The
New Zealand dollar lost ground after the September quarter inflation
data came in at levels under expectations. The Reserve Bank of New
Zealand have recently paused their aggressive series of rate hikes
and the data today indicate further rate hikes are less likely, or at
least will come later than expected. Indeed, ANZ in NZ revised their
forecast for a November 2023 RBNZ rate hike to February 2024.
A
few hours later we had the Australian dollar make an opposite move,
trading higher after surprisingly hawkish minutes from
the Reserve Bank of Australia October meeting. The Statement at the
time of the meeting was not hawkish but these minutes were. The minutes have
prompted a nudge higher for the probability of a November meeting
rate hike and even another in December. I’d suggest two more hikes
this year is a very unlikely outcome but the November meeting is
still in play until we get the results of the Q3 CPI data due from
the Australian Bureau of Statistics on October 25.
After
this we had more inflation data out of New Zealand, the Reserve Bank
of New Zealand’s own preferred inflation measure, the sectoral factor
model. This fell back for the first time since at least September
2021:
To
Middle East events, the news out of the region that we received during
the session here was on the encouraging side, including:
- Secretary
of State Antony Blinken said the United States and Israel have agreed
to work out ways to let international assistance come into the
blockaded Gaza Strip – this came after a more than 7-hour meeting
between Blinken and Israel’s Prime Minister Netanyahu - US
President Biden will fly into Israel on Wednesday - US
CENTCOM commander General Kurilla flew into Tel Aviv, saying “I’m
here to ensure Israel has what it needs to defend itself,
particularly focused on avoiding other parties expanding the
conflict”
While
encouraging, keep an eye out for the beginning of ground moves into
Gaza to flush out the Hamas terrorists. This will raise the
temperature again.
AUD/NZD sharply higher during the session: