Whisper it, but Wednesday could be a pretty quiet day in Asia after Wall Street closed little changed on Tuesday and with Malaysian trade and Australian leading indicators the only potential market-moving releases on the regional data calendar.
In fact, the main cue could come late in the session from Europe
- UK and euro zone consumer price inflation figures for March
could go a long way to molding Bank of England and European
Central Bank rate expectations for the coming months.
Unlike a growing number of central banks in Asia who have
pressed the pause button or are close to doing so, the BoE and
ECB are both expected to continue raising rates in their battle
to get inflation back down towards target.
The Fed is also close to the end of its cycle if you believe
current market pricing, with one more quarter point hike
expected next month. St Louis Fed president James Bullard is
much more hawkish though, as he confirmed in an interview with
Reuters.
Having marched up the hill last year, some policymakers in Asia
are taking a breather. The central banks of Australia,
Indonesia, India, Singapore and South Korea have all paused, and
the Philippine central bank governor signaled a pause in May.
Research from the Bank for International Settlements shows
that the global tightening cycle since the start of last year is
the most synchronized and strongest over the past 50 years, with
more than 95% of central banks raising their policy rates.
Historically, this share rarely exceeded 50%.
One notable absentee from that band is the People's Bank of
China (PBOC). It cut rates in 2020, 2021 and 2022, and is
expected to maintain a supportive stance this year even though
the economy grew at a faster-than-expected pace in the first
quarter.
Figures on Tuesday showed that GDP grew 4.5% in Jan-March
year-on-year, the strongest in a year, faster than 2.9% the
prior quarter, and comfortably above consensus 4.0% forecasts.
But the road ahead looks bumpy, and other indicators for
March were mixed - retail sales smashed forecasts, but
investment fell short.
The PBOC sets its one- and five-year loan prime rates on
Thursday. They have been anchored at 3.65% and 4.30%,
respectively, since last August.
Here are three key developments that could provide more direction to markets on Wednesday: - Malaysia trade (March) - Australia composite leading indicator index (March) - UK inflation, euro zone revised inflation (March) <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Dollar/Malaysian Ringgit & Malaysian FX reserves ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (By Jamie McGeever;)
jamie.mcgeever.thomsonreuters.com@reuters.net))