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The
two items of most interest during the session here were the
Australian monthly inflation data, for October, and the Reserve Bank
of New Zealand cash rate cut.
Australian headline consumer price inflation (CPI) stayed at a
three-year low in October, unchanged for September at 2.1% y/y.
Government rebates continued to restrain energy prices (electricity).
Core inflation, however, was a completely different story. The
trimmed mean CPI rose to 3.5% y/y, from September’s 3.2%. This is
higher than the top of the Reserve Bank of Australia’s 2 – 3% target
band for inflation. The sticky high core inflation reading argues
against any near-term Reserve Bank of Australia interest rate cuts.
As always, though, we really have to wait for the ‘official’ CPI
data, which is released once a quarter. December Quarter 2024
(September – December) CPI is due on Wednesday 29 January 2025.
AUD/USD
didn’t do much on the data.
The
Reserve Bank of New Zealand cut its cash rate target by 50bp, from
4.75% to 4.25%, in a widely expected decision. There was a perception
that the Bank were projecting a slower pace of rate cuts ahead and
NZD/USD surged higher. This perception was disputed by RBNZ Governor
Orr who went out of his way at his press conference to say that the
Bank’s projections are consistent with a 50bp cut in February,
depending on how the economy develops, of course. The Bank’s next
meeting is on February 19 2025.
NZD/USD
topped out around 0.5880 and then dribbled back down towards 0.5845.
As I update its back nearer to highs around 0.5870.
Data
from China showed
industrial profits fell again in October. The
headwinds for Chinese industrial earnings are familiar, soft demand
and deflation pressure.
Commentary
relating to the report trotted out the familiar hopes of more
policy easing next
year.
NZD/USD 5 minute candles:
This article was written by Eamonn Sheridan at www.forexlive.com.
