Reserve Bank of New Zealand – read from the bottom up for the chronological order:
Other:
It
was a busy day in Asia with Australian inflation data, a more hawkish
Reserve Bank of New Zealand, and a Bank of Japan policy board maker standing in front of the freight train of USD/JPY selling and helping turn it around. For now at least.
Australian
monthly inflation data for October came in well down from September
and under the median estimate. Looking further ahead, base effects should contribute to a further, and rapid, fall in the rate for the next few months ahead, although these effects will dissipate into the new year.
There
are, of course, caveats to today’s data release:
- Monthly
CPI data from Australia does not show all components of the CPI,
covering only updated prices for between 62 and 73 per cent of the weight of the
quarterly CPI basket. - October
data had a large ‘goods’ representation compared with services so its
lower than it otherwise would have been. - The core, trimmed mean, didn’t fall much at all from its reading in
September. The underlying inflation pressure is still solid. - Inflation
rates for most components are still much higher than the RBA’s
2-3% inflation target.
AUD/USD
dipped a little on the data but rose soon after, led by a strong NZD
(more on this to come). As I post its back to being barely changed on
the session.
The
Reserve Bank of New Zealand left its Official Cash Rate (OCR)
unchanged at 5.5%, as widely expected, but the statement,
minutes and Governor Orr’s following press conference were hawkish. The Bank said it’ll hold rates high for quite a while to come as
inflation is still too high. The Bank revised its track for the OCT higher, implying a better-than-even chance of another 25 bp rate hike ahead.
NZD/USD
jumped higher, to above 0.6200, and its just under there as I update.
Bank
of Japan Policy Board member Seiji Adachi spoke, hitting back at the
article in the Nikkei yesterday, link to this here ICYMI:
Adachi
emphasized that:
- recent
tweaks to YCC were not a policy change - now
is not the time to say the Bank’s inflation target has been met - policy
will remain easy, and indeed the Bank will take further easing steps if needed
USD/JPY
hit lows under 146.75 but since bounced back.
More
broadly the USD weakened further across the major FX board. US yields
remained under pressure after dovish Fed officials on Tuesday:
The
People’s Bank of China set its reference rate today at the strongest
for the CNY since June 5.
The bird in flight:
