It
was a busy day in Asia on Tuesday with a couple of inflation data
releases leading. South Korea was first, with its November CPI. South
Korean data does not often get a mention in the wrap but today’s
release showed the m/m headline CPI with its sharpest drop, -0.6%
m/m, since October 2020. The core rate recorded its slowest y/y rise
since March 2022.
For
Japan we then had Tokyo area inflation for November. All three
inflation indicators for the month remained well above the Bank of
Japan’s 2% target but they all dropped from the October reading and all also came in under central estimates.
USD/JPY
had a few minor swings in a 30 or so point range but as I update its
little net changed (down a little) on the session circa 147.10.
From
China today was the privately surveyed Caixin/S&P
Global Services
purchasing managers’ index (PMI). It
hit a
three-month high of 51.5 in November, well
up from October’s
50.4. All
of the Caixin PMIs (manufacturing, services, and composite)
registered solid expansiona in November.
And
so to the final Reserve Bank of Australia monetary policy decision of
the year, with the Bank leaving its cash rate unchanged at 4.35% and
issuing a less hawkish, even dovish, Statement from Governor Bullock.
The key final paragraph read like a Bank low on conviction that it
has much idea of what might lie ahead:
- Whether
further tightening of monetary policy is required to ensure that
inflation returns to target in a reasonable timeframe will depend
upon the data and the evolving assessment of risks. In making its
decisions, the Board will continue to pay close attention to
developments in the global economy, trends in domestic demand, and
the outlook for inflation and the labour market. The Board remains
resolute in its determination to return inflation to target and will
do what is necessary to achieve that outcome.
The
Bank is now on a summer break and is awaiting the next official
quarterly inflation data due on January 31 2024. The next RBA
meeting follows closely after on February 5 and 6. That meeting is
‘live’ at present.
The
Australian dollar was marked lower after the RBA announcement.
NZD/USD had been on the heavy side for the session and it was dragged
down further with the Australian dollar. As I post levels are around
0.6580 and 0.6150 respectively.
EUR/USD,
GBP/USD, USD/CHF are all little changed.
Cad
has joined its antipodean dollar friends, weakening on the session with
USD/CAD circa 1.3557 as I update.
Gold
rallied back above USD2040 while BTCUSD is around USD41.8K.
Still to come on Tuesday, at 10am US Eastern time, is the eagerly awaited ISm Services PMI. This should precipitate volatility and as for direction, check out the ‘ranges’ post above.