OIL: Crude Jumps On US Tariffs But They Cloud The Outlook

USD/CNH tracks close to 7.2740 in early Wednesday dealings. This is off intra-session highs from Tuesday of 7.2858, but CNH still lost close to 0.30% for Tuesday's session amid broader USD gains (on-going Trump tariff threats a driver). 

• Broadly USD/CNH remains wedged between key EMAs, with recent moves above the 50-day EMA (7.2834) proving unsustainable. On the downside, we have the 100-day EMA near 7.2500.
• With China markets closed for LNY, along with Hong Kong and Singapore out today as well, CNH liquidity will clearly be impacted.
• Sentiment is likely to largely reflect broader USD shifts, as well as any tariff developments from the US. 

In local morning trade, NZGBs are unchanged after US tsys finished the NY session little changed ahead of today’s FOMC decision. 

• US tsys pared early losses after lower-than-expected Durable Goods Orders and down-revision to prior, while Capital Goods were higher than expected. December's advance durable goods report was solid overall, despite a large miss in the headline orders figure (-2.2% M/M vs +0.6% expected, prior rev -2.0% from -1.2%).
• The Conference Board consumer survey saw confidence disappoint in January at 104.1 (cons 105.9) after an upward revised 109.5 (initial 104.7), its lowest since September.
• NZ Finance Minister Nicola Willis told a parliamentary select committee in Wellington that she intends to deliver a budget surplus in the fiscal year ending June 2028, a year earlier than the Treasury Department projects.
• Swap rates are little changed.
• RBNZ dated OIS pricing is little changed. 48bps of easing is priced for February, with a cumulative 115bps by November 2025.
• Today, RBNZ Chief Economist Paul Conway will also present a speech titled: Beyond the Cycle: Growth and interest rates in the long run.
• Tomorrow, the NZ Treasury plans to sell NZ$200mn of the 1.50% May-31 bond, NZ$200mn of the 4.25% May-36 bond and NZ$100mn of the 1.75% May-41 bond.

Today Q4 and December CPI print and with economists split between February and Q2 for the first RBA rate cut it will be monitored very closely. Headline is forecast to rise 0.3% q/q with the annual rate moderating to 2.5% from 2.8% but the focus will be on the underlying trimmed mean and services inflation as the headline is impacted by government electricity rebates.

• The RBA noted in the December minutes that “underlying inflation was still too high, underpinned by persistently high services price inflation”. Thus the domestically-driven services will be an important input into the February RBA decision. With core inflation still “some way” from the mid-point, the Board will need more “confidence” before cutting, and its updated projections will be an important part of that.
• Bloomberg consensus is at 0.6% q/q and 3.3% y/y for the trimmed mean after 0.8% & 3.5% in Q3. Forecasts are between 0.4%-0.8% q/q and 3.1%-3.5% y/y. Westpac is in line with consensus whereas ANZ, CBA and NAB are all lower at 0.5% & 3.2%.
• It is worth noting that ANZ and CBA are currently forecasting a 25bp rate cut in February, whereas NAB and Westpac have it in Q2.
• Q4 headline projections range from flat to 0.6% q/q and 2.2% to 2.8% y/y. Again Westpac is the same as consensus whereas ANZ is lower at 0.1% & 2.4% and CBA & NAB at 0.2% & 2.4%.
• December headline CPI is expected to print a 2.5% y/y after 2.3%. CBA and Westpac are forecasting 2.5% whereas ANZ and NAB are at 2.4%. There isn’t a consensus estimate for the monthly trimmed mean.