RBNZ Slashes Cash Rate by Half-Percent
AUD
The Aussie Dollar opens lower against the major’s bar the USD, after yesterday's Aus CPI print for October showed consumer inflation advanced 2.1% from a year earlier, below economists’ estimate of a 2.3% increase. The headline figure has now remained within the Reserve Bank’s 2-3% target for three months. In contrast, the trimmed mean core measure, which smooths out volatile items and is the focus of the RBA’s attention, climbed to 3.5% from 3.2% in the prior month, however most money markets believe the RBA is likely to stay on hold until May 2025 at the earliest. Asian equities finished the session mixed, Nikkei -0.8%, Hang Seng +2.3%, and Shenzhen +1.7%. The ASX closed upbeat +0.6%, as consumer discretionary lead gains. To commodities, precious metals Gold, and Silver both -0.1%, while Iron Ore and Copper were up 0.5%, and 0.8% respectively. Not much domestically today with Private Capital Expenditure q/q set for release later this morning at 11:30, however, all eyes will be focused later this evening when RBA Gov Bullock speaks at 7:55pm for a CEDA conference.
USD
AUDUSD opens higher this morning at 0.6496 after a myriad of mixed data was released overnight out of the US with the main events being Prelim GDP q/q first, increasing at an annual rate of 2.8% in Q4 2024, and US PCE inflation increasing 0.3% in October, in-line with forecasts and the consensus. The US inflation figures show stubborn price pressures which reinforce the Federal Reserve’s cautionary posture toward future interest-rate cuts. Other noteworthy release which came through yesterday were Unemployment Claims which ticked down slightly from the previous month to 213k from forecasts of 215k. US equities however closed in the red with the Dow Jones -0.2%, S&P 500 -0.4%, and the NASDAQ -0.6%. No further news set for release tonight as US banks will be closed in observance of Thanksgiving Day.
EUR
AUDEUR opens lower this morning at 0.6149 despite consumer sentiment in Germany declining significantly in November with GfK Consumer Climate coming through at -23.3 from forecasts of -18.8. German consumers show that they are also more pessimistic about the development of the general economic situation for the fourth time in a row. In particular, the significant decrease in income expectations for the next 12 months. Eurozone equities closed in the red with the DAX -0.2%, and the CAC -0.7%. There will be a few key data releases out of the Eurozone today with German Prelim CPI m/m forecasted to decrease from 0.4% to -0.2% which should be released sometime today as it is an all-day event, and Spanish Flash CPI y/y forecasted to increase from 1.8% to 2.3% at 7pm.
GBP
AUDGBP opens lower this morning at 0.5122 after what was a quiet day for news releases out of the UK yesterday. UK equities closed in green with the FTSE +0.2%. No further news set for release out of the UK today with the main even this week being Friday night with BoE Governor Bailey speaking and a few other minor releases with the BoE Financial Stability Report, FPC Meeting Minutes and FPC Statement.
NZD
AUDNZD opens lower this morning at 1.1018 despite the Reserve Bank of New Zealand agreeing to reduce the Official Cash Rate by 50 basis points to 4.25%. Annual consumer price inflation has shown a decline and is now close to the midpoint of the Monetary Policy Committee’s 1 to 3 percent target band. RBNZ Gov Orr also stated that there was no discussion of a 75-basis point cut (this comment strengthened the NZD), however, highlighted that OCR track was lower than August and implied another 50-basis point cut in Feb 2025. Looking at today, our Kiwi neighbours will have their ANZ Business Confidence release later this morning at 11am, with that being the last data release for the remainder of the week.