Trade, manufacturing, and inflation releases dominate next week’s Asian economic calendar, but the trade war will continue to dominate headlines. With several other important events lined up, we are in for another exciting month
The trade war will persist as a major overhang on global and Asian markets. The consultation period for further US tariffs on China ends next week (5 September) after which Washington could impose duties on another $200 billion worth of Chinese goods. China has pledged $60 billion of retaliatory tariffs on US products.
We believe the markets are pretty much priced for this oncoming trade risk and are unlikely to be jolted by it. Hopefully, a stable start to the new month will also bring more clarity on a host of other important economic issues in developed markets; the Fed’s tightening cycle, the ECB tapering timeframe, and the Brexit deal. And if that's not enough, the contagion risks from emerging economies continue to linger with Argentina and Turkey remaining on edge, so we'll be in for a month full of excitement and elevated market volatility.
On the data front, next week in Asia is packed with trade, manufacturing and inflation releases from across the region. There is little on the policy front except for a Malaysian central bank (BNM) meeting which will likely be a non-event, though ugly inflation data from the Philippines will keep the central bank there (BSP) on its toes.
Woes in Argentina and Turkey are back in the limelight again. We don't anticipate much contagion to Asian FX, but there are signs of weakness today