As anticipation builds for the release of US CPI data scheduled for Wednesday, financial markets across the Asia-Pacific region are watching closely. The figures will play a critical role in shaping market expectations around future Federal Reserve policy moves and could influence trading dynamics globally. Federal Reserve speakers are slated to address topics ranging from energy to economic policy, providing additional insights ahead of the announcement. In Australia, traders are on alert as Reserve Bank of Australia Governor Bullock prepares to deliver a speech on Thursday. While the argument for an immediate rate cut by the Reserve Bank of Australia remains weak, any hints regarding future policy changes will be carefully scrutinized by currency traders. Recent Australian data indicated a moderation in wage inflation, with the Wage Price Index for Q3 2024 recording a 0.8% increase, slightly below the expectation of 0.9%.
Despite this softening, it is unlikely to prompt the central bank to adjust its cash rate soon, with subsequent meetings scheduled for December and February. Japan's economic indicators presented a contrast with a higher-than-anticipated Producer Price Index (PPI) for October, which rose 0.2% month-over-month and 3.4% year-over-year. This unexpected uptick in prices has sparked discussions about a potential rate hike from the Bank of Japan. However, political pressures are simultaneously pushing against this idea, advocating for wage growth advancements before any policy shifts. The central bank is set to convene next on December 18-19, where these issues will likely be under intense deliberation.
Elsewhere, headlines emerged with Japan's Seven & i Holdings contemplating a management buyout, and in the UK, Bank of England MPC member Catherine Mann will share her views in a speech. On the energy front, Barclays maintained its outlook that current oil market dynamics suggest stability, dismissing expectations of significant changes soon. Turning to China, the People's Bank of China (PBoC) has taken strong measures to support the yuan, evidenced by setting a stronger USD/CNY mid-point, a move that has bolstered the currency onshore and offshore. Governor Pan Gongsheng reaffirmed the PBoC's commitment to preventing excessive currency depreciation, emphasizing a proactive stance against exchange rate overshoots.
On the other side of the globe, there's buzz in the US about significant developments in corporate tax policy. This includes potential EPS benefits for S&P 500 equities stemming from corporate tax cuts, a development closely watched by market participants. Meanwhile, Amazon's Jeff Bezos made headlines by offloading $1.25 billion worth of shares. Cryptocurrency markets remain volatile, with Bitcoin breaching the $90,000 mark, driven by speculative fervor and new developments including a mysterious DOGE initiative linked to Elon Musk and Donald Trump. Overall, stock indices in the US ended lower Tuesday, marking a pause in this week’s rally, as traders remained cautious ahead of pivotal inflation data. In the interim, currency pairs like USD/JPY experienced slight increases, reflecting the quiet waiting game among traders preferring to position themselves post-CPI release.
