US markets were closed for the Thanksgiving Holiday and will remain quiet for a long weekend, with Black Friday following. European markets posted gains on equity markets following slightly better than expected German inflation data. The German CPI was expected to jump to an annualised 2.3%, but only rose to 2.2%, which was chalked up as a plus. Inflation is still on the rise in Europe, following also, a sharp spike upwards in Spain. This is a deadly combination with rising deficits and debt, plus challenging energy prices in Europe in the Winter months. The US Dollar was steady, with the EUR trading 1.0550, while the GBP approaches 1.2700.
The reserve was steady, and the AUD looked to regain 0.6500, while the NZD slipped back below 0.5900. The RBNZ rate cut was more of the ‘buy the rumour, sell the fact’. A 50 basis-point rate cut would normally add downward pressure on the KIWI, but this was already built into market expectations. The interest rate differentials are likely to add to downward pressure on the NZD, in the near future. Australian inflation data was better than expected and should encourage the RBA to finally begin their own rate cut cycle.
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