GBP/USD Yawns as UK Shop Inflation Declines

UK shop inflation doesn’t usually make headlines but today’s release was further evidence that inflation is on a downward trend. The British Retail Consortium (BRC) Shop Price index rose 2.5% y/y in February, down from 2.9% in January. This marked the ninth straight monthly decline and was the lowest level since March 2022. The BRC also reported that food inflation dropped sharply in January, from 6.1% to 5.1%.

Japanese Yen Benefits from Hopes of Change in BoJ Approach

Japanese consumer inflation slowed from 2.6% y/y to 2.2% y/y in January. The data was slightly higher than the expected 2.1%, providing temporary support for the Yen, which rose 0.4% after the release, pushing USDJPY back to 150.10.

Sunset Market Commentary

Japanese inflation numbers for January this morning kicked off a moderately interesting eco calendar for today. A higher-than-expected outcome combined with base effects ready to push up the February reading rekindled expectations for the BoJ to ditch its negative policy rate and/or YCC programme as soon as March but more likely April. Japan’s 2-y yield (0.17%) closed at the highest level since 2013.

US Durable Goods Orders Slumped

US durable goods orders decreased 6.1% in January after falling 0.3%. The cost of total orders in January was the lowest since September 2022, although it has been quite volatile in recent months due to transportation orders. This was worse than the average forecast of a 4.9% fall.

NZ First Impressions: RBNZ Monetary Policy Statement

The OCR remains at 5.5%. The RBNZ’s monetary policy strategy remains unchanged, implying the OCR will remain at 5.5% until 2025 – in line with Westpac’s forecasts.

Australia: January CPI First Impressions

The Monthly CPI Indicator rose 3.4% in the year to January, in line with the outcome recorded in December. This remains  the equal softest print for monthly inflation estimate since November 2021.

AUD/NZD Technical: Squeezed Up Towards Key 1.0700 Resistance Ex-post RBNZ

The AUD/NZD has spiked up by +86 pips from today, Asian session intraday low of 1.0600, and almost hit a key short-term pivotal resistance of 1.0700 (current intraday high of 1.0686 at this time of the writing).

Review of RBNZ February 2024 Monetary Policy Statement

The RBNZ left the OCR at 5.5%. The forward profile was lowered, and now implies around a 40% chance of a further OCR increase (down from 75% previously) and is in line with our own assessment.

USD Takes Lead During Mild Risk-off

Drowned Under. The central bank of New Zealand softened its previous threat to lift rates even further (see below), turning the kiwi dollar into this morning’s biggest underperformer. The Aussie dollar trades on the backfoot as well following (incomplete) monthly CPI figures (January 3.4% vs 3.6% expected). USD takes a lead during mild risk-off. US cash yields ease less than 2 bps and German yields are ready for a lower open as well.

NZ Dollar Slides after RBNZ holds rates

The New Zealand dollar is sharply lower on Tuesday. In the European session, NZD/USD is trading at 0.6095, down 1.22%. Earlier, the New Zealand dollar dropped to a low of 0.6092, its lowest level since February 13.