- China data deluge will start Tuesday, with June CPI to be reported. A rate of 2.5% y/y is expected vs. 2.1% y/y in May. Trade comes next around mid-week, with exports seen rising 3.7% y/y vs. 1% y/y in May and imports seen rising 6.0% y/y vs. -0.3% y/y in May. New loan data will come out sometime over the next week, with consensus at CNY800 bln vs. CNY667 bln in May. CNY has traded largely sideways since mid-May, and we believe that will continue in Q3.
- Thailand central bank meets Wednesday, and is expected to keep rates steady at 2.5%. Last policy move was a 25 bp cut in May that restarted the easing cycle after six months of steady rates. While the pace of easing is likely to remain slow, we think rate cuts will continue as inflation remains very low (core 0.9% y/y vs. 0.5-3.0% target range) and the economy continues to slow. USD/THB made a new high for this move today near 31.50, and further gains to 32.00 are likely. Support seen near 31.00 and then 30.50.
- Brazil central bank meets Wednesday and is expected to hike rates 50 bp to 8.5%. However, we think there is a chance of a hawkish surprise 75 bp hike, as we think policymakers now understand the risks of their dovish policy stance of the past year. Retail sales and monthly GDP proxy will be reported Thursday and Friday, respectively. For USD/BRL, support seen near 2.25 and then 2.20, resistance seen near 2.2770 and then 2.30.
- Korea central bank meets Thursday, and is expected to keep rates steady at 2.5%. Last policy move was a 25 bp cut in May that restarted the easing cycle after six months of steady rates. While the pace of easing is likely to remain slow, we think rate cuts will continue as inflation remains very low (1.0% y/y vs. 2-4% target range) and the economy continues to slow. For USD/KRW, support seen nears 1140 and then 1130, resistance seen near 1160 and then 1185.
- Indonesia central bank meets Thursday, and is expected to hike rates 25 bp to 6.25%. This would be the second hike in the cycle after the 25 bp move in June, and rising price pressures are likely to keep BI in tightening mode for now. USD/IDR seen trading near the 10,000 area for now. Support seen near 9900 and then 9800, resistance near 10,100 and then 10,200.
- Malaysia central bank meets Thursday, and is expected to keep rates steady at 3.0%. Policy is seen remaining on hold for now, but low inflation is low enough to give the central bank cover to cut rates later this year if needed. For USD/MYR, support seen near 3.15, resistance seen near 3.22 (June high) and then 3.25.
- Chile central bank meets Thursday, and is expected to keep rates steady at 5.0%. Q2 GDP growth is tracking about 4% y/y though May, and compares to 4.1% y/y in Q1 and well below the 5.6% posted for all of 2012. Yet the central bank is not cutting rates, even with lower inflation, as retail sales remain very strong at +13.2% y/y in May and +11.2% y/y in April. As long as consumption is so strong, we see no move in rates. For USD/CLP, support seen near 505 and then 500, resistance seen near 510, 517, and then 523.
- Mexico central bank meets Friday, and is expected to keep rates steady at 4.0%. Ahead of that, Mexico will report June CPI Tuesday. Headline expected at 4.1% y/y vs. 4.6% y/y, while core seen easing from 2.9% y/y to 2.8% y/y. Despite the slowing economy, we do not think the central bank is in any hurry to cut rates, as inflation remains above the 2-4% target range. Future cuts are possible, but this July meeting seems too early. Next meeting September 6 is possible, but will depend in large part on the data and on the peso. For USD/MXN, support seen near 13.0 and then 12.80, resistance seen near 13.20 and then 13.45.
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(from my colleagues Dr. Win Thin and Ilan Solot)