Asia awaits Key rate decisions and China data

Asian investors' attention will be on some Key interest-rate decisions and a lots of Chinese data this coming week..

Tuesday the Reserve Bank of Australia meets, the central bank has been on an extended pause in its rate raising cycle, having last raised the benchmark cash-rate to 4.75% in November 2010.

But with the Global economy facing an uncertain future, some analysts are now betting the RBA's next move will involve a rate cut rather than another increase.

Such speculation rose after Brazil, which like Australia has a commodities based economy, shocked markets last Wednesday by swinging from rate tightening to a rate cut of a half a point.

While the central bank is more likely to keep rates on hold at the coming meeting, particularly after RBA Gov. Glenn Stevens told a government panel last month that inflation bears careful watching, but we can keep it under control, the markets will watch the governor's statement accompanying the decision for clues on Australia's policy intentions.

Thursday, the Bank of Korea is scheduled to announce their rate decision, and here the focus is more on potential tightening.

South Korea has seen a significant bump up in inflation, with August's Y-Y 5.3% rise in consumer prices marking the largest rise since Y 2008.

Still, a majority of economists surveyed see the South Korean central bank holding the benchmark rate steady at 3.25% at this month's meeting, so the policy statement may also prove more important than the decision itself.

The Bank of Japan (BOJ) is due to give its policy decision on Wednesday and is unlikely to change its 0-to-0.1% rate target. Here, the more important issue will be whether the central bank conducts more easing to fuel the recovery from Japan's catastrophic March earthquake.

Apart from central banks decisions, China will relese lots of economic data on Friday, with the focus on inflation.

With food and fuel prices rising, Chinese inflation hit a 3 yr high of 6.5% in July, prompting some monetary tightening moves from the People's Bank of China, but many China-based economists believe the July level marked a high, and that the August result will show some easing.

A recent report from the state-run Xinhua news agency tipped that consumer inflation to come in between 6.1%, and 6.3% for the month. Any upside surprise could be negative for stocks in China, and would likely also hurt equities elsewhere in Asia.


Paul A. Ebeling, Jnr

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.