields impact the Japanese Yen?

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

How does broader risk sentiment impact the Japanese Yen?

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

Source: FXSTREET

Appetite on Wednesday was limited on both sides of the Atlantic Ocean. In the US, the crowded economic data came in mostly in line with expectations, confirming that the US economy grew 2.8% in Q3 – mostly explained by a robust 3% growth in sales, price pressures were slightly higher than expected but remained below 2%, as core PCE prices for last quarter decelerated faster than expected. Core PCE prices for October, however, posted a small uptick from 2.7% to 2.8%, parallel to market expectations and the initial jobless claims came in softer than pencilled in. Overall, there was no big surprise in recent data. And the latter gave comfort to investors that the Federal Reserve (Fed) will cut its rates by another 25bp when it meets in December. That probability advanced from around 65% to 68% and the US 2-year yield tipped a toe below the 4.20% level.

But the lower yields, and the first day of ceasefire between Israel and Hezbollah, couldn’t convince investors to buy more US equities into the Thanksgiving holiday. The aggressive reaction from both Mexico and Canada to Trump’s latest tariff threats certainly revived worries of higher business costs and lower profits. As such, the S&P500 closed Wednesday’s session a few points below the 6000 mark, Nasdaq 100 retreated 0.85% as Dow Jones closed in the negative after hitting a fresh record. Microsoft dropped more than 1% on fresh news that the FTC opened a fresh antitrust investigation into the company ‘drilling into everything’ – yes everything they do – while Apple resisted to the news that its iPhone sales barely grew this year as Android-based rivals gained ground in China and in other emerging markets.

Meme news. A drone company called Unusual Machines rallied 110% on news that Donald Trump Jr. – yes Trumps’s eldest son — has joined the company’s advisory board reminding ‘the need for drones is obvious’ and that they must ‘stop buying Chinese drones and Chinese drone parts’. Interestingly, the company warned in a regulatory file that Trump’s proposed tariffs on China could affect its ability to source drones critical to its B2C business.

Le drame

In Europe, things were much less fun – as it is usually the case. The Stoxx 600 extended losses, and not only because of Trump’s tariff threats, but also on the rising unease in French politics, where Marine Le Pen, the far-right leader – who gained ground in the latest elections, remember? – threatened Michel Barnier’s administration – that’s doing its best to control the country’s deteriorating finances and deficit – that she would bring his government down with a no-confidence vote if he doesn’t respect their budget demands.

Needless to say that the spread between the French and German 10-year yields is rising again, even though Germany has its own political problems – mind you – and is preparing to hold a snap election because people, there, are not happy with Scholz’s government either.

Thank God, the growing French headache remains localized, for now. The French CAC40 underperformed its European peers as French bank stocks took a hit on the political chaos, but the EURUSD rebounded well past the 1.05 level – and even advanced near 1.0590 recently following the other majors up against a broadly weakened US dollar. The worsening political scene in France and the widening yield gap between France and Germany, could however limit the single currency’s upside potential along with clashing opinions from the European Central Bank (ECB) members about how fast the bank should cut rates. ECB’s Schnabel said that the borrowing costs are no longer at a level that retrains the economy, while Luis de Guindos said – a day earlier – that more rate cuts were on their way. One thing is clear, though: while German representatives often sound more hawkish than their southern counterparts, Germany’s economy arguably relies on ECB support more than any other in the union at this point.

For now, the EURUSD has potential to extend a recovery following an aggressive selloff in November. Today, Germany and Spain will reveal their November early CPI figures. The figures are expected to print an uptick in price pressures this month. If that’s the case, the ECB doves could lose ground and let the euro bulls gain field. Also note that, the latest rise in European nat gas prices will somehow impact the inflation numbers in the coming months, and Europe is said to be facing the coldest winter since Russia invaded Ukraine and since the continent gave up on Russian energy supplies. The latter means that the gas reserves will decline faster than otherwise, adding a renewed pressure on gas and broader consumer prices. Such situation would limiting ECB’s rate cutting plans and throw a floor under the euro’s weakness. The next important target for the EURUSD recovery stands at 1.0672 – the minor 23.6% Fibonacci retracement on September to now selloff.

Elsewhere, the USDJPY benefited grandly from a broad-based dollar weakness to extend its retreat to 150 level. However, note that, released earlier this week, the Bank of Japan’s (BoJ) core CPI measures eased unexpectedly to 1.5%, a number that doesn’t necessarily back the BoJ normalization bets.