Both the Aussie and Kiwi dollars rise as rate cut views retreat. Australian October inflation overshot the mark, putting another Reserve Bank of Australia cut in doubt. And the Reserve Bank of New Zealand cuts but strongly hints the cycle is over.
In our Deep-Dive interview, ANZ FX Analyst Kausani Basak explains why ANZ Research has downgraded its near term forecast for the Philippines Peso (PHP).
5 things to know in 5 minutes:
In Australia, the October monthly CPI overshot market expectations, coming in at 3.8% year-on-year - well above the Reserve Bank of Australia’s 2-3% target band. The trimmed mean measure also rose, says ANZ Senior Economist Adelaide Timbrell. Overnight in the US, December rate cut views solidified, while in the UK gilt yields fell following the Autumn Budget.
The Aussie dollar rose after the CPI print. Adelaide says the data will have seen the RBA sit up and take notice - there’s a risk that if the strength is sustained, the central bank won’t cut any further.
ANZ Research is keeping a cut in early 2026 penciled in. One factor is that the new, broader, monthly CPI series published by the Australian Bureau of Statistics has potential for large revisions.
The Reserve Bank of New Zealand cut its Official Cash Rate 25 basis points to 2.25% as expected. But the dollar jumped and 1 and 2-year swap rates rose as new projections showed about only a 20% chance of another rate cut, says ANZ New Zealand Chief Economist Sharon Zollner.
Sharon is expecting the OCR to stay on hold through 2026. But she says any upside data surprises may see markets start to debate a rate hike next.
Cheers,
Bernard.
Catch you tomorrow with a rates decision in Korea.
