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Fed meeting will top all events in Asia this week

Andrew Harrer | Bloomberg | Getty Images

This week's Federal Reserve policy meeting is likely to top all other major events and economic data in Asia, as investors wait to see if the central bank undertakes a much-anticipated scaling back of its monetary stimulus.

The Fed meets on Tuesday and Wednesday, and many strategists expect the U.S. central bank to begin paring back its $85 billion monthly bond buying.

What does that mean for Asian markets? Well, analysts say that depends on just how much the Fed tapers its monthly asset purchases.

(Read more: Here it comes: Are you ready for the Fed to taper?)

"Anything above $10 billion would have more of an impact on risk assets and a negative impact on emerging markets in Asia," Mitul Kotecha, head of global currency strategy at Credit Agricole, told CNBC last week. "Anything below $10 billion would be seen as a token move."

However, the main focus heading into this meeting may not be the prospect of taper, but the leadership moves at the helm.

On Sunday, former U.S. Treasury Secretary Larry Summer, largely viewed as President Obama's top pick to succeed Ben Bernanke as Federal Reserve chairman, withdrew his name for consideration, according to a senior administration official.

Analysts say his decision to quit the race will bring risk back into markets.

(Read more: Get ready for a Summers rally in the stock market)

"With [Summers] removal from the race, it has become a one-horse race; with Professor Janet Yellen now having one hand on the chair. Her position in the FOMC is one of general dovishness and this news will delight emerging markets and risk markets," said Evan Lucas, market strategist at IG Markets.

The news boosted the dollar and Treasury futures on Monday, and sparked gains across Asian stock markets.

In Asia, central banks will also dominate investors' attention, with Australian monetary policy minutes due for release on Tuesday, Bank of Japan governor Harukiko Kuroda scheduled to speak on Friday, and the Indian central bank's mid-quarter review of monetary policy, also on Friday.

New Reserve Bank of India chief Raghuram Rajan cheered markets earlier this month when he started his role by outlining measures to support the battered rupee. And markets are expected to watch any comments he makes closely.

(Read more: RBI's Rajan takes a deep dive to save the rupee)

Meanwhile, the minutes from the Reserve Bank of Australia's (RBA) latest meeting will be in focus after weaker-than-expected Australian jobs data last week renewed talk of another interest rate cut.

"It would make sense for the RBA to make it clear that it retains an easing bias because it helps maintain downwards pressure on the Australian dollar without necessarily having to do anything," said Shane Oliver, head of investment strategy and chief economist at AMP capital in Sydney, referring to the minutes.

On the data front, India is scheduled to release its wholesale price index, a closely-watched inflation gauge, later on Monday, followed by Japanese trade data for August on Wednesday.

Analysts polled by Reuters forecast a 14.5 percent on year rise in Japan's exports in August, compared with a 12.2 percent rise in July.

—By CNBC.Com's Dhara Ranasinghe; Follow her on Twitter @DharaCNBC

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