Emerging Markets: Week Ahead Preview – Monday, Nov. 13

(from my colleague Dr. Win Thin)

EM FX closed the week on a soft note. For the week as a whole, best performers were MYR, PLN, and COP, while the worst were BRL, ZAR, and INR. US inflation and retail sales data will likely set the tone for EM. Also, the US fiscal debate is set to continue this week, so expect lots of choppy trading across many markets.

China will likely report October money and loan data this week. October retail sales and IP will be reported Tuesday. The former is expected to rise 10.5% y/y and the latter by 6.2% y/y. Price pressures are picking up, but we not think the PBOC will change policy for the foreseeable future.

Turkey reports September current account data Monday. A deficit of -$4.1 bln is expected. If so, the 12-month total would continue widening to -$39.6 bln, the biggest since August 2015. Turkey is becoming more reliant on hot money flows to finance its external accounts even as investors are turning away from risk.

Israel reports October trade Monday. It then reports October CPI Wednesday, which is expected to remain steady at 0.1% y/y. Q3 GDP will be reported Thursday, which is expected to grow 2.9% SAAR vs. 2.4% in Q2.

India reports October CPI Monday, which is expected to rise 3.45% y/y vs. 3.28% in September. If so, inflation would still be in the bottom half of the 2-6% target range. The RBI warned that inflation will move higher and so we see steady rates for now. Next policy meeting is December 6, no change seen then. India reports October WPI Tuesday, which is expected to rise 3.04% y/y vs. 2.6% in September.  

Poland reports September trade and current account data Monday. It then reports Q3 GDP Tuesday, which is expected to grow 4.5% y/y vs. 3.9% in Q2. The economy remains robust even as wages are rising. Inflation will likely move higher and require tightening by mid-2018.

Russia reports Q3 GDP Monday, which is expected to grow 2.0% y/y vs. 2.5% in Q2. Growth remains subpar, but low inflation should allow the central bank to continue cutting rates into next year. Next policy meeting is December 15, and another 25 bp cut to 8.0% is likely.