More US soft landing signs dragged US Treasury yields lower overnight, but the Aussie and Kiwi dollars are weaker after a credit rating warning for China and an RBA hold yesterday that some in the markets saw as less hawkish than expected.
In our bonus deep-dive interview, ANZ’s Head of Asia Research Khoon Goh explains why he sees Fed rate cuts in 2024 helping Asia’s currencies.
5 things to know
US job openings data was softer than expected overnight, but services sector activity was stronger, reinforcing expectations of a soft landing. The US 2-year Treasury yield fell 7 bps to 4.58% and the 10-year fell 11 basis points to 4.17%.
As expected yesterday, the RBA held its cash rate at 4.35% and with the same tightening bias. ANZ’s Head of Australian Economics Adam Boyton still sees the RBA on hold until late in 2024.
Adam is expecting Australian GDP data today to show a 0.3% rise in Q3 for annual growth of 1.7%, which won’t surprise the RBA too much.
ANZ’s Head of FX Research Mahjabeen Zaman sees the US$ index consolidating down around 103 from over 105 a month ago, having priced in a dovish outlook that the Fed will cut around 125 basis points by the end of 2024.
ANZ’s Head of G3 Economics Brian Martin says US Non Farm Payrolls data on Friday is expected to show jobs growth in November of about 180,000, which is not too hot and not too cold…just right for the Fed’s soft-landing plans.
Cheers
Bernard
PS: Look out tomorrow for Khoon Goh’s view on the Indian rupee and Singaporean dollar for 2024.
