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On April 27th, Barclays analysts stated in a report that with inflation remaining high, the Federal Reserve is expected to keep the target range for the federal funds rate unchanged at its meeting this week, but a rate cut is still possible this year. The analysts said, "In a highly uncertain environment, the Fed tends to remain on hold. Strong demand and still relatively high inflation support its patience, and policymakers have also signaled a diminishing confidence in further rate cuts in the near term." The analysts indicated that if inflation falls as expected, the Fed is expected to gain sufficient confidence to begin easing policy around September. "We still expect it to cut rates this year." According to LSEG data, the money market currently prices in a 10 basis point rate cut by the Fed in 2026.The Philippine Department of Energy announced that the United States has approved an extension of the exemption period for the Philippines to purchase Russian oil and petroleum products.Toyota Motor Corp. reported a sales decline in March as demand for its best-selling RAV4 model weakened ahead of a facelift, while the conflict in Iran threatened to cut off key supplies, forcing the manufacturer to potentially reduce production. The company said Monday that global sales (including those of its subsidiaries Daihatsu and Hino) fell 5.8% year-on-year to 983,126 vehicles in March, while global production rose 3.9% to 1.02 million vehicles. These figures suggest that the worlds largest automaker is managing to stay afloat despite rising prices for raw materials such as aluminum and the base cost of auto parts due to the turmoil in the Middle East. Suppliers are preparing for shortages that could last for months, even if the Strait of Hormuz reopens and shipping returns to normal. Refineries need time to resume operations, and shipping companies need to digest the congestion caused by hundreds of ships stranded in the Persian Gulf. Major supplier Denso Corp. said in March that the ongoing conflict had reduced Japans monthly auto production by approximately 20,000 vehicles.Japans leading economic indicators for February came in at 1.3% month-on-month, compared with 0.3% previously.Japans leading indicator final reading for February was 113.3, compared to 112.4 in the previous month.

The AUD/NZD Exchange Rate Approaches 1.1000 Following a Slight Decline in Kiwi Inflation to 6.9 Percent

Larissa Barlow

Apr 21, 2022 09:40

The AUD/NZD pair is seeing a surge in demand following the release of Statistics New Zealand's annual inflation figure of 6.9 percent. The figures came in somewhat lower than expected at 7%, but the likelihood of another boost in the Reserve Bank of New Zealand's Official Cash Rate (OCR) remain high (RBNZ). Additionally, the quarterly kiwi Consumer Price Index (CPI) fell to 1.8 percent from a prior reading of 2%.

 

RBNZ Governor Adrian Orr increased the OCR by 50 basis points last week (bps). This was the RBNZ's fourth straight rate hike, bringing the OCR to 1.5 percent. The central bank stated in a statement that this was the largest rate hike in more than two decades, with the sole objective of minimizing inflation concerns. A larger-than-expected move by the RBNZ will provide the central bank with additional flexibility in future interest rate decisions. It's worth remembering that the RBNZ has been one of the most aggressive central banks in recent years, rapidly moving the grounded rates to neutral.

 

On the Australian front, the Reserve Bank of Australia's (RBA) officials have not identified any price pressures that would compel the institution to consider rate hikes. Meanwhile, investors are awaiting the release of the S&P Global Manufacturing PMI on Friday. A preliminary estimate of 57.8 is observed, compared to the earlier print of 57.7.

AUD/NZD 

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