Central Bank

NZD/USD's break above 60c ahead of the RBNZ's announced that they held rates at 5.5% again was shortly lived, and momentum has turned decisively lower. Ans there could be further downside to come.

At the most basic level the Fed delivered what was expected; another policy pause with the potential for further hikes. The opening paragraph tipped noted an economy which is “expanding at a solid pace” with a slower but “strong” job growth and elevated inflation. There’s nothing remotely dovish there. And then we look at the numbers…

The US dollar rises as the Fed still expects another rate hike and only two rate cuts next year

With an ECB interest rate decision and three US data points sandwiched in between, we could be in for an interest hour's trade on EUR/USD. And that likely explains why the 1-day implied volatility band is more than twice its 20-day average.

The RBNZ held their cash rate steady for the first time following 12 consecutive hikes, whilst AUD/USD broke above its 200-day MA ahead of a key US inflation report.

Key inflation reports for Canada and Australia will be released over the next 24 hours which could have a direct impact on interest rate decisions for the BOC and RBA.

Three mighty central banks release their monetary policy decisions next week, starting with the FOMC meeting on Wednesday. But Tuesday’s inflation report could also carry some clout as it has the potential to move the needle between an anticipated pause to an undesired hike if it surprises too much to the upside.

A hot inflation report and hefty wage increase for minimum-wage earners has seen a rise in bets the RBA could hike at tomorrow’s meeting.

Market pricing and the consensus among economists firmly points towards a 25bp hike from the BOC tomorrow.

There were high expectations from the BOJ at today’s meeting, yet what they delivered was a nothing burger. That is classic BOJ!

A sleepy session in Asia has been rudely awoken from is lull on the news that the BOJ will review their YCC (yield curve control), sending the Japanese yen sharply higher across the board.

Will the stronger Core CPI cause the Bank of Mexico to hike rates by another 75bps when it meets next Thursday?

Whilst the potential for a pause cannot be ignored, I suspect the RBA are more likely to hike rates by 25bp tomorrow as they do not meet again until February.

As if 75bp was not enough, the RBNZ came out swinging by increasing their terminal rate much higher than we anticipated.

The RBA’s November minutes lean towards 25bp hike/s with a pause along the way, with a 50bp hike likely requiring higher inflation expectations and wages.

The Bank of Mexico stuck to the script and hiked rates by the same amount as the US Federal Reserve, 75bps, to bring its overnight rate to 10%.

The RBA are set to hold their November meeting tomorrow at 14:30 AEDT and, whilst the consensus is for a 25bp hike, it doesn’t mean they won’t do a 50bp one instead.