Asia week ahead: Central banks and GDP figures

A smorgasbord of data awaits investors in the coming week. 

Stock Market
Source: Bloomberg

It’s difficult to pinpoint any particular ones to watch out for. All in all, most of them will provide insights of the state of the world economy, as well as regionally.

 

Fed, RBA minutes

There are some that you should definitely pay more attention to. For starters, the Federal Reserve will release minutes to the July 26-27 FOMC meeting. The Fed expressed slightly more confidence in the US economic outlook, as the May jobs data shocker was deemed an outlier. They also see receding risks in the near term, especially those emanating from the UK referendum. While the latest non-farm payrolls numbers were stronger than expected, which raised market expectations that further rate hikes are still on the cards. Of course, this would not be reflected in the minutes, as the data was released after the meeting.

What investors will look out for is language reinforcing the view that the FOMC is predisposed towards a rate hike if economic data outperform in the months ahead. In that regard, US consumer prices and housing data will be watched closely in conjunction.

The Reserve Bank of Australia (RBA) will also publish the minutes to the 2 August meeting, where the Bank cuts cash rate from 1.75% to another record low of 1.5%. Governor Glenn Stevens said recently that while inflation is going to stay low for the time being, it is unlikely that RBA will undertake unconventional policy such as the ‘helicopter money’ or negative interest rates.

Meanwhile, Bank Indonesia is going to set its monetary policy. Market is expecting a 25bps cut in the reference interest rate to 6.25%. The Bank of Thailand will release its policy meeting held on 3 August, where they maintained policy rate at 1.5%, unchanged since April 2015.

 

GDP performance

Several Asian countries are expected to release their Q2 GDP figures, including Japan, Taiwan, Thailand and the Philippines.

Japan’s Q2 GDP will be announced on 15 August. The consensus is expecting a slower growth of 0.7% QoQ, seasonally adjusted and annualised, down from 1.9% in Q1. A significant miss in actual number could add pressure for the Bank of Japan to ease further. The Bank of Japan  will be meeting next on 20-21 September. It will also bring greater urgency for PM Abe’s ¥28 trillion fiscal stimulus package to be implemented as quickly as possible.

Singapore is poised to report their June retail sales and July NODX exports. Local observers will be keen to monitor trade performance, after the government narrowed its 2016 GDP forecast from 1-3% to 1-2%. The revised projection is indicative of a deterioration in the risk assessment in the government’s view. Put simply, it implies that H2 growth in the island-state may weaken below 2%.

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