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The
two
items
of
most
interest
during
the
session
here
were
the
inflation
data
from
China
and
the
Reserve
Bank
of
New
Zealand
monetary
policy
Review
for
July.
The
RBNZ
dropped
a
dovish
bombshell.
I
explained
it
at
the
time
(see
bullets
above):
***
From
the
RBNZ
statement:
If
that’s
the
case
why
wouldn’t
we
expect
a
rate
cut
soon?
I
think
the
RBNZ
agree,
judging
by
this:
The
TL;DR
version
of
all
this
is
‘if
inflation
goes
down,
rates
go
down’.
***
The
interest
rate
and
FX
market
agreed.
NZD/USD
dropped
away
after
the
statement
and
rates
markets
moved
to
price
in
nearer-term
rate
cuts.
The
Reserve
Bank
of
New
Zealand
next
meet
in
August
(14th),
markets
are
close
to
pricing
in
a
40%
chance
of
a
25bp
rate
cut
at
that
meeting.
There
is
CPI
data
due
from
New
Zealand
next
week
–
this
will
be
a
critical
data
point
for
the
RBNZ
in
timing
a
rate
cut.
From
China
we
had
June
inflation
data.
Headline
CPI
came
in
at
0.2%
y/y
vs.
the
0.4%
expected
and
0.3%
in
May.
While
it
appears
China
is
in
danger
of
flirting
with
a
deflationary
CPI
again
the
core
rate
offered
some
sign
that’s
not
the
case.
Core
came
in
at
0.6%
y/y,
unchanged
from
May.
The
PPI,
of
course,
remained
in
deflation.
The
disappointment
on
the
CPI
has
reignited
calls
for
People’s
Bank
of
China
easing.
The
yuan
weakened
on
the
session.
USD/CNY
hit
its
highest
(weakest
for
CNY)
since
November
14
last
year.
Japanese
wholesale
inflation
data
showed
an
acceleration
in
June.
The
PPI
(aka
the
corporate
goods
price
index
(CGPI))
rose
2.9%
y/y.
The
yen-based
import
price
index
increased
9.5%
y/y
in
June,
from
7.1%
in
May,
a
sign
of
how
much
impact
the
weak
JPY
is
inflating
the
price
firms
charge
each
other
for
imported
raw
material.
NZD/USD
fell
on
the
day,
as
did
the
yuan
and
yen.
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