Australian CPI (inflation) data was expected to show a rise to 2.5%, but unexpectedly held steady at 2.1%.
- Australian CPI (inflation) data released a few hours ago showed an unexpectedly low rate of inflation, holding steady at an annualized rate of 2.1% over the past month, when it had been expected to rise to 2.5%. Despite the big surprise, the Australian Dollar fluctuated by only a little. However, the Australian stock market has traded a bit higher.
- The Reserve Bank of New Zealand cut its Official Rate by 0.50% as expected, to a new rate of 4.25%. The Bank also promised a further strong 50 bps rate cut happen early in 2025 if the New Zealand economy continues to improve. The New Zealand Dollar is sharply higher on the news.
- In the Forex market, the New Zealand Dollar has been the strongest major currency since the Tokyo open, while the US Dollar has been the weakest, putting the NZD/USD currency pair in focus. The greenback is in a long-term bullish trend although it is falling right now. Renewed strength in the greenback might be best exploited by going short of EUR/USD, but this currency pair has rebounded since spiking down to a new 2-year low on Friday below $1.0350. However, this is in a long-term bearish trend.
- The cryptocurrency Bitcoin has made its biggest drop since the Republican victory in the US general election during the first week of this month, falling below $91k at one point yesterday before recovering which may have shaken out many trend followers. Bitcoin has been in an amazing bull run, peaking a few days ago just shy of the major round number at $100,000. It may be that Bitcoin has peaked for some time just below $100,000.
- The FOMC Meeting Minutes released yesterday show mixed feelings within the Fed over a potential rate cut at its upcoming meeting next month. The CME FedWatch tool currently shows a 66% chance of a 25% rate cut at this meeting, up from 56% yesterday.
- There will be releases yesterday of very key data in the USA:
- Core PCE Price Index – this is the Fed’s key inflation metric, so is watched very closely. It is expected to show a second month-on-month increase of 0.3%. Higher and the chance of a rate cut will likely rice; lower, and the chance will likely fall.
- US Preliminary GDP – expected to remain at 2.8% annualized growth, anything higher might boost major US stock indices and the US Dollar.
- US Unemployment Claims
- The release yesterday of US Consumer Confidence data was as expected.
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