19thDecember 2023
Tuesday
On Tuesday,December 19, 2023, Australia is set to release its Monetary Policy MeetingMinutes, coinciding with Japan's announcement of their Interest Rate Decision.This will be closely followed by the latest update on the Consumer Price Index(CPI) from Canada, marking a significant day for key economic updates fromthese nations.
AUD - Monetary Policy Meeting Minutes
This document isa comprehensive account of the most recent meeting of the Reserve Bank ofAustralia (RBA) Board, offering a detailed analysis of the economiccircumstances that shaped their determination of interest rate levels.
The Monetary Policy Meeting Minutesare scheduled for Tuesday, December 19th, at 12:30 AM GMT.
JPY - BoJ Interest RateDecision
Currency valuation is primarily influencedby short-term interest rates, with traders typically considering otherindicators as tools to forecast future changes in these rates.
At its Octobermeeting, the Bank of Japan (BoJ) maintained its key short-term interest rate at-0.1% and the target for 10-year bond yields at approximately 0%, as expected.The central bank also adjusted its stance on the long-term interest rate,defining 1.0% as a flexible "upper bound" rather than a strict limit,removing a commitment to defend this level. This follows the July decision toraise the long-term rate cap from 0.5% to 1%. In its quarterly outlook, the BoJupgraded its inflation forecasts for the fiscal years 2023 and 2024 to 2.8%, upfrom previous estimates of 1.3% and 1.2%, surpassing its 2% goal. For fiscalyear 2025, the Consumer Price Index (CPI) is expected to moderate to 1.7%,influenced by the diminishing effects of high oil prices and earlier increasesin import prices. The bank noted that Japan's economy is likely to keeprecovering at a moderate pace, driven by pent-up demand, but warned ofpotential drawbacks due to a global economic slowdown. The BoJ reaffirmed itsreadiness to implement additional easing measures if necessary.
TL;DR
Aspect
Details
1 Short-Term Interest Rate
Maintained at -0.1%
2 10-Year Bond Yield Target
Approximately 0%
3 Long-Term Interest Rate Stance
Adjusted to define 1.0% as a flexible upper bound
4 Previous Long-Term Rate Cap
Raised from 0.5% to 1% in July
5 Inflation Forecast for FY 2023
Upgraded to 2.8% (previously 1.3%)
6 Inflation Forecast for FY 2024
Upgraded to 2.8% (previously 1.2%)
7 Inflation Forecast for FY 2025
Expected to moderate to 1.7%
8 Economic Outlook
Moderate recovery driven by pent-up demand
9 Risks
Potential drawbacks from global economic slowdown
10 Policy Stance
Readiness to implement additional easing measures if necessary
The forecast for the Bank ofJapan's (BoJ) interest rate decision suggests it will remain unchangedfrom the previous figure of -0.1%.
The forthcoming interest rate decisionby the Bank of Japan (BOJ) is scheduled for Tuesday, December 19,2023, at 03:00 AM GMT.
JPY - BOJ Press Conference
This serves asone of the main channels through which the Bank of Japan (BOJ) communicateswith investors about its monetary policy. It includes details on the factorsinfluencing the latest interest rate decision, an overview of the economicforecast, inflation trends, and hints about the direction of future monetarypolicies.
The pressconference is scheduled for Tuesday, December 19, 2023, at 03:00 AM GMT.
CAD – CPI m/m
Consumer pricesconstitute the bulk of overall inflation. Inflation significantly impactscurrency valuation since increasing prices compel the central bank to hikeinterest rates to adhere to their mandate of controlling inflation.
In a recenteconomic update, it was reported that Canada's Consumer Price Index (CPI) hadseen a 0.1% increase in October 2023, aligning with market expectations andmarking a rebound from a 0.1% decrease in September. The monthly uptick wasprimarily attributed to higher costs in areas such as travel tours and propertytaxes, along with other special charges that were typically assessed annuallyin October.
The forecast forCanadian CPI m/m is reading a decrease of 0.1%, indicatinga slight deflationary trend in the economy, potentially signaling a period ofreduced consumer spending and economic slowdown.
CAD - Median CPI y/y
The majority oftotal inflation is driven by consumer prices. Inflation plays a crucial role inthe valuation of currency, as the increase in prices prompts the central bankto elevate interest rates in adherence to their mandate of controllinginflation.
In October 2023,Canada's Consumer Price Index (CPI) Median experienced a modest decrease,dropping to 3.6% from the previous month's figure of 3.9%, which was consistentwith market predictions. Reviewing historical data from 1990 to 2023, theaverage CPI Median in Canada was found to be 2.08%. The highest CPI Medianrecorded during this period was 5% in June 2022, and the lowest was 0.90% inNovember 1997.
The forecast forthe Canadian Median CPI y/y is reading an increase of 3.3%, showcasing the risein the average cost of living over the last year.
CAD - Trimmed CPI y/y
A significant portionof overall inflation is comprised of consumer prices. The importance ofinflation in determining currency value lies in the fact that escalating pricesprompt central banks to increase interest rates, adhering to their commitmentto manage and contain inflation.
In October 2023,Canada's year-on-year CPI Trimmed-Mean rate decreased to 3.5%, down from theprevious month's 3.7%, which was slightly below the market's expected rate of3.6%. Historical data from 1990 to 2023 indicates an average CPI Trimmed-Meanrate in Canada of 2.03%. The highest recorded CPI Trimmed-Mean rate within thisperiod occurred in June 2022 at 5.60%, while the lowest was registered inDecember 1997 at 0.80%.
The forecast for Canadian Trimmed CPI y/yis reading an increase of 3.2%, showcasing the rise even with the extreme pricemovements being excluded from the CPI basket.
Canada's upcoming Consumer Price Index(CPI) data release is set for Tuesday, December 19, 2023, at 1:30 PMGMT.
