Asia week ahead: Key data on Australia, China, India, Japan, Korea, Philippines
In the forthcoming week, critical macroeconomic indicators from key Asia-Pacific economies will set the stage for market direction, notably the GDP releases from India and Australia as highlighted by the full note source. With Australia's GDP projected to decelerate to 1.8% year-on-year in Q2 due to a struggling housing sector, traders will be particularly focused on potential implications for the Reserve Bank of Australia's monetary policy stance. Conversely, India's growth is expected to remain robust at 7.5%, sustaining its outperformance relative to regional peers and bolstering the INR's resilience amidst global trade headwinds.
What the desk is arguing
The desk is of the view that Australia's slowing GDP growth coupled with India's robust economic performance will influence regional currency valuations. Per the full note source, the anticipated decline in Australian GDP reflects weakness in the housing sector and affects sentiment towards the RBA's policy trajectory, despite inflation pressures that may instill caution against rate cuts.
In India, the expected GDP growth rate of 7.5% indicates strong domestic demand and robust private consumption, suggesting that the INR could remain relatively stable or even appreciate as a result of favorable economic fundamentals. High-frequency indicators support this positive outlook, showcasing resilience amid global trade challenges.
Where it sits in our coverage
Our current consensus target for AUD/USD is 1.075, with a range between 1.04 and 1.12. Key firms with targets include: - jpmorgan: 1.10 (Mar 26) - bofa: 1.04 (Mar 26)
This desk’s view anticipates AUD weakness aligning with the lower end of the spectrum, given the deceleration in GDP growth in Australia. Conversely, the outlook for the INR aligns with bullish sentiments stemming from India’s solid growth outlook, challenging the views prevalent in some market narratives.
How other firms see it
Firms such as jpmorgan have aligned views on the challenges facing the AUD, expecting depreciation, while bofa presents a contrary perspective with more bearish targets. As sentiment shifts, monitoring the AUD/USD and INR against USD trajectories will be crucial, particularly as these currencies respond to domestic economic signals, RBA policy updates, and general market sentiment.
What the calendar says
With no high-impact events currently scheduled in the next 30 days, the immediate market focus will be on the GDP data releases from Australia and India. Market participants should prepare for potential volatility based on these economic indicators, particularly as the releases could influence currency positioning ahead of the upcoming RBA meeting.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Australia's GDP growth is set to slow to 1.8% YoY in Q2.
- 02India's GDP growth is expected to remain strong at 7.5% YoY.
- 03Market positioning ahead of the RBA decision could impact AUD adversely.
- 04The resilience of the INR may continue against regional peers.
Market implications
Traders should watch the AUD/USD approaching the consensus target of 1.075, as key GDP releases could prompt shifts in monetary policy expectations. Any substantive deviation from forecasts could catalyze a significant market reaction, particularly around risk-on or risk-off sentiment.
Risks to this view
A stronger-than-expected Australian GDP print or aggressive rhetoric from the RBA could reverse the current bearish outlook on the AUD. Conversely, if India's growth shows signs of deceleration, this could undermine the INR's strength and influence broader market dynamics.
Articles Asia week ahead: Key data on Australia, China, India, Japan, Korea, Philippines Published 07:49 Asia week ahead Australia China Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download GDP releases from India and Australia are the main events, along with China's purchasing managers' indexes, Philippines' inflation, Japan's retail sales and industrial production and South Korea's trade and inflation Deepali Bhargava and Lynn Song Asia Research highlights of the week Will AI become the Great Equaliser? Singapore inflation surprises lower, but upside risks keep MAS on tightening watch Philippines’ central bank stays hawkish as inflation risks remain elevated India: Growth remains robust despite moderation We expect India's GDP growth to ease modestly to 7.5% year-on-year, but the economy should continue to outperform most regional peers. High-frequency indicators point to resilient domestic demand, particularly in private consumption.
At the same time, exports have remained more resilient than expected amid global trade headwinds. Overall, the growth backdrop remains constructive, underpinned by strong domestic fundamentals and continued momentum in both services and manufacturing activity. Australia: GDP growth set to slow in 2Q We expect Australian GDP growth to slow to 1.8% YoY in 2Q, reflecting ongoing weakness in the housing sector – including declining house prices – and softer residential investment.
The release will be closely watched following the upside surprise in July inflation, which has markets pricing in a higher probability of another Reserve Bank of Australia rate hike. However, we continue to lean towards the RBA remaining on hold. China: PMIs to rebound but remain in contraction China releases its August PMI data on Monday.
We expect a modest rebound in both the manufacturing and non-manufacturing PMIs, to 49.5 and 49.4, respectively. Strong external demand, combined with continued implementation of existing investment and industrial-upgrading policies, may support manufacturing activity. But persistently weak domestic demand is likely to keep both indices below the 50 threshold.
Philippines: Headline inflation expected to ease We expect headline inflation in the Philippines to soften modestly to 6.0% YoY amid lower retail fuel prices. Core inflation pressures, though, should remain elevated, with food inflation continuing to pick up. Japan: Production to slow as retail sales rebound Japan releases its July industrial production and retail sales data on Monday.
Market consensus expects industrial production growth to moderate to 3.5% YoY, down from 4.9%. Meanwhile, the market expects retail sales growth to accelerate to 3.1% YoY, from a revised 0.6% in June. South Korea: Trade to moderate as inflation accelerates Korea will release its August trade and inflation data on Tuesday and Wednesday, respectively.
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