Friday: Pressure coming off Fed to hike

There’s more pressure off the Fed to hike as US producer prices ease more than expected. New Zealand inflation expectations fall. And Japan’s government is reported to favour a near term rate hike.

In our deep-dive interview, ANZ FX Analyst Kausani Basak analyses the implications of an investment surge in Thailand.

5 things to know in 5 minutes:

1. US producer price growth eased by more than expected in July, taking further pressure off the Fed to hike rates. The Producer Price index was flat in the month, and up 4.7% from a year ago, down from the 5.5% in June. ANZ Economist Bansi Madhavani says core PPI also decelerated.

2. New Zealand house prices were flat in July, to be down 0.7% from a year ago, according to the Real Estate Institute. ANZ Senior Economist Matthew Galt says the month matched what we’ve seen over the past three years.

3. New Zealand quarterly inflation expectations dropped in the third quarter, with the 1-year ahead falling from 3.41% in Q2 to 2.60%. The important two-year ahead measure eased from 2.53% to 2.34%. ANZ Senior Economist Miles Workman says the survey respondents expect the OCR to rise from here.

4. Japan’s producer price inflation was softer than expected in July, but remained elevated annually at above 7%. ANZ Head of FX Research Mahjabeen Zaman says that presents a pretty hawkish backdrop to the Bank of Japan’s September meeting.

5. The Japanese government was reported overnight as being in favour of a near-term Bank of Japan rate hike. It comes as Dollar-Yen has drifted to around 159 in recent days, after sitting at 157 following joint Japanese-US intervention to strengthen the Yen. Mahjabeen says officials will be keeping an eye on the currency if Dollar-Yen goes over 160 again.

Cheers,

Alex.

PS: Catch you next week with Australian July unemployment and Q2 wages data.

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