In
Asia on Tuesday markets remained closed in China and
Hong Kong. On Thursday (tomorrow) China and Australia will be out on
holiday.
The
focus for the session was on New Zealand, and then Australian, CPI data
for Q4 2022. There is detail on these reports and market and analyst
responses in the bullets above. Both sets of data came in higher than
expected. Some comfort in the NZ data was in a slowing rate of
non-tradeable inflation, and indeed some market analysts trimmed
their terminal rate forecasts largely on this. NZD/USD slid a little
lower on the session but as I update is back to the middle area of
its range.
The
Australian CPI rose strongly, with the headline and both measures of
core (underlying) inflation well higher than consensus expectations.
The key ‘trimmed mean’ measure of core inflation came in at 6.9%
y/y, far above the most recent Reserve Bank of Australia forecast for
it at 6.5%. Responses were almost uniform in acknowledging a +25bp
rate hike at the February 7 meeting is now locked in. Some analysts
had been tipping an ‘on hold’ February decision but have since
changed the call to +25 based on the incoming data. Not all though.
Market pricing firmed for a +25bp move.
In
addition to the Q4 CPI the Australian Bureau of Statistics also
published December-month CPI (i.e. CPI for that month alone, not for
the quarter). This rocketed to 8.1% y/y.
AUD/USD
has risen on the session, back above 0.7100.
Elsewhere
across major FX we’ve had limited moves only. EUR/USD is up a few
tics, as it USD/JPY. EUR/JPY is up with these moves.
—
AUD/USD:
news.google.com