FOREX: Limited FX Moves Ahead Of US CPI Data Later
Ahead of November US CPI out later today, there have only been restrained moves in G10 currencies. The BBDXY USD index is off its intraday low but still down 0.1%. The yen has made the largest move with USDJPY down 0.3% to 151.56 but off the intraday low of 151.42. Japanese corporate goods price inflation picked up but imported pressures fell.
- AUDUSD fell to 0.6369 in early trading continuing Tuesday’s sell off but it is now up 0.1% to 0.6384, after reaching 0.6389. RBA Deputy Governor Hauser speaks at 1800 AEDT at the ABE annual dinner. AUDJPY is 0.2% lower at 96.75 after falling to 96.62.
- NZDUSD is 0.1% higher at 0.5803 after falling to 0.5797 earlier. AUDNZD has been hovering around 1.10 for much of the session to be higher than before Tuesday’s RBA announcement.
- European currencies are little changed with ECB and SNB meetings on Thursday. EURUSD is around 1.0529, EURCHF 0.9301 and EURGBP 0.8243.
- APAC equities are mixed with the Hang Seng down 0.2%, CSI 300 flat and S&P e-mini up 0.1% and KOSPI +0.6%. Oil prices are higher with WTI +0.6% to $69.00/bbl. Copper is up 0.9% and iron ore is $105-106/t.
- November US CPI data is out later, which is expected to show headline ticking up to 2.7% y/y but core steady at 3.3% y/y. The Fed is currently forecast to cut rates 25bp on December 18. US November real earnings and federal budget balance are also out and the Bank of Canada decision is announced.
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INDONESIA: Consumer Confidence Gradually Trending Lower
Indonesian consumer confidence fell 2.4 points in October to 121.1, the lowest since December 2022. It has been gradually trending lower since April. Private consumption growth has been solid this year running at 4.9% y/y, slightly stronger than 2023. October is just one data point but maybe it is signalling the start of a slowdown in Q4. Bank Indonesia (BI) cut rates once this year in September but the outlook for further easing will depend on rupiah stability (USDIDR up 0.7% since October meeting).
- Retail sales were still robust in the year to August rising 5.8% y/y up from 4.5% in July, but domestic car sales are weak contracting by 10.4% y/y 3-month average in September.
- BI has said that it can support the economy through optimising macroprudential policies rather than rate cuts if it decides that it needs it, but it believes that private consumption will one of the drivers of Q4 2024 growth.
- The government of new President Prabowo is planning an increase in fiscal spending, which may also support private consumption going forward.
Indonesia private consumption y/y% vs consumer confidence
BONDS: NZGBS: Closed On Weak Note Despite Anchored Infl. Exps.
NZGBs closed with a modest bear-steepening, benchmark yields 1-3bps higher, after trading 2-3bps richer early in the session.
- Q4 inflation expectations from the RBNZ’s business survey showed that they remain well anchored close to the mid-point of the target band. 1-year out they moderated to 2.05% from 2.4% while 2-years out they were slightly higher at 2.1% from 2.0%. 1-year out has a 90% correlation with headline inflation and 78% with core, so the RBNZ should be assured that the former will stay in the band and that the latter should return soon. Another 50bp of easing is likely at its November 27 meeting.
- Cash US tsys are closed today for the Veterans Day holiday. Nevertheless, US tsy futures (TYZ4) are dealing heavily at 110-00, down 0-08+ from Friday's close. Fed speakers resume Tuesday in addition to the Senior Loan Officer Opinion Survey on Bank Lending Practices.
- Swap rates closed 1-2bps higher.
- RBNZ dated OIS pricing is flat to 4bps firmer across meetings, with July 2025 leading. A cumulative 92bps of easing is priced by February, with 53bps by year-end.
- Tomorrow, the local calendar will see Card Spending data, ahead of Migration data on Wednesday.
GOLD: Trump Win Weighs Despite US Fed Cut
Gold is 0.6% lower in today’s Asia-Pac session, after closing 0.8% lower at $2684.77 on Friday.
- Friday’s move left bullion 1.8% lower on the week.
- On Friday, Wall Street ended on a positive note, with the S&P marking its fourth consecutive gain amid optimism for a pro-growth, business-friendly agenda under Trump. The index rose 0.38% to close at 5,995, testing but not quite reaching the 6,000 level. This marked the S&P's 50th record high this year. The week's 4.66% rally was also the strongest weekly gain of the year.
- US short-term rates softened amid the rally in risk assets and reduced expectations for rate cuts. Typically, lower rates are supportive for gold, as it carries no interest yield.
- Despite this week’s dip, UBS analysts say that gold will likely see support as a hedge against the inflationary pressures of higher US government borrowing.
- From a technical perspective, the trend condition remains bullish, and the latest pullback is considered corrective, according to MNI’s technicals team. Attention is on a key support at $2,647.4, the 50-day EMA. For bulls, a reversal higher would refocus attention on the bull trigger at $2,790.1, the Oct 31 high.
- Meanwhile, silver has underperformed, falling by ~2.5% on Friday and 3.8% on the week.
