Asia week ahead: Central bank meetings continue

US data to drive the greenback

The spotlight had been on monetary policy this week, focusing in particular on the Federal Reserve. While the 25-basis point cut for policy rates came through as expected, guidance had been on the mixed end, which saw to the greenback strengthening post-meeting. Even as the US dollar index, measured against six major currencies, receded into Friday, prices remain largely supported in an uptrend that remains intact. Given the deviation we have seen this week between the market and the Fed’s view on interest rates, look to the likes of the slew of data alongside geopolitical issues such as US-China trade negotiations to continue driving the greenback movements in the coming week.

For the coming week, key US releases due include the likes of September’s conference board consumer confidence index, the third reading of US’ Q2 GDP and August’s core PCE, among others. The preliminary Markit manufacturing PMI will also be released for various advanced economies including the US, eurozone and Japan on Monday. A broadly softer set of numbers are expected for indicators such as the consumer confidence and manufacturing PMI for the US. For the key GDP and core PCE figures, they are expected to remain unchanged from previous. Disappointments here could see to increased Fed cut bets that could pressure the greenback though amid the uncertainties, this sideway trade may well sustain.

Source: IG Charts

Asia Pacific central bank meetings

The series of central banks had mostly seen to rate cuts or an easing bias this week and this tone is expected to be no different in the coming week with more Asia Pacific central banks set to convene. The Reserve Bank of New Zealand (RBNZ) is due to announce their monetary policy decision on Wednesday, though no changes are expected this meeting after an extensive 50 basis point cut in the previous round. Bank of Thailand (BoT) sits a little on the fence though growing calls for a 25bps cut amid deteriorating economic indicators may see to the realization in the upcoming meeting. As for the Bangko Sentral ng Pilipinas (BSP), governor Benjamin Diokno may not have made it any clearer with Friday’s comments that a rate cut is coming, citing risks to the economy and policy room for further easing.

Other data due in the week including China’s August industrial profits. For the local Singapore market, August’s CPI and industrial production will be released on Monday and Thursday respectively.