Dollar's rebound is picking up momentum in early US session, bolstered by latest Employment Cost Index which rose by 1.2% in Q3, marking the fastest pace since Q3 2022. This unexpected acceleration in employment costs adds to a series of economic data that suggests the US economy remains hotter than preferred. Especially, persistently elevated services inflation and tight labor market are holding back Fed's plan for interest rate cuts. With this economic backdrop, Fed Chair Jerome Powell is expected to temper market expectations tomorrow about the feasibility of three rate cuts this year, reinforcing the notion that Fed would maintain a more cautious approach to monetary policy easing.
Australian Dollar weakened across the board in Asian session, dragged down by unexpectedly poor retail sales data for March. The contraction in sales is a reminder to RBA about the ongoing impact of cost of living pressures exacerbated by higher interest rates and inflation. This challenging economic backdrop is likely to make RBA more cautious about any further rate hikes, which would place additional financial strains on consumers.
New Zealand ANZ Business Confidence fell from 34.7 to 22.9 in March. Own Activity Outlook fell from 29.5 to 22.5. Inflation expectations fell from 4.03% to 3.80%. Cost expectations rose from 73.5 to 74.6. Pricing intentions fell from 48.2 to 45.1. Profit expectations fell from 5.3 to -3.8. Wage expectations rose from 78.9 to 80.5. Employment intentions fell sharply from 6.2 to 3.5.
Nikkei tumbled sharply in Asian session today, largely in response to Yen's rebound late yesterday, which followed strong verbal interventions by Japanese officials aimed at curbing the currency's recent weakness. Additionally, profit-taking activities could be another factor as markets gear up for an extended holiday weekend.