Daily Brief, Nov 13: Economic Events Outlook – US CPI & Fed Ready to Play
Arslan Butt • 2 min read
What’s up, traders.
The Asian session came with sharp volatility as the RBNZ (Reserve Bank of New Zealand) left the interest rate unchanged at 1%. The New Zealand Dollar has traded dramatically higher early Wednesday following the Reserve Bank (RBNZ) Monetary Policy Committee vote to hold the Official Cash Rate (OCR) at 1%.
As per the policymakers, employment persists around its highest sustainable mark while inflation prevails just beneath the 2% target mid-point. However, it’s still within the target range of RBNZ. Besides, the economic developments do not warrant a change to the previously stimulatory monetary framework at this time.
The dollar clung to most of its recent gains on Wednesday after US President Donald Trump said a trade deal with China was “close” but offered no new details on negotiations to send the greenback higher.
Watchlist – Economic Events Outlook
For all the newbies, the Core Consumer Price Index (CPI) covers the changes in the price of goods and services, excluding food and energy. A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
Lately, the US Federal Reserve Chairman Jerome Powell emphasized that recent weakness in inflation has been temporary — and the surge of core CPI to 2.1% in October supports his words.
However, the inflation figures for November may pose additional hurdles for the Federal Reserve. Headline CPI increased by 0% m/m in October and Core CPI by 0.1% while a rise of 0.3% in CPI and 0.2% in Core CPI is on the cards this week.
Fed Chair Powell Testifies – 15:00 GMT
The Federal Reserve is due to testify on the economy before the House Budget Committee in Washington DC at 15:00 GMT. Investors will tune in for any signs on monetary policy, as Powell is expected to be questioned on the recent rate decreases and the subsequent ‘pause’ his central bank published.
Following the policymaker’s interest rates drop last month, traders are eyeing evidence that Powell views the economy on stable enough ground to halt policy easing in December.
RBNZ Gov Orr Speaks – 19:10 GMT
The RBNZ (Reserve Bank of New Zealand) left the interest rate unchanged at 1%. The New Zealand Dollar has traded dramatically higher early Wednesday following the Reserve Bank (RBNZ) Monetary Policy Committee vote to hold the Official Cash Rate (OCR) at 1%.
Later in the day, we have RBNZ Governor Adrian Orr’s speech, who is due to testify on the Monetary Policy Statement before Finance and Expenditure Select Committee in Wellington. Since there was no change in the interest rate, his comments may help us drive further clues about forwarding guidance.
That’s all for now, but brace for the price action as the market is getting ready for the US CPI and Fed Chair’s speech later in the day.