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Even with the latest developments out of Australia earlier today, AUD/USD is finding it tough to make any meaningful push higher. The pair continues to trade around 0.7030 on the day, once again knocking on the door of key technical resistance near its 100-day and 200-day moving averages.

The latest Australia CPI report was hotter than expected, with trimmed mean inflation rising to 3.7% against expectations of 3.6%. That certainly doesn't make the RBA's job any easier, especially with oil prices adding to inflation pressures.

And RBA governor Bullock didn't exactly mince her words either, warning that inflation remains "far too high". Her comments pretty much reinforces the narrative that the central bank is almost certainly poised for…

US Stocks Rally as Tech Leads Gains Ahead of Fed – Nasdaq Up 0.82%

US stock markets pushed higher in trading yesterday, with technology stocks once again leading the charge as investors positioned themselves ahead of more key earnings updates and a big week of central bank interest rate decisions. The Nasdaq led the gains, jumping 0.82% to close at 26,169, while the S&P 500 climbed 0.70% to finish at 7,676. The Dow Jones also pushed higher, gaining 0.28% to close at 52,361. Investors remain cautiously optimistic heading into another busy earnings period, although the focus is increasingly shifting towards Wednesday’s Federal Reserve announcement and the implications for US interest rates heading into the end of the year.

US Treasury…

●         Asian Stock Markets : Nikkei up 2.06%, Shanghai Composite down 0.13% Hang Seng down 0.23% ASX up 0.43%

●        Commodities : Gold at $4,031.15 (-0.19%) Silver at $53.755 (-1.08%), Brent Oil at 109.81 (-0.86%), WTI Oil at 100.83 (-0.90%)

●        Rates : US 10-year yield at 4.963, UK 10-year yield at 5.3484, Germany 10-year yield at 3.3554

●        (JPY) SPPI y/y   3.7% to 3.7%  expected

U.S. stock futures were little changed on Monday night following a positive session on Wall Street, as investors prepared for a busy week of corporate earnings and the Federal Reserve’s two-day policy meeting.

Dow Jones Industrial Average futures slipped 8 points, or less than…

It has been quite an eventful start to the day so far as the central bank bonanza rolls into town. That is putting inflation back in the spotlight with there already being plenty to digest before European traders get to their desks and before we even get to the main events later today.

To start with, we saw Australia's latest CPI report came in hotter than expected with trimmed mean inflation rising to 3.7%. That's not a good look and RBA governor Bullock was quick to respond in warning that inflation remains "far too high". The numbers certainly strengthen the argument for another rate hike, with Bullock's response underscoring the narrative that the central bank is facing an increasingly uncomfortable inflation outlook.

As such, that is…

Wall Street enjoyed a bit of a breather in overnight trading, as the S&P 500 gained by 0.6% and Nasdaq closed higher by 1.2%. It's a welcome relief after drop in the past two weeks as tech shares bounced back, but there are still plenty of reasons for investors to be nervous in trading this week.

For one, the rebound overnight was not all too convincing once we start to dig a little deeper beneath the surface. It was largely driven by big tech names with most of the stocks in the S&P 500 actually closing lower. That's not a good signal on market breadth now, is it?

And with the Fed decision coming up later today, followed by earnings from Microsoft and Alphabet after the closing bell, there's still quite a lot that could go wrong.

Now, the…

The immediate effect comes at Thursday’s close, when around $60 billion of passive trades is expected to cause sharp, short-lived price swings and heavy volume in affected stocks. That can briefly distort the Topix and individual names, which is why hedge funds have been positioning in advance. Over time, the quarterly weight cuts create steady selling pressure on smaller, less liquid companies and support larger stocks such as Kioxia. That may widen the gap between Japanese large caps and small caps. The 2027 re-evaluation gives companies a reason to improve liquidity and free float, which could encourage more unwinding of cross-shareholdings and buybacks. That fits the governance push foreign investors have rewarded. Watch for a…

• RBNZ’s Breman: more hikes likely at coming meetings, possibly into restrictive territory
• US warns Gulf allies of possible short, intense Iran campaign after midterms: WSJ
• Oil edges higher after Houthis claim missile strike on Saudi Arabia’s biggest refinery
• RBA’s Bullock: Inflation is far too high
• PBOC sets USD/ CNY mid-point today at 6.7165 (vs. estimate at 6.6734)
• AUD/NZD in focus as hawkish RBA signals clash with RBNZ’s surprise 4-3 hold
• RBNZ holds OCR at 2.75% in surprise 4-3 vote, says tighter policy still likely
• Australia trimmed mean CPI rises to 3.7%, above forecasts, as RBA hike case firms
• RBA’s Bullock: oil shock means inflation above August forecasts, Board meets next week
• HBM explained: the AI memory behind SK Hynix’s record profits…

This is a direct upside risk for oil. A renewed US campaign against Iran would revive the threat of Iranian retaliation against Gulf energy facilities, shipping and infrastructure, which Iran has already shown it is willing to target. With Brent already around $115, the Houthi refinery claim adding to supply nerves and OPEC+ unlikely to add barrels on Sunday, a risk premium could build in the days before the November 3 midterms. Freight and insurance costs for Gulf shipping are also exposed. The inflation consequences extend well beyond the region: higher crude would add to the pressure that the RBA flagged today and complicate Fed policy. Safe-haven flows into the dollar are possible. Gold has tended to fall on escalation as rate…

Breman’s guidance partly reverses the dovish read of the hold. Signalling likely hikes at coming meetings, possibly into restrictive territory, should push December pricing back up, support front-end yields and help the New Zealand dollar recover some of its losses. Her explicit worry about a weak currency feeding imported inflation acts as a soft floor for the kiwi, since further falls make a hike more likely. Oil is the main swing factor: fuel is already lifting inflation toward 4.4%, so higher crude, especially if a US strike on Iran escalates after the midterms, would make a December hike much more likely. The guidance also narrows the policy gap with the RBA, which may cap AUD/NZD after this morning’s divergence.

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The RBNZ held,…

I'll have more to come on this separately ... once I pick my jaw up off the floor. 

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Background:

• All 5 major NZ banks expect RBNZ to hike to 3% today, but split on how far rates will go

• Preview: RBNZ set to lift OCR to 3% ahead of election as oil and weak kiwi fuel inflation
• NZIER Shadow Board majority backs 25bp RBNZ hike to 3% as oil and weaker kiwi bite

Reserve Bank of New Zealand Governor Breman 

Oil sits at the centre of the call: the RBNZ expects fuel to lift inflation to 4.4% in the December quarter, but the majority chose to look through the direct effects for now, betting that weak demand will limit pass-through. With a hike close to fully priced, the hold is likely to hit the New Zealand dollar and pull front-end yields lower. The 4-3 split and the guidance that tighter policy is still likely should limit how far December pricing unwinds. Policy divergence is now sharp. Hotter Australian core inflation this morning and a hawkish Bullock contrast with a cautious RBNZ, which points to upside for AUD/NZD into the RBA meeting on November 2 and 3. The RBNZ’s warning about opaque AI financing and an abrupt global downturn adds a…