Markets are on tenterhooks ahead of US CPI data tonight and the FOMC decision on Thursday morning, although the yen is falling as expectations of a Bank of Japan hike next week evaporate.
In part two of our bonus deep-dive interview, ANZ Senior Economist Adelaide Timbrell explains why there’s such strong demand for Australia’s houses from rental property investors.
5 things to know
The yen fell sharply overnight to 146/US$ from 144 as expectations of a Bank of Japan (BoJ) tightening from -0.1% to 0.0% next week evaporated.
ANZ Head of FX Research Mahjabeen Zaman says the fundamentals of falling real wages make a BoJ tightening very difficult any time soon.
Mahjabeen says she’ll be watching the post-FOMC commentary from Fed Chair Jerome Powell for any push-back against market views of big rate cuts soon.
She sees the FOMC’s ‘dot plot’ of future rate cuts showing how much more hawkish the Fed is than market expectations of 100 bps of cuts in 2024, starting in May.
ANZ’s Head of G3 Economics Brian Martin sees US core CPI inflation of 0.3% in November and 4.0% for the year, which gives the Fed plenty of ammunition to fire back at those market expectations of big and early rate cuts.
Cheers
Bernard
PS: Look out tomorrow for analysis of US CPI data and the latest on Australian business confidence figures due later today.
