NJA: Central banks on hold amid poor manufacturing growth

Attention in Asia will focus on central bank meetings and manufacturing/industrial production data. On Thursday, the BSP in the Philippines and CBC in Taiwan are scheduled to deliver decisions that will likely leave policy rates on hold. 

However, the BSP is expected to maintain a hawkish tilt, albeit slightly toned down due to softer inflation, while the CBC is set to maintain a broadly cautious tone. Although China's flash June HSBC manufacturing PMI is likely to rebound slightly (consensus: 49.4 from 49.2 in May), hard data in Taiwan (Wednesday), Singapore (Friday) and Thailand (Friday) should paint a picture of soft manufacturing activity. 

Taiwan IP is set to rise only 1.0% y/y in May (consensus: 1.2%), Singapore IP is set to drop -2% y/y, (consensus: -3.5%) while Thai manufacturing production is likely to drop a sharp -5.6% y/y over the same month. 

"We expect weak export demand to be revealed in a further contraction in Thai May exports (Thursday), highlighting the ongoing China-related pressure on manufacturing and exports in the region",says Barclays.

While on the face of it weak exports should focus attention on weaker currencies, Asian currencies are benefiting from a softer USD tone of late.