Asia Summary and Highlights 26 Nov
RBNZ cuts its cash rate by 25bp
Asia Session
The RBNZ has cut its cash rate by 25bp as per forecast. The RBNZ cut its cash rate by 25bp to 2.25% in the November meeting and signal there will be no more rate cut. The RBNZ downplayed the spike of Q3 CPI by transitory factors and expect inflationary pressure to ease back towards mid point of target range in 2026. The OCR forecast is seeing no more rate cut from the current 2.25% and first rate hike in late 2026, a pace slightly sharper than August OCR forecast. The reason for RBNZ's 25bps cut seems to be slow economic recovery from U.S. tariffs and geopolitical uncertainty. Market participants seize the opportunity to bid the Kiwi and send NZD/USD 1.24% higher at 0.5689. AUD/USD is trading 0.55% higher on red hot 3.8% y/y monthly CPI for October while USD/CAD slides 0.18%.
The wind begun to blow as more BoJ members signal their support for a December hike. Apart from persistent JPY weakness, the meeting between Ueda and Takaichi seems to have cleared the political obstruction for the BoJ. USD/JPY rises 0.1% to 156.19 as the broad upbeat risk atmosphere has weaken the demand for haven JPY. Else, EUR/USD and GBP/USD is up 0.18%.
North American session
The USD weakened through the North American session with a modest late correction. A 0.2% rise in September retail sales, 0.3% ex autos, 0.1% ex autos and gasoline, and accompanied by an on consensus 0.3% rise in September PPI, that saw a below consensus 0.1% rise in the core rate ex food and energy. The initial USD dip on the data was quickly corrected, but subsequently resumed. November consumer confidence at 88.7 from 95.5 provided another below consensus release, though October pending home sales were stronger than expected with a rise of 1.9%.
USD/JPY found support below 156 after falling from 156.50, perhaps cushioned by resilient equities. EUR/USD rose to 1.1565 from 1.1530, underperforming GBP/USD, though the latter was unable to sustain a move above 1.32. USD/CAD slipped to 1.41 from 1.4120 while AUD/USD rose to .6470 from .6450.