Halister News

(Bloomberg) -- RBA rate decision, details of Japan PM Abe’s fiscal stimulus, and China PMI report are potential event risks this week, ahead of BOE policy meeting and U.S. non-farm payrolls, Bloomberg strategist Mark Cranfield writes.

• Click here to see major regional data due this week
• AUD/USD may be in for a bumpy ride if RBA governor Stevens cuts rate one last time before retiring next month. Pair is 1.7% stronger since last RBA decision on July 5. Inflation running at 1.0% y/y is no impediment to lower rates
  • Majority of economists forecast a 25bps rate cut to 1.50%, according to a Bloomberg survey
  • Australian 3-yr bond yields may extend further into record low territory if RBA maintains a dovish outlook
• USD/JPY bulls will be looking for support from details of Abe’s fiscal stimulus package on Aug. 2; package said to include 15,000 yen handout per person to those under certain income level
  • BOJ decision on July 29 failed to inspire dollar buying, with option risk reversals showing a pick up in demand for downside protection
  • With USD/JPY below 103.00, risk of verbal intervention is high; however “the path of least resistance for USD/JPY is still lower with a move to 100 appearing likely,” BK Asset Management managing director Kathy Lien writes in note on July 30
  • Japan yield curve ended last week on bear flattening mode after BOJ held short term rate unchanged
• USD/CNH may find support ahead of 100-DMA if China July manufacturing PMI slips below 50 breakeven line which may increase speculation that PBOC will lower official rates.
• BOE decision due Aug. 4, est. 0.25% vs prev. 0.5%
• U.S. non-farm payrolls due on Aug. 5, est. 175k vs prev. 287k
• NOTE: Mark Cranfield is an FX strategist who writes for First Word. The observations he makes are his own and are not intended as investment advice.