(from my colleague Dr. Win Thin)

EM FX ended the week on a mixed note, as investors await fresh drivers. US jobs data on Friday could provide more clarity on Fed policy and the US economy.  Within EM, many countries are expected to report lower inflation readings for June that support the view that most EM central banks will remain in dovish mode for now. We remain cautious on the EM asset class near-term.   

Caixin reports June China manufacturing PMI Monday, which is expected at 49.8 vs. 49.6 in May. Official manufacturing PMI was already reported at 51.7 vs. 51.2 in May. While the two series often diverge, we warn of upside risk to the Caixin reading. For now, markets are comfortable with China’s macro outlook.

Thailand reports June CPI Monday, which is expected to remain flat y/y. This remains well below the 1-4% target range. Bank of Thailand meets Wednesday and is expected to keep rates steady at 1.5%. Indeed, with no price pressures to speak of, we believe rates will remain steady into 2018.

Indonesia reports June CPI Monday, which is expected to remain steady at 4.3% y/y. This remains well within the 3-5% target range. Bank Indonesia next meets July 20 and is expected to keep rates steady at 4.75%. While the bank has signaled an end to the easing cycle, we do not see any tightening in 2017.

Turkey reports June CPI Monday, which is expected to rise 11.2% y/y vs. 11.7% in May. If so, this would be the lowest since February but still well above the 3-7% target range. Next policy meeting is July 27 and no change is expected then. Until inflation has fallen significantly more, we believe rates will be kept steady.

Chile central bank releases minutes Monday. Chile also reports May retail sales Monday, which are expected to rise 2.8% y/y vs. -0.4% in April. Chile then reports June CPI and trade Friday. CPI is expected to rise 2.0% y/y vs. 2.6% in May. If so, this would be the lowest since October 2013 and would be right at the bottom of the 2-4% target range. Next policy meeting is July 13 and no change is expected then.