Asia FX Weekly China’s PMIs, Asia trade data and RBI policy will be key 2

China’s PMIs, Asia trade data and RBI policy will be key LIN LI, PhD Head of Global Markets Research Asia Global Markets Research Global Markets Division for Asia Asia’s calendar is quite packed, with the interaction between resilient technology- E: related exports, oil-driven inflation and the regional monetary-policy outlook likely to dominate. China’s RatingDog manufacturing and services PMIs, coupled with MICHAEL WAN trade data for July will provide another read on China’s economic momentum thus Senior Currency Analyst far. This comes on the back of softer than expected official PMI numbers, and Global Markets Research also a Politburo meeting readout which emphasised a faster rollout of existing Global Markets Division for Asia E: stimulus plans with the option of perhaps doing more later this year. Outside of China, trade data from South Korea, Taiwan, and Vietnam should point to robust semiconductor and AI demand, while CPI releases across Korea, Indonesia, the LLOYD CHAN Senior Currency Analyst Philippines, Thailand and Taiwan will show how far higher energy costs have passed through into core prices. The contrast may be important for regional rates Global Markets Research and currencies: Korean core inflation is expected to firm even as headline CPI Global Markets Division for Asia moderates, Philippine inflation could move further above the BSP’s target, and E: Thailand’s core inflation is projected to remain moderate. KHANG SEK LEE Wednesday will be the main policy and domestic-demand focal point in our Associate region. The Reserve Bank of India is expected to leave the repo rate unchanged at 5.25% with a likely neutral policy stance, with inflation still within its target band Global Markets Research but policymakers facing upside risks from oil prices and weaker monsoon Global Markets Division for Asia conditions. We still think the balance of risks tilt towards RBI hiking rates later this E: year even if a delayed cycle. Indonesia’s second-quarter GDP may show growth moderating as investment and government spending soften, while Philippine’s GDP is expected to show some marginal improvement on better government spending. In Japan, June labour cash earnings and the minutes of the Bank of Japan’s June meeting will be watched for evidence that stronger wages are supporting underlying inflation and the case for further policy normalization, and 31 July 2026 coming on the back of BOJ’s latest policy meeting where the BOJ kept rates on hold but with a hawkish tilt.

MUFG Bank, Ltd. MARKETS WILL KEEP A KEEN EYE ON POSSIBLE FX INTERVENTION IN A member of MUFG, a global financial group JAPAN, AND WITH THAT THE SPILLOVERS TO ASIAN FX SUCH AS KRW

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FX views Globally, the week begins with the OPEC+ meeting, where decisions on September production targets could influence oil prices, inflation expectations and energy- importing Asian currencies. In the US, the ISM manufacturing and services surveys, JOLTS vacancies, ADP employment and weekly jobless claims will build towards the important non-farm payrolls July employment report, the principal global risk event. The consensus expects NFP to rebound to around 88,000 from June’s 57,000 gain, although unemployment may edge higher. Europe’s schedule is centred on final manufacturing and services PMIs, euro-area producer prices and retail sales, together with German factory orders, industrial production and trade, providing a check on whether the recent improvement in business activity is feeding into demand. For Asian FX the key will also be the Japanese Yen and the spillovers to other FX pairs. There was suspected FX intervention by Japanese authorities and markets will be watching closely for whether there is any follow-through activity into early next week. On that front, the likes of the South Korean won will be important to watch as well, with Reuters reporting that Korea authorities intervened at the same time to strengthen KRW.

WE FORECAST RBI TO KEEP RATES ON HOLD IN AUGUST, BUT FOR RBI TO EVENTUALLY DELIVER RATE HIKES LATER THIS YEAR RBI Repo Rate - Baseline 1 year INR OIS Onshore Headline CPI %yoy Baseline…