A surging US dollar triggers currency intervention across Asia. Fed Chair Powell signals high rates for even longer. China’s GDP outstrips expectations, but weak domestic demand means further stimulus is expected. NZ inflation data due.
In our bonus deep dive interview, ANZ Economist Bansi Madhavani details what’s at stake for fiscal policy and the rupee in India’s general election, starting on Friday.
5 things to know:
A rampant US dollar is triggering interventions across Asia, as traders bed in expectations the Fed will keep rates higher for longer. Chair Jerome Powell hardened those views with comments this morning that it will take longer than expected for the Fed to be confident enough to lower interest rates. Indonesia’s central bank intervened, while Korea and Malaysia said they were ready to step in. India’s rupee hit a record low. ANZ Head of Asia Research Khoon Goh says yesterday’s move by Chinese authorities to weaken the Yuan’s fix shows just how much pressure there is.
China’s Q1 GDP was stronger than expected, with annual growth of 5.3% beating the consensus forecast of 4.8%. ANZ Senior China Strategist Zhaopeng Xing has revised up his forecasts for 2024 and 2025 to 4.9% and 4.5%, respectively.
Other China data muddied the picture. March retail sales and industrial output growth were lower than expected. New home sales by value fell 30% from a year ago. Zhaopeng says China has a two-speed economy and more domestic support is expected.
In New Zealand, house prices fell 0.5% in March. ANZ Senior Economist Miles Workman says there’s downside risk to ANZ’s forecast for 3% growth in 2024.
March quarter CPI data will help show whether inflation is heading back towards the RBNZ’s 1-3% target range. ANZ Economist Henry Russell expects March quarter CPI of 0.6% and an annual rate of 4%, slightly above the RBNZ.
Cheers
Bernard
PS: Catch you tomorrow with reviews of NZ, UK and Euro CPI data.
