Week Ahead for FX, Bonds : Fed, BOE Among Slew of -2-

A busy week lies ahead for China, headlined by a slew of May economic data releases that will offer fresh insight into how the world's second-largest economy is faring amid a prolonged conflict in the Middle East.

The data, including industrial production, retail sales and fixed-asset investment, are expected to indicate overall improvement and signal economic resilience despite macro headwinds.

Amid a continuing export boom, DBS economists forecast China's industrial production growth to jump to 4.6% on year in May, up from 4.1% in April, thanks to strong external demand for AI-related electronics. The improvement should align with the latest high-tech manufacturing and equipment manufacturing PMI readings, which both strengthened last month.

Meanwhile, ANZ expects retail sales growth to pick up to 1.0% in May, up from 0.2% in the previous month on an improvement largely from an extended Labor Day holiday. Analysts broadly agree that domestic consumption remains subdued, with DBS economists highlighting weak household sentiment continuing to weigh on spending amid uncertain employment prospects, slower income growth and elevated precautionary savings.

May fixed-asset investment readings will also be closely watched. DBS expects year-to-date investment to contract 2.0% in May from a year earlier, as companies continue to navigate the government's ongoing crackdown on overcapacity and aggressive price competition.

Beijing will release its latest house price index as markets watch for signs of whether the prolonged downturn in housing prices, which has been a key drag on household wealth, will continue to deepen.

Investors are also monitoring May's foreign direct investment data release.

Australia/New Zealand

Australia's central bank will make its interest-rate decision Tuesday, which is widely expected to maintain the official cash rate at 4.35% as policymakers wait on more data to show the Iran conflict's impact on the economy.

The Reserve Bank of Australia raised rates by 25 basis points at each of its past three meetings in an effort to dampen inflation, fully reversing the cuts made in 2025.

Data has since shown that consumer-price growth slowed in April, but largely due to a temporary fuel tax cut. Markets anticipate at least one more rate rise by end-2026, with UBS economists among those tipping August as the most likely window.

Top of the docket in New Zealand is GDP for the three months through March, with economists expecting a strong bounce back from tepid quarterly growth of 0.2% at the end of 2025.

The headline number, due Thursday, will be interesting because New Zealand's central bank forecast GDP growth of 1.0% last month.

ASB economist Kim Mundy doesn't expect the RBNZ's forecast will be met. ASB is tipping a GDP rise of 0.8% on quarter, and a 1.0% increase on an annual basis. "We expect the data to be consistent with an economy that was gaining traction," ASB says. "However, pockets of weakness will still be visible."

Westpac's Michael Gordon is more bullish, anticipating a 1.0% rise in quarterly GDP. The impact of the conflict in the Middle East on economic output is more likely to be apparent in the second quarter. Gordon adds that GDP is the only major data release before the RBNZ's rate decision in July, and it would need to be a large surprise to shift policymakers' thinking.

Taiwan

Taiwan's central bank will hold its June-quarter monetary policy meeting on Thursday, the first since May inflation rose above the 2% threshold - a level not breached in a year.

Taiwan was one of the few holdouts in the wave of monetary easing last year, and it could possibly be one of the few to not hike this year as growth continues to be powered by AI-driven demand for exports and inflation remains manageable so far.

While most economists expect the central bank to stand pat for another quarter, Barclays economists see a chance of a 12.5-basis-point hike in the June meeting. Higher inflation, the building pressure on the Taiwan dollar from other central banks' tightening, and high oil prices could nudge the CBC to deliver a surprise hike.

Indonesia

Bank Indonesia already delivered an emergency rate hike to bolster the ailing rupiah, and markets will be keen to see if it does so again.

The central bank could tighten by another 25 basis points at Thursday's regularly scheduled meeting, some economists say, as the currency remains under pressure.

Others, including at ING, think BI will hold steady after the off-cycle move.

ING reckons the central bank will prioritize alternative measures to attract foreign capital inflows and steady the rupiah. Still, supporting the currency while mitigating downside risks to economic growth is a delicate balancing act.

Philippines

The Philippine central bank is widely expected to deliver a rate hike on Thursday as inflation remains uncomfortably strong despite a pullback in May.

As inflationary pressures persist, markets are betting that Bangko Sentral ng Pilipinas will probably tighten further even at the risk of imperiling growth.

"Like an acrobat that balances on a tightrope, the Bangko Sentral ng Pilipinas is in a tough but delicate balancing act," said HSBC economist Aris Dacanay.

While the economy's growth is well below potential, inflation is running hot, and given the BSP's price-stability mandate, Dacanay expects a 50-basis-point hike ahead.

Malaysia

Malaysia will release its May inflation and trade data on Friday.

Headline inflation is expected to edge up to 2.0% in May from 1.9% in April, driven by low base effects and modest energy cost pass-through, though fuel subsidies and stable food prices are likely to keep inflation contained, DBS economists Taimur Baig and Samuel Tse said in a note.

Meanwhile, export growth is projected to accelerate to 40.0% from 36.9%, mainly supported by AI-driven electronics demand and stronger energy shipments.

Singapore

Singapore will release non-oil domestic exports data for May on Wednesday, showing how trade has fared amid prolonged supply-chain disruptions.

Barclays analysts think exports growth likely accelerated, boosted by a favorable base effect and continuous semiconductor demand.

The Monetary Authority of Singapore's June survey of professional forecasters is due on Wednesday.

The report will show if experts polled by the central bank have adjusted their growth forecasts to account for the price shock brought about by the conflict in the Middle East.

Any references to days are in local times.

Write to Renae Dyer at [e-mail] and Jihye Lee at [e-mail]

(END) Dow Jones Newswires

06-14-26 1714ET