ForexLive Asia-Pacific FX news wrap: NZD (CPI) & AUD drop, bounced back

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• RBNZ’s own preferred inflation model 3.4% y/y for Q3 2024 (prior 3.6%)
• JPY strengthened a little on comments from BOJ board member Adachi
• BOJ’s Adachi says conditions are already in place to start normalising policy
• PBOC sets USD/ CNY reference rate for today at 7.1191 (vs. estimate at 7.1208)
• ICYMI – Fed’s Bostic says he sees only one more 25bp FOMC rate cut this year
• China President Xi only has 2 objectives: Bail out local govt debt, prop up stock market
• Westpac continue to expect no cash rate cut from the Reserve Bank of Australia this year
• Japan Machinery orders for August 2024: -1.9% m/m (expected +0.1%)
• Australia leading index in September shows still very slow growth ahead
• Fed’s Bostic: US economy performing quite well, confident inflation will get to 2% target
• RBNZ’s Silk says confident inflation will converge to 2% target midpoint in medium term
• RBA’s Hunter says inflation has been more sticky than the Bank expected
• Bank of Japan rate hike incoming at the December meeting. Another two in 2025.
• RBA’s Hunter says inflation expectations have not become de-anchored
• New Zealand Q3 CPI 0.6% q/q (expected 0.7%) & 2.2% y/y (expected 2.2%)
• Reports of a large fire in an Iran oil refinery
• UBS on the US election, says that it remains very close
• China (lack of) oil demand growth is helping to slam crude
• Nomura is wary of higher US inflation ahead
• Trade ideas thread – Wednesday, 16 October, insightful charts, technical analysis, ideas
• Forexlive Americas FX news wrap: Canadian CPI slumps, Chipmakers weigh on US stocks

We
had Q3 CPI data from New Zealand today, showing that its inflation
rate dropped
back into the Reserve Bank of New Zealand’s target
band for the first time since early 2021. The
CPI is also encouraging for the central bank as it came in slightly
below their most recent forecasts (issued in August).

The
New Zealand dollar lost more ground on the data, NZD/USD hit its
lowest since August. It wasn’t just the CPI, though, sentiment
continued to weaken towards the Chinese stimulus rollout. Chinese
stocks fell on this factor also.

Also
weaker was the Australian dollar.

Later
in the New Zealand day the Reserve Bank of New Zealand published its
own inflation data, the sectoral factor model. While the earlier,
StatsNZ, CPI came in at 2.2% y/y the RBNZ’s model came in much
higher, at 3.4% y/y. Both NZD/USD and AUD/USD have recovered some
ground (as I write).

Speaking of disappointment over Chinese stimulus there was a very
interesting piece in the Wall Street Journal saying the objectives in
China are to bail out indebted local governments and prop up the
equity market. Boosting consumer demand is not a high priority. There
is a summary in the points above.

From
Japan today we had very disappointing machine orders data. About the
best that could be said for it is that this is a volatile data set so
maybe it’ll bounce next month. Bank of Japan Board Member Adachi
spoke. He reiterated that rates will be raised, but only gradually.
The Bank of Japan meet later this month and expectations are for no
rate hike. Adachi’s comments support this expectation. The BOJ meet
again in December and a hike is a possibility though.

USD/JPY
dropped under 149.00 on Adachi but soon stabilised above the
figure.

Reserve
Bank of Australia Assistant Governor Hunter spoke in Sydney, saying
inflation expectations have not become de-anchored. Hunter didn’t
give any hints on when the RBA might begin its cutting cycle. Market
expectations centre on Q1 2025.

Oil steadied near its recent lows:

This article was written by Eamonn Sheridan at www.forexlive.com.