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Investors to focus on China, Japan, Australia data

Greg Baker | AFP | Getty Images

Asia's in for a data deluge this week, with key numbers expected from China, Japan and Australia.

China will be the main focus as investors eye a slew of economic data including trade, consumer and producer price indexes, industrial production, and retail sales, as measures of the effectiveness of Beijing's reforms.

Meanwhile, Japan will release its third-quarter gross domestic product (GDP) performance, the broadest measure of economic health, and machinery orders. And Australia will announce its November jobs data, while the central banks in South Korea and New Zealand will meet to decide on their monetary policies.

Is China on the road to recovery?

Beijing has introduced a number of reforms since late 2014 to keep its slowing economy on track. The inclusion of the yuan as a reserve currency in the International Monetary Fund's (IMF) Special Drawing Rights basket last week represented a nod from the IMF that Beijing's reforms were moving in the right direction.

But a disappointing result from the official manufacturing Purchasing Managers Index (PMI), a measure of factory activity, for November sent investor confidence tumbling once again.

On Tuesday China will release trade numbers for November, which analysts believe will show some improvement in the country's trade surplus. Moody's Analytics said in a note it expected imports to remain sluggish. The note added, "Meanwhile, exports are also declining year on year but have performed better thanks to a recovery in U.S. demand."

On Wednesday China's Consumer Price Index (CPI) and Producer Price Index (PPI) will measure inflation for November.

Bank of America Merrill Lynch (BoAML) said it expected CPI inflation to edge up to 1.5 percent on-year in November, compared to 1.3 percent in October, citing higher food price inflation due to bad weather. In a note, the bank also said it expected PPI to fall to 6 percent on-year due to a slump in global commodity prices.

On Saturday China will release its industrial production number, fixed asset investments (FAI), and retail sales for November. The latter will give a broad indication of domestic consumption patterns.

BoAML said, "Industrial production (IP) and fixed asset investment (FAI) growth could still be sluggish due to the lack of demand pick up amidst poor weather in the month, while retail sales growth data will likely demonstrate the relative resilience in consumption."

Japan's economic health

After a series of uninspiring economic data in recent weeks, investors will eye Japan's third quarter economic performance for signs of impending trouble. Between the July and September, government data showed the economy slid into technical recession as a result of falling business investment and a dip in consumer spending. A technical recession is defined by two consecutive periods of negative growth.

On Tuesday the government will release the second preliminary GDP data for Q3. Barclays said in a note it expected real growth to rise to 0.2 percent on-quarter, up from an initial negative 0.2 percent. The change will reflect a large upward adjustment to private capex and a small downward adjustment to the contribution of private inventory investment, the bank said.

On Wednesday October machinery orders, a leading indicator of capital expenditure, are due from Japan. Last month, core machinery orders for September rose for the first time in four months to 7.5 percent. Moody's Analytics believes that number will fall to 3.2 percent on the back of a slow economic performance.

Elsewhere, the South Korean central bank will announce its monetary policy decision on Thursday. The Bank of Korea is expected to leave rates unchanged to continue supporting consumption and credit demand.

Data from Down Under

The Australian Bureau of Statistics will release housing finance data for October on Wednesday, which experts believe will show a downward trend. National Australia Bank (NAB) said in a note that industry reports pointed to a 0.5 percent decline in the headline number of owner-occupied loans approved in October.

"The market will also be expecting some further trend softness in investment lending, approvals down 8.5 percent in September with more recent signs of a continued cooling in the Sydney and Melbourne house market," the note added.

On Thursday the bureau will release the November jobs report. The seasonally adjusted number of jobs created shot up to 58,600 in October, which Moody's Analytics noted was "well above the average monthly gain of 15,000."

Most analysts expect a drop in the employment number and for the unemployment rate to rise, following a poor performance from resources producers on the back of low commodity and base metal prices. NAB estimates a 17,000 fall in employment and forecasted the unemployment rate to be at 6 percent, up from 5.9.

Meanwhile, the Reserve Bank of New Zealand will release its monetary policy decision on Thursday. Economists are divided on whether the bank will ease its discount rate from the current 2.75 percent