We had several notable currency moves during the session.
Australia delivered another hotter-than-expected inflation print. The new monthly CPI series showed headline inflation rising 3.8% y/y in October, the fastest in ten months and above the 3.6% median forecast, marking a fourth straight month of re-acceleration since the June trough. The trimmed mean rose to 3.3%, continuing its upward trend and staying above the RBA’s 2–3% target band. With inflation heading the wrong way, you can forget about rate cuts from the Reserve Bank of Australia any time soon. The data gave the Australian dollar a solid lift.
Across the Tasman, the Reserve Bank of New Zealand cut its official cash rate target by 25bps to 2.25%, the lowest since mid-2022, but signalled the easing cycle is effectively over. The Bank now projects the OCR to hold around 2.25% in early 2026 before rising to 2.65% by late 2027, guidance that shuts the door on further cuts. Markets reacted quickly: the New Zealand dollar rallied about 1% to a one-week high and two-year swaps jumped.
The yen strengthened on rising expectations of a near-term Bank of Japan rate hike, with USD/JPY and yen crosses broadly lower. The catalyst was a Reuters report flagging a shift in BOJ communication around the weak yen, suggesting a possible December move. Japan’s 40-year JGB auction, meanwhile, drew demand slightly above its 12-month average as higher yields enticed buyers despite lingering fiscal concerns.
The PBOC set the onshore yuan at its strongest level since 14 October 2024.
In geopolitics:
Asian equities gained, extending Wall Street’s advance, as weaker U.S. data reinforced expectations for further Fed rate cuts.
Asia-Pac
stocks:
This article was written by Eamonn Sheridan at investinglive.com.
Australia’s inflation accelerated again in October, delivering a hotter-than-expected print that has all but extinguished hopes of further rate cuts and even revived talk of a possible hike next year. New monthly CPI data from the ABS showed headline inflation rising 3.8% y/y — the fastest in 10 months and above the 3.6% forecast — marking a fourth straight month of re-acceleration since the June low. The trimmed mean climbed to 3.3%, also continuing its upward trend.
Markets reacted sharply: the Australian dollar gained 0.5% to US$0.6502 and three-year yields spiked 11bps to 3.855%, the highest since February. Rate-cut expectations for May dropped from 40% to just 8%, while the probability of a hike by late 2025 rose to 32%. Economists described the report as “ugly,” warning the RBA cannot consider easing and may even need to contemplate tightening if inflation and services-sector pressures remain stubborn.
Although the new full monthly CPI series adds more detail, the RBA still prefers quarterly data given volatility in the monthly numbers. Even so, the broad-based nature of October’s rise — including firmer services inflation at 3.9% and housing inflation at 5.9% — underscores the challenge for policymakers after three cuts this year. Economists say the Bank must ensure inflation heads back toward the 2–3% band, though the full impact of prior easing has yet to flow through.
This article was written by Eamonn Sheridan at investinglive.com.
New Zealand’s central bank cut the official cash rate by 25 basis points to 2.25%, the lowest since mid-2022, but signalled the easing cycle is effectively over as early signs of recovery emerge. The move matched expectations, yet the tone of the statement was more cautious than markets anticipated, prompting traders to sharply scale back bets on any further cuts.
The Reserve Bank of New Zealand said the board debated between holding rates or cutting again, and stressed that future moves will depend on how inflation and growth evolve. The meeting was the final one under Governor Christian Hawkesby before Anna Breman takes over in December.
The bank now projects the OCR to sit at 2.25% in early 2026 and rise to 2.65% by late 2027, a path that, while lower than previously forecast, effectively shuts the door on more easing. Markets responded swiftly: the New Zealand dollar rose 1% to a one-week high, and two-year swaps jumped as expectations for another cut fell from just over 50% to 22%.
The RBNZ has delivered 325 basis points of cuts since August 2024 to support an economy that slipped into recession last year and remains fragile. While activity remained weak through mid-2025, lower borrowing costs have begun to lift household spending. Inflation is seen drifting back toward the 2% midpoint of the target band by mid-2026.
Economists said the central bank’s stance mirrors the caution seen at the RBA and the U.S. Federal Reserve. The committee minutes showed five of six members opted for Wednesday’s cut, but placed weight on upside risks to both inflation and output despite the “significant excess capacity” still apparent in the economy.
Growth is expected to improve modestly to 0.4% in Q3 and 0.7% in Q4, but confidence, housing and external demand remain clear headwinds.
Earlier:
This article was written by Eamonn Sheridan at investinglive.com.
Markets European markets weren’t really heading anywhere until ABC News reported on Ukraine agreeing to terms of a peace deal according to a US official: “The Ukrainians have agreed to the peace deal. There are some minor details to be sorted out”. Headlines followed talks between the US and Ukraine in Geneva this weekend and […]
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The U.S. dollar weakened after markets sharply increased the odds of Kevin Hassett being nominated as the next Federal Reserve chair, according to Mizuho Securities. Said traders are not questioning the Fed’s independence based on policy signals alone, with senior officials including John Williams, Chris Waller and Mary Daly all openly supporting another cut next month.
However, analysts noted that investors are starting to price in the risk that a Hassett nomination could politicize the central bank, a dynamic they dubbed the “Hassett effect.” This perception, they said, weighs on the dollar by raising concerns about future policy direction and the possibility of a more politically compliant Fed. Until these doubts fade, he warned, the threat of dollar “debasement” will remain elevated.
Mizuho info via a Wall Street Journal report.
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A politically motivated rate cut to please Trump is not necessarily going to be a done deal even if Hassett gets the gig:
This article was written by Eamonn Sheridan at investinglive.com.
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