FX ASIA/RATES WEEK AHEAD: BOJ, BI Meet; Aussie Payrolls, NZ GDP
Source: BFW (Bloomberg First Word)
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(Bloomberg) -- APAC currencies and rates may have a volatile week given event risks including the Fed rate decision on June 15. While investors aren’t predicting a Fed rate hike, they will monitor the FOMC dot path to see if there are any changes to forecasts for future hikes, Bloomberg strategist David Finnerty writes.
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- AUD/USD is consolidating after short-term bull trend and may resume June rally if Australian payrolls data on June 16 beat forecasts. Investors will also focus on China economic data on June 13, Australian NAB business confidence on June 14 and Westpac consumer confidence on June 15. Australian 10-yr yields may rally back above 2.20% if Fed decides to maintain its present rate hike dot path
- USD/JPY investors will focus on BOJ meeting on June 16 to see if central bank surprises markets, as Bank of Korea did last week, by deciding to ease in an attempt to maximize its market impact as it tries to reach 2% CPI goal. Unforeseen increase in QQE may see FX pair rally towards 110.00
- New Zealand 2-yr swaps may rise toward 2.40% if May house sales data on June 13 indicate housing market is still growing strongly, reducing probability of RBNZ rate cut. Investors will also focus on 1Q New Zealand GDP on June 16, BusinessNZ Manufacturing PMI and ANZ consumer confidence on June 17; NZD/USD may move lower and consolidate after bull rally with slow stochastics indicating FX pair is overbought, particularly if Fed statement is more hawkish than investors expect
- USD/IDR has returned to 13,000-13,500 range but is vulnerable to retest resistance at 13,698, June 2 high, if Fed statement leads market to reprice higher probability of rate hike this year. Bank Indonesia meets June 16 and is forecast by economists to leave its reference rate unchanged
- With monsoon season approaching, which can affect food prices, USD/INR will eye Indian May CPI data on June 13 after it upticked last month. FX pair may rally towards 100- DMA resistance in near-term after 200-DMA support held last week
- NOTE: David Finnerty is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.
Source: BFW (Bloomberg First Word)
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UUID: 7947283