News

New Zealand Dollar (NZD) could continue to edge lower, but it is unlikely to be able to break below 0.5700. In the longer run, NZD is under mild downward pressure, and could edge lower, potentially testing 0.5700, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

West Texas Intermediate (WTI US Oil trades around $60.45 on Monday at the time of writing, down 0.40% on the day, after briefly touching $61.29 earlier in the day.

West Texas Intermediate (WTI US Oil trades around $60.45 on Monday at the time of writing, down 0.40% on the day, after briefly touching $61.29 earlier in the day.

Swiss Franc (CHF) underperforms as October inflation surprises to the downside, boosting market bets on an SNB rate cut while CHF retains safe-haven appeal, BBH FX analysts report.

The GBP/USD pair struggles to gain any meaningful traction at the start of a new week amid mixed fundamental backdrop and remains within striking distance of its lowest level May 12, touched last Friday.

A standoff between the Netherlands and China over chipmaker Nexperia had prompted auto giants to warn of production outages.

EXPECTATIONS

The RBA is widely expected to hold the Cash Rate unchanged at 3.6% tomorrow after the “material miss” (quoting RBA’s Governor Bullock) on inflation. In fact, the Australian Q3 inflation report last week surprised significantly to the upside, with the Trimmed Mean figure (RBA’s preferred inflation measure) printing at 1.0% Q/Q versus the RBA’s 0.6% forecast.

At this meeting, we will get the updated SMP (Statement on Monetary Policy) with new economic forecasts. The near-term inflation forecast is likely to be revised higher given the renewed pressures and improved global economic activity. As a reminder, the RBA’s inflation target is the mid-point (2.5%) of the 2-3% band. The Trimmed Mean CPI Y/Y is now at 3.0%.

STATEMENT

The statement is likely to acknowledge the increase in underlying inflation and reiterate that the decline has slowed. If the central bank adds that there are upside risks to inflation, then it would be a slightly hawkish turn. The RBA is likely to repeat that the outlook remains uncertain and might note that the labour market data was softer than expected (although Governor Bullock dismissed it as volatile).

PRESS CONFERENCE

In the press conferece, Governor Bullock is likely to repeat that future policy decisions will be cautious, and on a meeting-by-meeting and data-dependent approach. She is unlikely to offer much in terms of forward guidance as the data will eventually shape their decisions (although we will likely need notable weakening in the labour market to force them to cut).

Given the market pricing, even some hawkish comments are unlikely to change expectations much, although we should see the probabilities for a December cut evaporate to near zero. Click here to read her most recent comments.

MARKET PRICING

• November cut: 7% probability
• December cut: 16% probability
• Total easing by the end of 2026: 22 bps (next cut expected in May at the earliest)

This article was written by Giuseppe Dellamotta at investinglive.com.