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■ AUD/USD retreated overnight, settling near 0.6460. Today’s spotlight is on the Australian October CPI indicator, due at 11:30am Sydney time. Currently, the market fully anticipates the RBA’s first 25bp cut in May 2025.
■ The USD strengthened overnight but remains 0.3% below its peak following President Trump’s tariff threats against Mexico, Canada, and China. Treasury yields saw modest increases across the board. Trump’s tariff rhetoric has quashed hopes that Scott Bessent’s appointment as Treasury Secretary would soften trade policies. The looming possibility of further tariff comments from Trump may bolster the USD short-term. It’s debatable whether the President can unilaterally alter existing free trade agreements with nations like Canada and Mexico. Should these tariffs materialize, the US economy might face a more significant deceleration in 2025 than currently projected.
■ November’s FOMC minutes suggest uncertainty around the neutral interest rate, advocating for a measured approach to rate cuts. This aligns with Chair Powell’s recent stance that the FOMC isn’t rushing to reduce the Funds rate. We maintain our expectation of a 25bp cut at December’s meeting, which is about 60% priced in. However, another robust monthly core CPI for November could challenge the FOMC’s view of declining inflation, potentially weakening the case for further cuts.
■ AUD/NZD has dipped just above 1.1080. The NZ OIS market has priced in 57bp of cuts for today’s meeting and 98bp by February’s meeting.
■ AUD/CAD relinquished yesterday’s gains, hovering near 0.9080. USD/CAD remains about 0.5% higher than before Trump’s tariff threats against Canada. Given its high trade exposure, Canada’s economy is vulnerable to these tariffs.
Here are the latest mid-market rates:
| Currency Pair | Mid-market rate |
| NZD/USD | 0.5833 |
| NZD/AUD | 0.9013 |
| NZD/JPY | 89.28 |
| NZD/CNY | 4.2309 |
| NZD/EUR | 0.5563 |
| NZD/GBP | 0.4641 |
| NZD/HKD | 4.5384 |
| NZD/SGD | 0.7844 |
Chart of the day
