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Australian CPI (inflation) data was expected to show a rise to 2.5%, but unexpectedly held steady at 2.1%.

1. Australian CPI (inflation) data released a few hours ago showed an unexpectedly low rate of inflation, holding steady at an annualized rate of 2.1% over the past month, when it had been expected to rise to 2.5%. Despite the big surprise, the Australian Dollar fluctuated by only a little. However, the Australian stock market has traded a bit higher.
2. The Reserve Bank of New Zealand cut its Official Rate by 0.50% as expected, to a new rate of 4.25%. The Bank also promised a further strong 50 bps rate cut happen early in 2025 if the New Zealand economy continues to improve. The New Zealand Dollar is sharply higher on the news.
3. In the Forex market, the New Zealand Dollar has been the strongest major currency since the Tokyo open, while the US Dollar has been the weakest, putting the NZD/USD currency pair in focus. The greenback is in a long-term bullish trend although it is falling right now. Renewed strength in the greenback might be best exploited by going short of EUR/USD, but this currency pair has rebounded since spiking down to a new 2-year low on Friday below $1.0350. However, this is in a long-term bearish trend.
4. The cryptocurrency Bitcoin has made its biggest drop since the Republican victory in the US general election during the first week of this month, falling below $91k at one point yesterday before recovering which may have shaken out many trend followers. Bitcoin has been in an amazing bull run, peaking a few days ago just shy of the major round number at $100,000. It may be that Bitcoin has peaked for some time just below $100,000.
5. The FOMC Meeting Minutes released yesterday show mixed feelings within the Fed over a potential rate cut at its upcoming meeting next month. The CME FedWatch tool currently shows a 66% chance of a 25% rate cut at this meeting, up from 56% yesterday.
6. There will be releases yesterday of very key data in the USA:
   • Core PCE Price Index – this is the Fed’s key inflation metric, so is watched very closely. It is expected to show a second month-on-month increase of 0.3%. Higher and the chance of a rate cut will likely rice; lower, and the chance will likely fall.
   • US Preliminary GDP – expected to remain at 2.8% annualized growth, anything higher might boost major US stock indices and the US Dollar.
   • US Unemployment Claims
7. The release yesterday of US Consumer Confidence data was as expected.

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