Week Ahead for FX, Bonds: All Eyes on U.S. -2-


Week Ahead for FX, Bonds: All Eyes on U.S. -2-

Inflation data too could show some signs of stronger demand.

The HSBC economists expect CPI inflation to be up in October from September, as the stimulus package may have slightly driven up nonfood demand and related prices. Producer price deflation may have eased.

MALAYSIA

Malaysia's central bank holds a policy meeting on Wednesday, where it is all but certain to continue keeping rates steady.

The country's economy continues to be a beacon of stability, with growth ticking along nicely and inflation well in hand. This benign domestic backdrop suggests there is no reason for Bank Negara Malaysia to change policy settings any time soon.

UOB economist Julia Goh said upside risks to inflation and a challenging global outlook further back the case for the bank to maintain the status quo on policy rates for a prolonged period.

ASIA PMI DATA

More manufacturing PMI prints are due Monday, including from Hong Kong, Singapore, and the Philippines.

After the latest round of October PMIs signaled that manufacturing conditions weakened across much of Asia at the start of the fourth quarter, the next batch of S&P survey data will be looked at to see which other economies show signs of softer industrial activity.

Recent PMI signals back Capital Economics' view that manufacturers in Asia will continue to struggle near term. Economist Shivaan Tandon expects global economic growth to weigh on Asia's export-based manufacturing sectors.

ASIA INFLATION DATA

South Korea, Thailand and the Philippines will release inflation prints for October on Tuesday. Taiwan follows on Wednesday.

A WSJ-compiled forecast puts South Korea's headline inflation at a new multi-year low last month, largely due to a high comparison base. CPI likely rose 1.4% on year, which would be the slowest pace since early 2021. The index likely ticked up 0.2% on a monthly basis in October, according to the poll.

UOB economists expect Thailand's inflation to have surged from a year earlier, driven by supply-side factors and a low base effect. On-month, price pressures were likely benign, but HSBC economists think inflation will return to the central bank's target by November. This could give the Bank of Thailand room to keep policy steady to help guide the economy's deleveraging cycle.

Philippines inflation is likely to have risen in October but Citi economists continue to expect it will stay relatively low for the rest of the year, and much of the first half of the next, keeping the path for another rate cut intact.

Taiwan's headline inflation probably softened last month, but resilience in private consumption and high housing prices will continue to limit the pace of disinflation for the core measure, HSBC economists said. The risk of an overheated property market has been a point of concern for Taiwan's central bank, which has rolled out some measures to cool activity.

PHILIPPINES

Philippines watchers will be looking at third-quarter economic growth data on Thursday.

ANZ Research analysts project growth at 5.7% on year versus 6.3% in the second quarter, citing softer private consumption and slower government spending.

Though the central bank began its easing cycle during the quarter, HSBC economists don't think the change in monetary stance has affected growth. Monetary policy remains restrictive, but growth should still be roughly intact, they said. That would help give the central bank confidence to ease policy rates gradually.

INDONESIA

Indonesia's third-quarter growth data will likely show that economic momentum has held steady in the populous country.

In the wake of the new government taking office, UOB economists think that new policy along with the continuation of capital-intensive projects will keep the economic growth trajectory tilted slightly higher.

They expect GDP growth to come in at 5.10%, roughly on par with the prior quarter.

--Any references to days are in local times.

--Additional reporting by Kimberley Kao, James Glynn, Megumi Fujikawa, Amanda Lee, Kwanwoo Jun, Ronnie Harui, Xiao Xiao, Jiahui Huang, Emese Bartha and Miriam Mukuru

Write to Jessica Fleetham at jessica.fleetham@wsj.com and Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com

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