Forex news for Asia trading on Wednesday 27 October 2021

The focus for the session was the Australian inflation data release. Official inflation data in Australia is published only four times a year and today we got the CPI for the July - September quarter:

  • headline came in as expected,
  • however the core CPI measures (underlying inflation) came in hotter, above expectations and into the RBA target band for the first time since 2016 (see bullets above).

The market response was swift, with Australia's three-year bond yield rising to its highest since January 2020 and the Australian dollar marked higher. AUD/USD traded briefly to circa 0.7535 and has since tracked a small retracement and sideways. The core inflation result has added kindling to a slow-burn expectation that the RBA will hike its cash rate well before its oft-repeated forecast not to do prior to 2024 at the earliest. Interest rate markets are now pricing a hike in around 12 months or so with more to follow.

Other data released today showed a record trade deficit for New Zealand and improving industrial firm profits in China. ANZ in New Zealand also published their October Business Survey results, making a 'key point' that inflation pressures in the country are soaring (see bullets above).

In China today coal got slammed lower again. Commodity futures in China pretty much across the board are softer.

Apart from AUD, FX rates were fairly subdued. EUR and GBP are up slightly against the USD while the dollar is up just a little against the yen and CAD. After its drop overnight and 50%-odd retrace, gold slipped down a few dollars during the session here. Its still above its US-time lows though. BTC/USD is down on the session here also.

AUD marked higher upon the CPI data release:

Forex news for Asia trading onWednesday27October 2021