Bets firm for a December rate cut by the Fed as US disinflation continues. Australian wage growth is lower than expected, but that might not move the RBA. The Yen weakens further as the US dollar continues its surge - the Aussie and Kiwi fall as well.
In our bonus Deep Dive interview, ANZ Head of Asia Research Khoon Goh continues our coverage of the effects of Donald Trump’s election victory on global markets. Chinese authorities moved yesterday to support a weakening Yuan, while foreign investment outflows in Asia have also been picking up pace.
5 things to know:
Bets on a December rate cut by the Fed increased overnight as October price data showed disinflation continued in the US economy. ANZ Economist Bansi Madhavani says the odds of a 25 bps rate cut firmed to around 70-80% versus 60% before US CPI data printed in line with expectations.
Australian wages grew slower than expected in the third quarter at 0.8%, and 3.5% for the year - down from 4.1% in Q2. ANZ Senior Economist Catherine Birch says that’s the lowest annual rate since late 2022.
Catherine says the lower-than-expected wage growth isn’t likely to shift the Reserve Bank of Australia’s thinking. That’s partly due to ongoing jobs market strength. ANZ Research is forecasting October jobs data out today to show another strong month of growth, with the unemployment rate holding at 4.1%.
New Zealand’s net migration fell below 45,000 in the year to September, continuing a decline from over 136,000 in the year to October 2023. ANZ Economist Henry Russell says outflows of NZers to Australia are at record highs.
The Yen weakened through the key 155 mark to the US dollar overnight. A weak currency saw Japan’s goods PPI rise more than expected at 0.2% in October. ANZ FX Analyst Felix Ryan says that while the Bank of Japan wants to see inflation, it would rather this was from domestic services, and not imported goods.
Cheers
Bernard
PS: Catch you tomorrow with whether Australian jobs market data shifts the dial at all for the RBA.
