(from my colleague Dr. Win Thin)
EM FX ended the week on a mixed note. US jobs data may refocus market attention on Fed tightening. Most EM inflation readings this week are expected to show easing price pressures, supporting a dovish EM central bank outlook. The major exceptions are Mexico and Turkey, whose central banks may be forced to tighten policy in the coming weeks.
Indonesia reports November CPI Monday, which is expected to rise 3.4% y/y vs. 3.6% in October. If so, it would still be below the 4% target and in the bottom half of the 3-5% target range. Next policy meeting is December 14, no change is expected.
Turkey reports November CPI Monday, which is expected to rise 12.5% y/y vs. 11.9% in October. If so, it would still be above the 5% target as well as the 3-7% target range. If the lira comes under significant pressure again, we think the central bank will be forced to hike rates outright. Next policy meeting is December 14, no change is expected. October IP will be reported Friday, and is expected to rise 5.3% y/y vs. 10.4% in September.
Korea reports October current account data Tuesday. The trade surplus narrowed that month, and so we expect the current account surplus to follow suit. Still, the overall external accounts remain strong and thus won-supportive.
Philippines reports November CPI Tuesday, which is expected to rise 3.2% y/y vs. 3.5% in October. If so, it would still be above the 3% target and in the top half of the 2-4% target range. Next policy meeting is December 14, no change is expected if disinflation continues.
Hungary reports October retail sales Tuesday, which are expected to remain steady at 6.2% y/y. It then reports October IP Wednesday, which is expected to rise 6.7% y/y WDA vs. 8.1% in September. Central bank minutes will also be released Wednesday. October trade and November CPI will be reported Friday, with inflation expected to rise 2.6% y/y vs. 2.2% in October. If so, it would still be below the 3% target and 2-4% target range. Next policy meeting is December 19 and further easing is possible via unconventional measures.
