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Central banks see busy week

Consensus expects the first hike in the Indian cycle to be a token five basis point or so, though its market impact could be greater.

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Investors expect a busy week for central banks, notably the Reserve Bank of Australia (RBA) on 7 December and the Reserve bank of India (RBI) on 8 December.

Analyst don’t expect either central bank to change policy at these meetings, and the Omicron variant provides some fresh cover for dovish central banks to hide behind.

“That said, it is always worth looking out for changes in nuance in accompanying statements that might hint at changes next year,” according to investment bank ING.

The RBI, for example, may nod in the direction of recent higher than desirable inflation figures and could flag the possibility of a small increase in rates early next year.

The consensus expects the first hike in the Indian cycle to be a token five basis point or so, though its market impact could be greater.

Next week’s calendar features several trade reports, with China’s trade data showing a year-on-year slowdown although the growth rate will still be in double digits.

Exports are expected to slow given that most orders for western holiday demand have been fulfilled. Some last-minute urgent orders however may still be placed but these may show up in the December report.

Numbers to anticipate
Taiwan will also report trade data next week. Given the strong demand for semiconductors, year-on-year growth should edge higher but face a slight month-on-month contraction as production bottlenecks transmit to a similar situation in exports.

Philippine trade numbers will come out on 10 December with recent trends expected to hold. Both exports and imports will expand but import growth is forecast to outpace exports. The overall trade balance will likely remain in a deep deficit at roughly $3.8 billion, which should be enough to nudge the overall current account balance into deficit.

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