US Treasury yields are down after April CPI was softer than expected, but the Fed may still want to wait. The Aussie and Kiwi dollars jump. Good news for the RBA as Australian wage growth peaks. Japan’s economy may have contracted in Q1.
In our bonus deep dive interview, ANZ Head of FX Research Mahjabeen Zaman discusses ANZ’s call this week that the US dollar won’t weaken as much over the year as previously expected.
5 things to know:
Headline US CPI rose 0.3% in April from March, below expectations. US Treasury yields fell 8-10 bps, stocks rose 1% to record highs, and the Aussie and Kiwi dollars were up over 1%. ANZ Head of G3 Economics Brian Martin says the data adds to confidence that inflation is resuming its fall back towards the US Federal Reserve’s 2% target in Q2, after stalling in Q1.
Australia’s wage price index rose 4.1% year on year, slightly below market and the RBA’s expectations. ANZ Senior Economist Catherine Birch says it appears wage growth peaked back in the December quarter, which will be welcomed by the Reserve Bank of Australia.
Catherine expects Australian jobs data for April to show employment fell 10,000 and the unemployment rate rose to 4%. Some of that softness could be driven by Easter and the school holidays being during the survey period, she says.
Japan’s economy is expected to contract slightly in the March quarter. The consensus forecast is for a 1.2% drop in GDP over the year. ANZ FX Analyst Felix Ryan says a one-off disruption to car production is a factor.
ANZ Chief Economist for Southeast Asia Sanjay Mathur expects the Philippines’ central bank to decide on a ‘hawkish hold’ at 6.5% later today.
Cheers
Bernard
PS: Catch you tomorrow with Japan’s Q1 GDP data and further reaction to the US CPI data.
