Asia Summary and Highlights 28 Feb
RBNZ kept rate unchanged but revised inflation forecast higher
Australian January monthly inflation 3.4% y/y (vs. 3.6% expected)
Asia Session
In the February meeting, the RBNZ has kept rate unchanged with 2024 inflation forecast revised higher and OCR forecast revised lower. The hawkish speculation (2 rate hikes) from TD and ANZ are disappointed for the RBNZ recognized higher inflation in 2024 but does not see it to be significant in affecting bring inflation back to target in 2025. NZD/USD took a beating when RBNZ almost saying there will be no more hike and see the pair dropped 0.97% to 0.6110.
The latest Australian monthly inflation came in at 3.4% y/y vs. 3.6% expected. It continues to support RBA's decision to keep rates on hold. Regionally, we have headlines that the Chinese developer Country Garden Holdings said a liquidation petition has been filed against it and Hong Kong’s budget says that all demand side property cooling measures will be abandoned. Regional sentiment remains soft, though partial losses have been recovered. AUD/USD is trading 0.42% lower at 0.6516. U.S. Treasury Yields slipped across the curve while JGB yields outperform. Yet, USD/JPY is trading 0.08% higher at 150.62 as USD is broadly higher so as a comment from BoJ official saying that trend inflation is not high enough. Elsewhere, EUR/USD is down 0.15% and GBP/USD is down 0.21%.
North American session
Another very quiet session in the FX markets saw the USD slightly higher against the CAD and JPY, but otherwise not much changed. US data was on the weak side of expectations but had little impact.
January durable goods orders plunged by an even steeper than expected 6.1% with the fall fully explained by a plunge in aircraft. Ex transport data was however was also on the weak side of expectations, with a fall of 0.3%, and with December now reporting a 0.1% decline rather than a 0.5% increase. February consumer confidence with a fall to 106.7 from a downwardly revised January reading of 110.9 (from 114.8) put the index below December’s 108.0 too, though remains above the levels seen in September, October and November. A recent bounce as hopes for rate cuts built appears to be fading.