The Aussie and Kiwi dollars have surged overnight to four-month highs against a weakening US dollar, thanks to comments from a normally hawkish Fed official suggesting US rate cuts are more likely than hikes anytime soon.
In part two of our bonus deep-dive interview, ANZ Australia Economist Blair Chapman maps out the sweet spot for his new FTE-pop indicator of Australian labour market tightness.
5 things to know
The A$ jumped to 66.65 USc and the NZ$ is up at 61.33 USc as of 5am Sydney/Melbourne time. ANZ’s NZ Senior Strategist David Croy says dovish comments by FOMC hawk Christopher Waller drove US yields and the US$ lower. The US 10-year fell as low as 4.33%. The US 2-year fell 9 bps to 4.76%.
Australian CPI data for October is expected to show just 0.1% inflation for the month, down from 0.6% in September and August, says ANZ Australia Senior Economist Catherine Birch.
But Catherine says the monthly data isn’t detailed enough to change the RBA’s mind for its cash rate decision next week, which is likely to be a hold at 4.35%.
Australian retail sales in October were weaker than expected, supporting the case for the RBA to remain on hold, says ANZ Australia Economist Maddy Dunk.
The RBNZ is expected to hold its cash rate at 5.5% this afternoon. ANZ NZ Chief Economist Sharon Zollner says she’ll be watching the RBNZ’s OCR forecast track for any signs of cuts earlier than 2025.
Cheers
Bernard
PS: Look out tomorrow for the detail on Australia’s inflation rate and where NZ interest rates are headed.
