Focus will stay trained on the yen and comments from officials as the currency's rout continues. Japanese Finance Minister Shunichi Suzuki again reiterated that currency moves will be carefully monitored.
The steady decline in U.S.-Japan interest-rate differentials for the past two months argues for a 140 handle in USD/JPY, UOB's Global Economics & Markets Research team said, rather than current levels of about 161. "We still think markets would eventually revert to fundamentals and USD/JPY would thus peak and normalize lower."
MALAYSIA
Like most of its peers, Malaysia's central bank is tipped to hold rates steady at its meeting on Thursday.
In focus is any comment on the inflation impact of the government's long-awaited winding back of subsidies, which finally began with the hiking of diesel prices. While the diesel subsidy cut is unlikely to make a big splash, anticipated cuts to subsidies for a more widely used fuel--RON95--is expected to keep inflation forecasters on their toes.
Despite the degree of uncertainty, as long as inflation is within the central bank's forecast range, it shouldn't warrant a rate hike, HSBC economists said. While the possibility of a hike is higher than a cut, neither is HSBC's base case and it still thinks Bank Negara Malaysia will hold through 2025.
Analysts at BMI, a unit of Fitch Solutions, also call for a rate hold in July, noting that the ringgit's performance this year--supported by Bank Negara's intervention--has reduced the need for further policy tightening. However, they warn that higher civil-servant salaries and a restructured national pension fund could pose upside risks to inflation.
SINGAPORE
In Singapore, advance estimates for gross domestic product in the second quarter are due out Friday.
Traders will be looking to see if the economy has picked up momentum from the first quarter, when it grew 2.7% from a year earlier, extending the 2.2% expansion recorded in the final quarter of 2023.
Barclays economists expect a rebound in manufacturing activity, driven by the semiconductor segment, and still-resilient services activity to have pushed growth higher.
In late May, the Ministry of Trade and Industry said Singapore's GDP growth forecast for 2024 has been maintained at 1.0% to 3.0%.
(All references to days are in local times.)
--Additional reporting by Emese Bartha, Renae Dyer, Miriam Mukuru, Paulo Trevisani, James Glynn, Megumi Fujikawa, Xiao Xiao, Ying Xian Wong and Ronnie Harui
Write to Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com and Jessica Fleetham at jessica.fleetham@wsj.com
(END) Dow Jones Newswires
07-08-24 0314ET
