EM ended the week on a soft note, as markets were taken off guard by news that the FBI was reopening its investigation of Hillary Clinton’s emails. Risk off trading hit MXN particularly hard. The FOMC meeting this week should be a non-event, but markets are likely to remain volatile ahead of the November 8 elections in the US.
Individual country risk remains important. Brazil budget data is likely to provide a reminder of how bad fundamentals remain. China PMI readings will provide the first snapshot of the mainland economy in Q4, though markets remain fairly comfortable with yuan weakness. Turkey is expected to report a higher inflation print, which comes even as the lira trades at record lows. Lastly, Mexico is expected to report a weak Q3 GDP reading, and sentiment is likely to remain vulnerable.
Korea reports September IP Monday, which is expected at -1.1% y/y vs. +2.3% in August. Korea reports October CPI Tuesday, which is expected to rise 1.0% y/y vs. 1.2% in September. Korea also reports October trade and September current account data Tuesday. Exports are seen at -3.0% y/y and imports at -4.5% y/y.
Thailand reports September manufacturing production, trade, and current account Monday. It reports October CPI Tuesday, which is expected to remain steady at 0.4% y/y. Low base effects from last year should see rising inflation in the next couple of months. However, it should remain in the low end of the 1-4% target range next year. Next central bank meeting is November 9, no change in policy seen.
South Africa reports September M3 and private sector credit growth Monday. The former is expected to rise 5.5% y/y, while the latter is expected to rise 5.95% y/y. It also reports September trade Monday. The economy remains sluggish, but inflation remain elevated and will prevent any near-term easing by the SARB. Next policy meeting is November 24. While a lot can happen between now and then, our base case is for no changes then.
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