Australian CPI Falls, Japanese Yen Hits 34-Year Low

The week is relatively light in terms of financial data releases, when compared to previous ones, as Easter holidays will put some markets on hold on Good Friday. The Tokyo CPI report and some GDP data from the US and the UK will likely draw analysts’ attention before going to enjoy the long weekend.

On Wednesday morning, the Japanese yen dropped to the lowest level recorded against the US dollar since 1990, although the Bank of Japan raised interest rates last week. Japan’s finance minister, Shun'ichi Suzuki, said that the government closely monitors the situation and stressed that decisive action will be taken in case necessary. However, he declined to say if this means that an intervention in the forex market is an option.

Australian CPI February 2024

The Australian Bureau of Statistics (ABS) published earlier today its CPI inflation report for the month of February. According to the survey, inflation rose by 3.4% in February, matching January’s figure but slightly below market expectations for a 3.5% reading.

Core inflation also fell, coming in at 3.9% from 4.1% in January. Moody’s Analytics economists suggested that inflation is getting closer to the Reserve Bank of Australia (RBA) target of 2-3%, adding that “partial data suggests inflation is on track to ease to 3.35% year on year across the [March] quarter of this year, down from 4.1% in the December quarter.”

The RBA’s governing board will convene on May 7th to decide on interest rates. Its governor, Michele Bullock, has stressed that the central bank would like to see more data reports strengthening the case of inflation coming down before cutting interest rates.

BoE Policymaker Mann: Too Many Rate Cuts Expected

Catherine Mann, one of the members of the BoE’s Monetary Policy Commitee (MPC), told reporters that the number of interest rate cuts anticipated by economists is perhaps too high. Speaking to Bloomberg TV, Mann said that “they’re pricing in too many cuts – that would be my personal view – and so in some sense, I don’t have to cut because the market already is.”

Catherine Mann is considered one of the most “hawkish” rate setters in the governing council. Mann noted that “there has been a substantial easing, even since the vote last week. I think that perhaps markets are a bit too complacent about how long they think the BoE overall – the MPC – will hold rates.”

Tokyo CPI March 2024

The Japanese Statistics Bureau will publish the March Tokyo CPI report on Thursday morning. Economists expect the Tokyo Core CPI inflation to come in at 2.4%, recording a slight drop from the 2.5% figure noted in February.

ING economists suggest that “the government’s energy support programme has been a key reason for the monthly swing in inflation data, and we expect Tokyo CPI to moderate to 2.4% year-on-year from the previous month’s 2.6%.”

National CPI inflation data for February last week showed a rise to 2.8%, on an annualised basis, from 2.2% in January. The figure remained well above the Bank of Japan’s (BoJ) 2% target.

Test Your Trading Strategies on an Admirals Risk-Free Demo Account

Are you interested in practising trading without risking your funds? A demo trading account from Admirals allows you to do just that, whilst trading in realistic market conditions. Click the banner below to open a demo account today:

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.