NZD steady ahead of key data updates

Key Movers

Price action across major currency markets was subdued Monday as markets square positions ahead of a host of key macroeconomic risk events. US ten-year rates rallied early before giving up gains and settling virtually in line with last week's close as investors' attentions turned to today’s all-important CPI print.

After Jerome Powell affirmed the FOMC’s commitment to tighter monetary policy, stating “we are not confident that we have achieved a sufficiently restrictive monetary policy setting to return inflation to the 2% target”, the October CPI print is even more important in guiding monetary policy expectations.

While we anticipate headline pressures will have eased as gasoline prices fall, growing service sector-led inflation remains a concern and could be a catalyst for driving rate hike expectations into the December policy update. With risk appetite subdued amid lingering concern for the Chinese and global growth outlooks in 2024 US yields continue to drive direction.

The USD hit fresh 2023 highs against the yen on Monday, closing in on a break above 152, before retreating back toward 151.50. Markets remain nervous about extending gains amid the fear of intervention, yet it seems clear the BoJ and Ministry of Finance are unlikely to intervene at this level as the focus remains on the speed and length of yen depreciation and not a fixed price point.

With the GBP and euro largely flat, focus turns to US and UK inflation data as the primary drivers through the coming 24 hours.