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On May 19th, Harumi Taguchi, an economist at S&P Global Market Intelligence, stated that the Bank of Japan (BOJ) may raise its policy rate from the current 0.75% to 1.0% in July, with further rate hikes in December and 2027, bringing the policy rate to 1.5%. Taguchi noted that if rising oil prices and a weaker yen exacerbate concerns about the second-round effects of inflation, the BOJ may raise rates further. Taguchi added that given the continued high oil prices driving up demand for the dollar, rising market expectations for a Federal Reserve rate hike, and concerns about Japans fiscal expansion, the yen is unlikely to appreciate in the short term.On May 19th, according to Iranian sources, Iranian President Pezechzian, during a meeting with officials from the Ministry of Cooperation, Labor and Social Welfare, stated that economic and social problems should be addressed at their root through structural and sustainable planning. Pezechzian stated that those who lost their jobs during the war should not rely solely on unemployment insurance, but rather on creating sustainable employment opportunities. He also emphasized the need for targeted support programs to maintain existing jobs. Pezechzian further stated that controlling consumption and avoiding waste are "necessary measures at the national level" under the current circumstances, and that government agencies should play a leading role in related areas. Regarding electronic consumption vouchers, Pezechzian stated that priority should be given to low-income and vulnerable groups, and related support policies should aim to increase household purchasing power and alleviate the living pressures on low-income groups.Futures News, May 19th: Shanghai Futures Exchange (SHFE) Energy and Chemical Warehouse Receipts and Changes: 1. Pulp futures warehouse receipts: 205,945 tons, down 1,930 tons from the previous trading day; 2. Pulp futures mill warehouse receipts: 20,000 tons, unchanged from the previous trading day; 3. Offset paper futures warehouse receipts: 957 tons, unchanged from the previous trading day; 4. Offset paper futures mill warehouse receipts: 6,560 tons, unchanged from the previous trading day; 5. Fuel oil futures warehouse receipts: 47,160 tons. 6. Petroleum asphalt futures warehouse receipts: 21,120 tons, unchanged from the previous trading day; 7. Petroleum asphalt futures factory warehouse receipts: 31,220 tons, unchanged from the previous trading day; 8. Medium-sulfur crude oil futures warehouse receipts: 3,511,000 barrels, unchanged from the previous trading day; 9. Low-sulfur fuel oil futures warehouse receipts: 1,540 tons, a decrease of 500 tons from the previous trading day; 10. Low-sulfur fuel oil futures factory warehouse receipts: 0 tons, unchanged from the previous trading day.UK medium- and long-term government bond yields fell in early trading, by about 3-5 basis points.On May 19, according to reports from IRNA and Reuters, Iranian Deputy Foreign Minister Gharibabadi briefed a national conference on the current progress of negotiations with the United States and Irans response to the draft agreement proposed by the US. Gharibabadi stated that Irans recent proposals explicitly emphasized its right to the peaceful use of nuclear energy, demanded an end to the war on all fronts, including Lebanon, the lifting of the US naval blockade against Iran, the return and unfreezing of frozen Iranian assets, compensation from the US for losses incurred in the war and for reconstruction efforts, the termination of all unilateral sanctions, and the withdrawal of US troops from the region surrounding Iran.

As China's Inflation Misses Forecasts, NZD/USD Sinks Below 0.6320

Alina Haynes

Feb 10, 2023 11:53

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As a result of China's National Bureau of Statistics (NBS) releasing weaker-than-anticipated Consumer Price Index (CPI) (Jan) data, the NZD/USD pair has dropped precipitously below 0.6320. The annual inflation rate is 2.1%, which is below the consensus estimate of 2.2% but above the prior figure of 1.8%. The monthly inflation rate declined by 0.8%, but inflationary pressures rose by 0.7%.

 

China's Producer Price Index (PPI) revealed a 0.8% deflation, which is 0.8% worse than the 0.5% predicted deflation and 0.7% previous deflation. It indicates that enterprises are aggressively discounting their goods and services at the facility gates. This is symptomatic of weak household demand.

 

The Chinese government and the People's Bank of China (PBOC) may pursue expansionary stimulus and monetary policies, respectively, as the Chinese economy recovers following the lifting of economic regulations.

 

There is little doubt that the Chinese economy will experience a rise in inflationary pressures as a result of further stimulus driving commodities in a bullish path. After overcoming the pandemic, western and other Asian nations have witnessed a similar circumstance.

 

Notably, New Zealand is one of China's most important trading partners, and lower inflation will require further assistance, which will benefit the New Zealand Dollar.

 

Meanwhile, the risk mood is negative as investors become anxious in advance of next week's release of Consumer Price Index (CPI) data in the United States. S&P500 futures ended Thursday's session on a negative note, as the market thinks that the Federal Reserve (Fed) will soon hike interest rates. The US Dollar Index (DXY) has difficulty maintaining a value greater than 103.00.

 

Following the release of January's good employment report, an unanticipated rise in inflation cannot be ruled out. Consumer spending can be stimulated by an increase in consumer expenditure, which may occur from a rise in employment.

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