EM FX stabilized last week as the situation in Turkey calmed somewhat. Reports Friday that the US and China are hoping to resolve the trade dispute also helped EM FX ahead of the weekend. However, TRY remains vulnerable as the US threatens more sanctions due to the pastor. Both S&P and Moody’s downgraded it ahead of the weekend and our own ratings model points to further downgrades ahead. Turkish markets are closed this week for the holiday.
Thailand reports Q2 GDP Monday, which is expected to grow 4.4% y/y vs. 4.8% in Q1. CPI rose 1.5% y/y in July, which is still in the bottom half of the 1-4% target range. The Bank of Thailand has signaled that it is in no rush to hike rates. The next policy meeting is September 19, no change is expected then.
Poland reports July industrial and construction output and PPI Monday. July real retail sales will be reported Wednesday, which are expected to rise 7.4% y/y vs. 8.2% in June. Central bank minutes will be released Thursday. Despite rising price pressures, the central bank has maintained its ultra-dovish forward guidance of steady rates through 2019. The next policy meeting is September 5, no change is expected then.
Taiwan reports July export orders Monday, which are expected to rise 2.1% y/y vs. -0.1% in June.It also reports Q2 current account data that day. Exports and export orders have slowed in recent months. July IP will be reported Thursday, which is expected to rise 3.0% y/y vs. 0.4% in June. The central bank does not have an explicit inflation target, and so downside risks to growth should allow it to remain on hold at its next quarterly policy meeting in September.
Chile reports Q2 GDP and current account data Monday. Growth is expected at 5.2% y/y vs. 4.2% in Q1. CPI rose 2.7% y/y in July, which is in the bottom half of the 2-4% target range. However, robust growth has led the bank to signal the likely start of the tightening cycle in Q4. The next policy meeting is September 4, no change is expected then.
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