SYDNEY (Reuters) – Asia’s factories are reporting a generalised loss of momentum that speak volumes about the need for more policy stimulus, on top of Japan’s latest efforts to ignite growth.
Readings on Japanese activity were delayed by a holiday but will likely be overshadowed by the central bank’s decision on Friday to expand its already massive asset buying programme in a sudden change of tack that stunned financial markets.
The bold move has raised expectations the European Central Bank will eventually have to bite the bullet on quantitative easing, even if not at its meeting on Thursday.
“In this environment of subdued growth and long-term low-flation, we expect the ECB to announce the purchase of government bonds of euro area member states by early next year at the latest,” said Apolline Menut, an analyst at Barclays.
That outlook is one reason the euro caved to a fresh two-year trough of $1.2444 on Monday, and why the dollar reached a seven-year peak on the yen at 112.98.
The relative outperformance of the US economy should be evident in the ISM survey of manufacturing out later on Monday which is expected to hold at a healthy 56.2 in October.
The October payrolls report on Friday is also forecast to show a solid increase of around 231,000.
In South Korea, new export orders were down for a third straight month and at the lowest in 14 months.
The overall HSBC/Markit PMI for South Korea fell to a seasonally adjusted 48.7 in October, from 48.8 in September, the lowest since June.
Even Taiwan’s privileged position as a major supplier of Apple products could not prevent some slowing as its PMI slipped to the lowest in 13 months at 52.0.