Analysts at Nomura expect core CPI in November to increase 0.2% (0.174%) m-o-m, a slight deceleration from October’s 0.225%, but keeping the y-o-y rate unchanged at 1.8% (1.765%).
"For November, core goods prices likely increased modestly, supported by another increase in used vehicle prices partly boosted by hurricane-related demand.
In addition, the recent stabilization of import prices likely contributed to a flattening out of other core goods prices after recent declines.
Core service prices likely increased steadily, albeit at a slightly slower pace than October. A solid increase in rent inflation combined with a modest uptick in medical care prices likely contributed to a moderate increase in core service prices.
For noncore components, food prices likely increased slightly during the month, supported by a trend-like increase in food away from home prices and we expect a moderate increase in food at home prices, the other subcomponent of food prices.
We expect that CPI’s energy prices overall likely rebounded during November, primarily driven by a surge in retail gasoline prices.
Altogether, we expect a 0.402% m-o-m increase in headline CPI inflation, corresponding to a 2.2% rate on 12-month basis. Our forecast for CPI NSA is 246.716."
Analysts at ANZ explained that Global equities rose, the US dollar was mixed, and treasury yields lifted after some further solid data and ahead of some key central bank decisions over the next day or so.
"European bourses were led higher by the CAC 40, which recorded a 0.8% gain, while other regional indices added around 0.5-0.6%. In the US, the DJIA and S&P 500 are currently up 0.5% and 0.4% respectively. Telecommunication stocks led gains in the latter."
"A number of stronger inflation prints generally weighed on fixed income markets, with the 10-year yield in the US and UK both up around 2bps to 2.41% and 1.22% respectively."
"In currency markets, the USD was mix against the G10 with SEK rising 0.7%, while expectations of M&A flows supported the AUD. Oil prices fell from a four day high with Brent crude down 1.9% to $63.5/bbl. Gold was reasonably stable at $1241/oz."
The Kiwi was mostly holding gains from the 10th Dec rally to 0.6952 recent highs in the NY session and is at a standstill in the early Asian shift. Currently, NZD/USD is trading at 0.6933, down -0.08% on the day, having posted a daily high at 0.6941 and low at 0.6932.
FOMC meeting preview: big noise, little substance?
NZD/USD is likely to continue consolidating without further domestic events and before the FOMC announcements tonight. "But it is fair to say the kiwi has held in well (despite some signs that the domestic economy is wobbling a little right now) and looks to be threatening a further modest squeeze higher, which is not unusual for this time of year," explained analysts at ANZ.
Technicals lean bearish in the near term with the 10/21 hourly SMA crossover while the key support would not come in until 0.69 the figure while, on the wide, the technicals are leaning with a bearish bias also within the aggressive downtrend from 0.7557. The key target to the upside stays with 0.6979 Nov highs while 0.6820, if broken, could be a catalyst for 30th May 2016 territory on the wide down at 0.6680.
RBA's Lowe is speaking at an event entitled, "An electronic Aussie" with an address to the 2017 Australian Payment Summit. While there is noting on monetary policy, he says that there is no case yet for issuing Australian dollars on blockchain for use with limited private systems, although adding that any form of electronic Australian dollar would best be issued by the RBA.
Some key notes:
Plausible that households, businesses will continue to hold bulk of money in commercial bank deposits.
History of private currency issuance is one of periodic panic and instability.
Says current fascination with cryptocurrencies a "speculative mania"
Hard to see cryptocurrencies being commonly used for everyday payments.
Any form of electronic Australian dollar would best be issued by the RBA.
Case for adding electronic form of Australian banknotes to payments mix has not been established.
Says few central bank peers see electronic banknotes on the horizon.
Says electronic banknotes could threaten financial stability, lead to bank runs.
Do not see case for RBA offering every Australian a bank account for making payments.
Says no case yet for issuing Australian dollars on blockchain for use with limited private systems.
About RBA Lowe
Philip Lowe replaced Glenn Stevens as governor of Australia’s central bank. Lowe was the Deputy Governor of the Reserve Bank of Australia, a position he held since February 2012.
Data source: FX Street
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