China exports jump 36% as MAS surprises by holding policy

China's exports rose 36.3% from a year earlier in September in US dollar terms, customs data showed on Wednesday, Oct. 14. That was well above the 25.5% forecast in a Reuters poll and up from 25% growth in August. On the same day, the Monetary Authority of Singapore kept its policy settings unchanged. All 10 analysts polled by Reuters had expected it to tighten.investinglive+3

The two decisions came as the US dollar weakened slightly in Asian trading ahead of US consumer price data for September. Investors are watching that release for signs of whether the Federal Reserve will raise interest rates.marketwatch+1

China's trade and prices

Exports reached $447.18 billion, the fastest growth since February. Imports rose 31% to $313.65 billion. Trading Economics said demand for Chinese-made parts used in AI data centers drove the gain. It also reported that exports to the US rose 9.8% as trade tensions eased, while shipments to ASEAN countries climbed 28.7%. Bloomberg reported that China's trade surplus for the year so far is nearing $940 billion.firstpost+2

Producer prices rose 5% from a year earlier, beating the 4.5% forecast and marking the fastest increase since June 2022 as oil and commodity costs climbed. Consumer inflation edged up to 0.9%, below the 1% expected, and core inflation held at 1%. That points to weak domestic demand that limits how much of the higher costs reach consumers.investinglive

The Australian and New Zealand dollars gained after the trade data. South Korea's Kospi rose and Japan's Nikkei 225 gained 0.5%, MarketWatch reported.marketwatch+1

Singapore pauses

The central bank left the rate of appreciation, width and center of its exchange-rate policy band, known as the S$NEER, unchanged. It said risks to inflation remain tilted to the upside. MAS said it is "well-positioned to respond to any risk to medium-term price stability," according to MarketWatch. The bank had tightened in April and again "very slightly" in July. Before the meeting, UOB, Barclays and Bank of America had each forecast that the slope of the band would be raised to 1.5% a year.businesstimes+4

The Singapore dollar weakened slightly after the decision. The Straits Times Index was flat.marketwatch

US inflation ahead

Economists surveyed by The Wall Street Journal News Corp ↘ 0.54% expect annual US inflation to have risen to 3.6% in September from 3.4% in August. Core inflation is expected to hold at 2.4%, while higher gasoline prices push the headline rate up. Brent crude traded near $107 a barrel amid tensions in the Middle East.investinglive+1

MUFG's Michael Wan said the US data "will be the key test of whether the recent repricing toward a Fed hold in October can be sustained".marketwatch