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Citi
Week Ahead:
USTs extend their bid from Friday following large miss in the U-Michigan Consumer Sentiment Survey (70.2 vs. 81.2 exp.) with 10Y dipping below 1.25%. FX is relatively quiet with INR and KRW out on holiday.
Reports over the weekend of Malaysia PM resigning today led USDMYR to open higher with risk of further outflows now more pronounced, however, our onshore trader likes to use this uptick to sell USDMYR with a very tight stop loss given all the politics induced upticks in the spot have been faded by the market in recent weeks.
G10, AUD is down -41bps as authorities locked down the entire New South Wales state over the weekend and delta continues to spread with 478 new cases reported today.
Looking ahead, several CB to look out for with FOMC minutes and RBNZ on Wednesday, followed by BI on Thursday and China LPR to end the week on Friday.
RBNZ Preview
CitiFX Strategy’s Takashima-san offered the latest RBNZ preview , in which he focuses on the potential OCR rate hike from 0.25% to 0.5% at the monetary policy meeting on August 18 this week. A 0.5% rate hike is the risk scenario, but this would be a bigger risk than the probability the local rate market currently prices in. There will be limited room for interest rates to rise in the near future even if a rate hike is officially announced, but NZDUSD is likely to bounce.
The correction of the pair in July was limited to the –1σ band from the 200d MA, which implies its long-term trend is still upward. The 200d MA (around 0.711) will be achievable on the rate hike delivered by the RBNZ this Wednesday, and we see another scope to appreciate toward the +1σ band (around 0.723) over the following days.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.