Inflation in Focus, BoC to Raise Rates, RBNZ Surprises

Equities are trying to stabilize after yesterday’s losses, with the USD continuing in its dominance, pushing the USDJPY pair above 126 for the first time since May 2002.

Earlier today, the Reserve Bank of New Zealand hiked the Official Cash Rate more than expected as the central bank delivered a 50 bps rate increase, bringing the main rate from 1% to 1.5%. However, the NZDUSD pair has failed to capitalize on it and was down half a percent during the London session.

Meanwhile, WTI oil jumped above 100.00 USD again after the OPEC cut this year’s oil demand growth and its supply forecast. 

Negative sentiment persisted in the markets after comments from Russian President Vladimir Putin. He said that talks with Ukraine are at a dead-end, claiming that Ukraine has deviated from the agreements achieved at talks in Istanbul, Turkey. Putin added that the news reporting war crimes in Bucha were fake.

Yesterday’s US CPI showed another acceleration to 8.5% yearly, up from 7.9% previously. However, the core CPI remained “stable” and ticked higher a notch to 6.5%. As a result, the USD fell, while stocks and bonds gained in the initial reaction; however, markets reversed those moves shortly after. 

Today’s US PPI is expected to continue rising, likely printing 10.5% year on year (up from 10% previously), while the core indicator is projected to stay at 8.4%. 

Later in the day, the Bank of Canada is seen raising the benchmark rate by 50 bps to 1%. However, that step is already priced in. Therefore, investors will pay attention to the following statement and press conference. 

Source: https://www.axiory.com/-/market-news/inflation-in-focus-boc-to-raise-rates-rbnz-surpris