Asian FX, stocks climb as U.S. inflation print lifts appetite

Most emerging Asian currencies and equities climbed on Monday as investors have seized on hints that easing U.S. inflation may give the Federal Reserve a leeway to scale back the size of its future interest rate hikes.

Leading gains in the region, the Indonesian rupiah USDIDR marked its highest level since Sept. 20, 2022 after gaining 1% in early trade. Thailand's baht USDTHB tracked gains for a second straight day and hit its highest level since March 2022 after appreciating up to 0.9%.

Data from last week showed U.S. consumer prices fell for the first time in over 2-1/2 years in December, boosting the case for the central bank to ease off from its hawkish monetary policy.

"It looks like we continue to see inflation expectations being priced out from the market post the U.S. CPI number last week that showed softening, hence, a risk-on sentiment supports EM currencies now," said Junvum Kim, sales trader at Saxo Markets.

Indonesia, which witnessed an export boom last year due to high commodity prices, saw its trade surplus narrow more than expected in December as export growth weakened while imports slumped, according to data from the statistics bureau.

Investor focus is also on a monetary policy meeting due this week by the central bank of Indonesia, Southeast Asia's largest economy.

Elsewhere in Asia, the Malaysian ringgit USDMYR firmed 0.6%, the Philippine peso USDPHP gained 0.8% and Singapore's dollar USDSGD added 0.1%.

The Chinese yuan USDCNY largely remained listless, while Shanghai stocks 000001 gained after health officials said COVID-19 infections in the region likely peaked.

Separately, a Reuters poll showed China's gross domestic product in the fourth quarter of 2022 likely grew only 1.8% from a year earlier as pandemic controls intensified, slowing from the third-quarter's 3.9% annual pace.

Most stocks across the region continued to mirror the upbeat global sentiment, with MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) gaining 0.9%, with hopes for a speedy Chinese reopening giving it a 4.2% gain last week.

"Given the upcoming Chinese New Year holiday next week, the current momentum on broad-based U.S. dollar weakness shouldn't change much as China reopening has been one of the main drivers behind the recent strength particularly in commodity currencies," Kim said.

Stocks in Philippines (.PSE) jumped the most, with a 2% gain, while shares in South Korea KOSPI, Taiwan TAIEX and Thailand SET rose between 0.4% and 0.7%.

Stocks in Malaysia BURSA and Singapore STI edged lower.

HIGHLIGHTS:

** Thousands of Indonesian workers protest against president's job decree

** Japan's Nikkei dives 1% as BOJ capitulation bets push up yen

** Indonesia palm oil export curbs, biodiesel plans to hit world vegoil supplies