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Focus on Japan factory output, South Korea trade, China PMI, Australian Q4 GDP

Tomohiro Ohsumi | Bloomberg | Getty Images

There's a data barrage out of Japan, Australia, and South Korea this week, as well as China's official and Caixin purchasing managers index, and few commentators expect good news.

Instead, the numbers are largely expected to reflect weakness as a result of the issues plaguing economies since the start of the year: volatility in global markets and economic uncertainty amid China's slowdown.

Stronger yen to weigh on Japan

A stream of January data due this week from Japan will likely show the impact of yen appreciation amid rising financial market volatility.

Japan's January industrial production, due for release Monday, is expected to decline 0.4 percent on December, which showed an on-month fall of 1.4 percent.

Japan's factory orders will take a hit from the stronger yen, with the exception of Japanese automakers, which remain resilient as global demand for Japanese vehicles holds up, analysts at Moody's Analytics wrote in a note.

January retail sales, also out on Monday, are expected to slide 0.6 percent year-on-year, as consumer confidence fails to recover, Moody's said.

Wage growth in Japan continues to be elusive, and will to weigh on Japan's household expenditure, due for release Tuesday. Moody's predicts expenditure to fall by 1.9 percent year-on-year in January.

Japan's January seasonally-adjusted unemployment rate, also out Tuesday, is expected to show an improvement at 3.2 percent, from 3.3 percent in December.

Weaker global demand to hurt South Korea

South Korea's February exports, due on Tuesday, are expected to slump 17 percent on-year on "weak external demand," Barclays economist Angela Hsieh wrote in a weekly note.

Softer global demand will also weigh on South Korea's January industrial production, due Wednesday, which will likely fall 2 percent, Hseih said.

Also on Wednesday, data is expected to show that South Korea's January current account balance shrunk to $6.6 billion from $7.5 billion in December, driven by a smaller goods balance, she said.

Meanwhile, Korea's February consumer price index, out on Thursday, will have edged up 0.9 percent, "as higher food prices are likely to have offset a decline in retail pump prices," said Hsieh.

Investors eye China's official, Caixin PMI

On Tuesday, China will release its official February manufacturing and services purchasing managers index (PMI), which Barclays forecasts to come in at 49.3, slightly lower than January's 49.4. A reading below 50 indicates contraction, and above means expansion.

China's final February Caixin manufacturing PMI, which focuses on smaller and medium-sized companies in China, will also be released on Tuesday and is forecast to come in at 48, a decline from the previous month's PMI at 48.4, according to Barclays.

"China's Caixin manufacturing remains a key event risk especially if the data undershoots expectations [and] we may see another round of global financial volatility," economists at Mizuho wrote in a weekly note.

RBA to make rates call

The Australian central bank will announce its latest monetary policy decision on Tuesday. The Reserve Bank of Australia (RBA) is likely to keep rates on hold at 2 percent, even though it has an easing bias, said Shane Oliver, head of investment strategy and chief economist at AMP Capital. Oliver expects the central bank to wait until May to ease interest rates.

While the lower Australian dollar is supporting service exports, weaker demand from China is dragging on Australian commodities, Moody's analysts said.

According to Paul Bloxham, chief economist at HSBC in Australia, the Australian economy is still growing at a solid, albeit below-trend pace, and Q4 GDP is expected to show growth of 2.5 percent year-on-year.

However, the pace of economic growth is insufficient to generate a pick-up in inflation and underlying measures of inflation will drop below the bottom edge of the RBA's target band of 2-3 percent in the coming quarters, added Bloxham.

Australia will also release its fourth-quarter balance of payments on Tuesday, which Moody's Analytics expects to have narrowed to A$16.4 billion ($11.7 billion) from A$18.1 billion ($12.9 billion) in the third-quarter.

Finally on Friday, Australia's January retail sales will likely be the bright spot after a week of weaker data; they're slated to show an uptick of 0.4 percent month-on-month, after staying unchanged in December.

Stronger retail sales come on the back of accommodative monetary policy and a buoyant labor market, which are supporting household spending, said Moody's.

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