Kiwi Tops G10 Pile As Expectation-Busting Inflation Print Fans Hawkish RBNZ Bets

The kiwi dollar went bid as New Zealand's Q3 CPI data showed that inflation keeps running hot, with headline printing at +7.2% Y/Y, considerably above the median estimate (+6.5%) and RBNZ projection (+6.4%). The data support the case for continued aggressive monetary tightening from New Zealand's central bank. Market participants added hawkish OCR-hike bets, with the OIS strip now pricing 70bp worth of tightening at the November meeting +11.1bp on the day), while NZ 2-Year swaps have soared to the highest point since late 2008. This came alongside a flurry of hawkish revisions to sell-side views, as the choir of voices calling for a 75bp rate hike next month grew louder, while terminal rate estimates were shifted higher.

• A degree of spillover from the NZ data has lent support to the Aussie dollar, before it took another upleg as RBA speak was crossing the wires. The minutes from the RBA's most recent monetary policy meeting showed that the decision to slow the pace of tightening was finely balanced, while Dep Gov Bullock said Australia's central bank could afford raising the cash rate target by smaller increments due to a higher frequency of its meetings.
• Gains in the Antipodeans were supported by broader risk-on mood, as an uptick in U.S. e-mini futures played down concerns over potential exhaustion after yesterday's dynamic Wall Street rally. Asia-Pac equity benchmarks are firmer, taking their cue from U.S. indices.
• Broad-based USD sales have given some reprieve to USD/JPY, which trades a handful of pips lower on the day. Japanese officials resumed their jawboning, as FinMin Suzuki said they "will be watching markets with a sense of urgency today as well."
• The RBNZ will publish its preferred metric of core inflation (sectoral factor model) later in the day. This will be the final point of note on the regional data docket, since the release of China's activity data was postponed.
• After Asia hours, focus will turn to German ZEW survey, U.S. industrial output & Canadian housing starts. Speeches are due from Fed's Bostic & Kashkari, ECB's Makhlouf & Schnabel and Riksbank's Jansson.