Roach Eyes China Treasuries, Yuan Tagged, Fed Cut Risk: Eco Day

(Bloomberg) -- Welcome to Tuesday, Asia. Here’s the latest news and analysis from Bloomberg Economics to help get your day started:

• The yuan’s plunge past 7 per dollar -- long seen as a line in the sand -- shows the possibility of Beijing dumping its $1.1 trillion pile of Treasuries can’t be ruled out, says Stephen Roach, a senior lecturer at Yale University. The yuan’s slide threatens to revive concerns about the capital flight
• The Trump administration formally labeled China a currency manipulator, further escalating the trade war. It’s about five years late on the designation, writes Tom Orlik
• The Fed will be leaning closer to reducing rates again next month after President Donald Trump ratcheted up his trade war. But whether that gives Trump a weaker dollar is far from certain
• The latest U.S.-China salvos open up a new front the world’s central banks must contend with: a currency war
• New Zealand’s central bank is poised to cut rates to a fresh record low and may hint it’s not done yet. One potential snag in its narrative is jobs: unemployment dropped to an 11-year low in the second quarter as hiring jumped, while wages surged
• India meantime is set to deliver its fourth successive quarter-point cut as a slowdown gripping the economy becomes more pervasive
• Vietnam is caught between contradictory forces unleashed by the trade war: The country is benefiting so much from the impasse that it, too, is at risk of being hit with punitive American duties
• Philippine central bank Governor Benjamin Diokno said he expects to cut rates by another 50 basis points this year, with the timing dependent on economic data. Swap traders are starting to reassess bets that Brazil’s central bank will cut the key rate beyond 5.5% as renewed global trade tension undermines the real
• North Korea fired more projectiles into waters off its coastline and questioned the value of talks with the U.S., adding pressure on Trump as his trade war escalates

To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Chris Bourke

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