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What's Important in Asia This Week

Tomohiro Ohsumi | Bloomberg | Getty Images

It's the turn of Asia's central banks to take center stage this week after central banks in Europe hogged the market spotlight last week.

The Bank of Japan (BOJ) concludes a two-day meeting on Thursday – the same day that central banks in South Korea, Indonesia and Malaysia are all expected to meet. The Bank of Thailand is scheduled to meet on Wednesday.

Weakness in regional powerhouse China and concerns about an outflow of funds from the region amid expectations for an unwinding of U.S. monetary policy mean this week's monetary policy decisions could attract more attention than usual.

Last week, the European Central Bank and Bank of England took markets by surprise by departing from usual practice by giving financial markets a clear steer on its intentions or what is being described as forward guidance.

(Read More: July 4: Independence Day for Europe's Central Banks?)

"The BOJ is unlikely to take any concrete steps. Another three central bank meetings in Asia, namely Korea, Malaysia and Indonesia, are lined up on Thursday," analysts at Mizuho Corporate Bank said in a note. "South Korea and Malaysia will probably stand pat though the former has scope to ease."

The BOJ, which kicks off its two-day meeting on Wednesday, is not expected to make any significant changes to its monetary policy.

"The BOJ is pretty much on hold now. JGBs are stable so there's no pressure to change policy," Ray Attrill, co-head of currency strategy at National Australia Bank told CNBC Asia's "Squawk Box" on Monday, referring to trade in Japanese government bonds that has been volatile since April when the BOJ unveiled an aggressive monetary stimulus program.

BOJ Governor Haruhiko Kuroda last week said the economy was on track for a steady recovery with signs of inflation expectations picking up.

China releases June consumer price inflation (CPI) inflation data on Tuesday. Inflation in China rose 2.1 percent in May from a year earlier.

"CPI inflation is likely to have rebounded to 2.5 percent year-on-year, but it should not trigger worries of potential policy rate hikes amid the downside risk to growth," analysts at Credit Agricole said in a note.

Singapore releases second quarter gross domestic product data on Friday, with analysts polled by Reuters forecasting a 2 percent annual rise in growth compared with 0.2 percent rise in the first quarter.

In Australia, jobs data for June due this week is expected to be watched closely by the market as it tries to assess whether or not the country's central bank will lower interest rates next month.

"If the data paints a picture of rising unemployment, rate-cut expectations will come back on to the table," said Attrill.

The Reserve Bank of Australia kept its key rate steady in July at 2.75 percent earlier this month.

(Read More: Aussie Dollar Weak? Its Central Bank Doesn't Think So)

Federal Reserve Board Chairman Ben Bernanke.
Getty Images
Federal Reserve Board Chairman Ben Bernanke.

U.S. Federal Reserve Chairman is scheduled to speak this Wednesday and his comments are likely to be closely followed by markets globally as investors try to work out the timing of when the Fed will start to take back its monetary stimulus.

Data on Friday showing the U.S. economy created a stronger-than-expected 195,000 new jobs in June has reinforced expectations that Fed tapering could begin later this year.

(Read More: One Eye on Earnings, the Other on Bonds)

"Tapering is coming a bit closer and the rise in [government] bond yields suggests markets are anticipating it coming sooner than thought," said Frederic Neumann, co-head of Asian economics research HSBC.

-By CNBC's Dhara Ranasinghe; Follow her on Twitter: @DharaCNBC

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