Given the very high correlations between NZ and Australian CPIs and their major components, there is information to be gained about the upcoming Q4 Australian data on January 29 from NZ’s Q4 data. Given government electricity subsidies, it is difficult to compare the headline measures. But the NZ data suggest there will be further moderation in Australia’s trimmed mean inflation but possible upside risks to services, which is a particular focus of the RBA’s.
Australia vs NZ underlying CPI y/y%
Australia vs NZ services CPI y/y%
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BOJ-dated OIS pricing is marginally softer than pre-Dec MPM levels.
Figure 1: BOJ-Dated OIS – Today Vs. Pre-BOJ MPM (October)
Source: MNI – Market News / Bloomberg
Markets slipped on the hawkish Fed, touching 141.87 on the way lower before rebounding back to flat on the dovish BoJ decision. Medium-term trend signals on the continuation chart continue to point south. A resumption of the trend would pave the way for a move towards 141.88 and 141.56, Fibonacci projection points on the continuation chart. A stronger recovery would open 144.48, the Nov 11 high. Further out, key resistance is at 146.53, the Aug 6 high (cont).
In post-Tokyo trade, JGB futures closed weaker, -9 compared to settlement levels, after a heavy NY session for US tsys. Benchmark yields finished 3-7bps higher, with the 7-year leading.