Halister News

(Bloomberg) -- Asia-Pacific currencies and rates may experience a volatile week navigating regional event risk and the after-effects of strong U.S. nonfarm payrolls data, Bloomberg strategist Mark Cranfield writes.

• Click here to see major local data due this week
• RBNZ may front-load rate cuts with a 50 bp move on Aug. 11 after RBA lowered rates last week; all economists in Bloomberg survey see a 25 bp cut to 2.0%, and OIS are pricing in an 8% chance of a 50 bp reduction
  • Westpac and HSBC both see RBNZ cutting twice in the months ahead to reach 1.75%
  • If there is a 50 bp rate cut, AUD/NZD may rise to test resistance at 200-DMA, now at 1.0795, for first time since April; chart here
• Japan’s auction of 30-year bonds on Aug. 9 may be a pivotal moment for JGBs after a torrid selloff in past month
  • Investors will try to gauge whether the jump in yields in this cycle is a repeat of 2015, in which case it could be nearing completion. Or is it more like 2013, and there’s worse to come? Click here for a chart
  • In 2015, JGB 30-yr yield rose 52 bps over a three-week period; in 2013, yield rose 95 bps over seven weeks; since falling close to zero on July 6, yields are about 40 bps higher
• Other events include:
  • RBI Governor Rajan will preside over his final meeting and the first since govt voted to create a GST; nearly all surveyed economists see no change to rates; a preview is here
  • China data this week includes trade, CPI and industrial production; also one-year anniversary of yuan mini- devaluation
  • Philippines central bank meets Aug. 11, is seen holding overnight rate at 3.0% by all surveyed economists
• 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.