As 2023 draws to a close, disinflationary forces across the Asia & Pacific region are mostly intensifying although, with headline inflation still above target in many countries, central banks are in no hurry to cut interest rates.
The Reserve Bank of Australia is one. It delivered a ‘hawkish pause’ on interest rates earlier this month, and rates traders are only pricing in one quarter percentage point rate cut next year. And not until the fourth quarter too.
RBA Governor Michele Bowman speaks on Tuesday morning and investors – and the Aussie dollar – will be keen to see if she maintains that hawkish stance, or if it softens at all.
Investor sentiment was pretty neutral on Monday – U.S., Chinese and global stocks edged up but Asian stocks slipped, while bond yields and the dollar index were little changed on the day – but Japanese markets were more eye-catching.
The yen lost around 1% against most major currencies, and the Nikkei jumped 1.5%. Japanese markets have been on edge since investors interpreted remarks from BOJ governor Kazuo Ueda last week as paving the way for a more rapid exit from ultra-loose monetary policy.
Part of that reversed on Monday. What’s in store Tuesday?
Elsewhere, U.S. Commerce Secretary Gina Raimondo told Reuters on Monday that the Biden administration is in discussions with Nvidia about sales of some artificial intelligence chips to China but not its most advanced semiconductors.
