EM FX was mixed on Friday, but largely firmer over the entire week. Top performers were BRL, KRW, and ZAR, while the worst were ARS, MXN, and RUB. The FOMC meeting this week poses some potential risks to the global liquidity story that’s supporting EM. Within EM, the low inflation/easy monetary policy narrative should continue with data and events this week.

Singapore reports June CPI Monday, which is expected to rise 0.7% y/y vs. 1.4% in May. It then reports June IP Wednesday, which is expected to rise 6.5% y/y vs. 5.0% in May.  Price pressures remain low while the real sector has been a bit sluggish. As such, the MAS may maintain its forward guidance to keep the current policy neutral “for an extended period” at the semi-annual policy meeting in October.  

Taiwan reports June IP Monday, which is expected to rise 1.9% y/y vs. 0.8% in May. It then reports Q2 GDP Friday, which is expected to grow 2.3% y/y vs. 2.6% in Q1. The economy remains a bit sluggish, even as price pressures remain low. This should allow the central bank to keep rates on hold at the next quarterly policy meeting in September.

Mexico reports mid-July CPI Monday, which is expected to rise 6.25% y/y vs. 6.30% in mid-June. If so, inflation is topping out with some help from the firmer peso. As such, we think rate hikes have ended for now. Next policy meeting is August 10, no change is expected then. Mexico then reports June trade Thursday.

South Africa reports Q2 unemployment Tuesday, which is expected to remain steady at 27.7%. The real sector remains weak. SARB surprised markets with a 25 bp cut to 6.75% last week, a little earlier than expected. Now that the door has been opened, further cuts are likely at the September 21 and November 23 meetings.

COPOM meets Wednesday and is expected to cut rates 100 bp to 9.25%. IPCA inflation was only 2.78% y/y in mid-July, the lowest since 1999. This is below both the 4.5% target and the 3.0-6.0% target range, and so 100 bp rate cuts are likely to continue. Brazil then reports central government budget data Thursday, followed by consolidated data Friday.