The Reserve Bank of New Zealand held its official cash rate steady at 5.50% at its July meeting, staying in what Gov. Adrian Orr likes to call watch-worry-and-wait mode. However, it dialed back its hawkish tone somewhat, noting that inflation pressures are starting to ease in what some economists said could be setting the stage for a dovish pivot.
"Timely indicators continue to point toward a gradual easing in price and wage pressures in Australia and New Zealand," Goldman Sachs economists said. Their base case remains for the Reserve Bank of New Zealand to start cutting in November, but downside surprises in CPI and/or labor market data could allow the central bank to act on its new easing bias.
The week also features Australia labor force data for June on Thursday as well as the Reserve Bank of Australia bulletin.
JAPAN
Japan reports provisional trade figures on Thursday, followed by nationwide consumer inflation data on Friday--both for June.
The inflation data will be looked at for signs of rising price pressures that could influence the Bank of Japan's policy stance. Attention will also be paid to any comments on the yen amid renewed volatility. Calculations based on data from the BOJ and private money brokers suggest that Japan carried out yen-buying intervention on Thursday.
ING economists expect inflation to have edged up on year, as suggested by Tokyo CPI and producer price data. They noted that the BOJ has expressed concern about exchange rate pass-through inflation, and think that solid wage growth is likely to fan inflation in the coming months.
Meanwhile, the Ministry of Finance is slated to hold an auction of Y350 billion in five-year climate transition JGBs on Thursday.
Market participants might also monitor the BOJ's scheduled JGB purchases for any possible reductions in the amounts to be bought ahead of the central bank's monetary-policy meeting at the end of this month. The BOJ plans to buy one-year to three-year JGBs, five-year to 10-year sovereign notes, and 10-year to 25-year government securities on Wednesday.
SINGAPORE
A light week for Singapore features June non-oil domestic exports data on Wednesday.
The June data will be watched for further signs of improvement in the city-state's non-oil domestic exports after May's print marked the mildest decline in 20 months.
Stronger exports could firm the outlook for the city-state's economic growth this year after advance second-quarter data pointed to more robust momentum in the first half of 2024 after a weak 2023. The small, open economy relies heavily on trade and signs of softer momentum abroad could dent growth at home.
Barclays economists expect that an unfavorable base effect might have submerged exports into a deep decline again in June.
INDONESIA
Indonesia's central bank is widely expected to stand pat on Wednesday, keeping a watchful eye on the rupiah.
Bank Indonesia Gov. Perry Warjiyo said there might be room for the policy rate to be cut in the fourth quarter if the rupiah stabilizes, but for this, "we almost certainly need to see the Federal Reserve starting its easing cycle in September, leading to a weaker USD and allowing the IDR to strengthen," ING economists said.
The rupiah has been on stronger ground versus the dollar recently, which will likely come as a relief for the central bank and reduces the need to hike its policy rate further, Barclays economists said.
Indonesia releases trade data for June on Monday.
MALAYSIA
Flash estimates on Friday will likely show that Malaysia's economy continued growing in the second quarter of the year.
Barclays economists expect an increase in mining and oil palm production to have lifted GDP growth, with further support coming from services and consumption.
Economists at UOB also project further improvement on the back of low base effects, increasing tourism, continued investment flows, and recovering external trade.
Continued economic momentum would add to expectations that the central bank is in no rush to tweak policy settings any time soon, feeling no pressure to stimulate growth nor tame inflation that continues to be stable.
(All references to days are in local times.)
--Additional reporting by Ronnie Harui, James Glynn, Xiao Xiao, Paul Vieira, Emese Bartha, Joshua Kirby, Renae Dyer and Megumi Fujikawa
Write to Jessica Fleetham at jessica.fleetham@wsj.com and Fabiana Negrin Ochoa and fabiana.negrinochoa@wsj.com
(END) Dow Jones Newswires
07-14-24 1814ET
