Week Ahead for FX, Bonds: U.S. PMI Data, Various -2-

Recent economic data have strengthened the case for additional support, Societe Generale strategists said, pointing to August retail sales having risen just 0.4% from a year earlier, while year-to-date fixed-asset investment growth slowed to 7.2%. Industrial production, however, remained a bright spot.

The currency has also shown resilience, with the dollar slipping below 6.70 yuan despite the Federal Reserve's hawkish stance. Societe Generale noted the People's Bank of China recently set its daily fixing at 6.7521, the strongest level in the current cycle.

The currency's recent strength could give policymakers some room to ease, although pressure on banks' profit margins and the risk of renewed yuan weakness could limit the scope for rate cuts, they added.

Any decision to lower the rates would signal an effort to support borrowing and domestic demand, though pressure on banks' profit margins and the yuan could limit the scope for easing.

PBOC Gov. Pan Gongsheng has described slower loan growth as a "new normal," citing shrinking credit demand from the property sector and local governments that emerging industries haven't yet fully replaced.

DBS economists expect the PBOC to keep the one-year LPR unchanged at 3.00%, maintaining a measured easing stance as resilient exports and industrial activity continue to support growth.

"Against this backdrop, policymakers are likely to maintain a measured policy stance, relying on targeted fiscal support to sustain growth rather than further rate cuts," they said.

Australia / New Zealand

Reserve Bank of Australia communications will again be in focus, while August employment data Thursday will be the week's main economic release.

RBA Gov. Michele Bullock will speak to the Committee for Economic Development of Australia on Tuesday.

Comments from the RBA in recent weeks have been hawkish, and economists now expect two more interest-rate increases before year-end.

Bullock is expected to continue signaling further increases, citing the Middle East war and a boom in artificial-intelligence investment among the reasons policy may need to be tightened further.

The RBA believes the labor market is close to full employment and has been somewhat surprised by the strength of hiring despite continuing global shocks.

The unemployment rate is expected to come in at around 4.5%. The data are unlikely to significantly weaken expectations for further interest-rate increases.

Indonesia

Bank Indonesia is expected to leave its benchmark rate unchanged at 5.75% at its policy meeting Wednesday, following a dovish pause in August and a recent appreciation of the rupiah supported by foreign inflows, ING economists Deepali Bhargava and Lynn Song said.

However, the rupiah could come under renewed pressure from broad U.S. dollar strength, weaker external balances and declining foreign-exchange reserves, they said.

The economists continue to expect one final quarter-percentage-point increase in the fourth quarter.

Newly appointed central-bank Gov. Destry Damayanti is likely to highlight tighter global financial conditions and geopolitical tensions as key risks on the horizon, while noting that the domestic economy remains relatively resilient, DBS economists said.

After considerable volatility in the first half of the year, the rupiah has been rangebound this quarter, reducing the need for currency-driven rate increases, they added.

Past comments from Indonesia's incoming finance minister also indicate a continued preference for fiscal prudence rather than fiscal activism.

"We expect Indonesia's policymakers to exhibit limited urgency to tighten policy at this juncture," DBS said.

Singapore

Singapore will release August inflation data Wednesday. The figures will be watched for signs of mounting price pressures following increases in electricity and town-gas tariffs this quarter.

Headline and core inflation are likely to have accelerated in August, ING economists said. Higher oil prices are expected to lift energy inflation, while El Niño-related supply disruptions should keep food-price pressures elevated, they added.

Any references to days are in local times.

Write to Jessica Fleetham at jessica.fleetham@wsj.com and Jihye Lee at jihye.lee@wsj.com

(END) Dow Jones Newswires

September 21, 2026 03:14 ET (07:14 GMT)