NZD Falters On Slower Inflation Data, USD Mildly Firmer Elsewhere

The USD index sits marginally higher as the FOMC comes into view. The BBDXY index was last near 1242, +0.10% firmer for the session. Earlier lows were at 1240.35, which leaves us within recent ranges.

• The main focus point in Asia Pac trade has been NZD weakness. This followed earlier monthly price data, which suggests inflation is cooling more than the RBNZ expects.
• A number of local banks have lowered their inflation projections as a result.
• NZD/USD has test sub 0.6100 and sits close to this level in recent dealings, which is 0.55% weaker for the session. Note the 20-day EMA isn't too far away (0.6093), while the 200-day sits at 0.6075. NZ swap rates closed 11-13bps lower.
• As widely expected, the new NZ government passed laws returning the RBNZ to a signal price mandate.
• AUD/USD sits marginally lower, last near 0.6555, but has outperformed NZD by around 0.45%. The AUD/NZD was last near 1.0745/50. The mid year fiscal update from the government didn't impact sentiment, while CBA data showed a firmer spending in November.
• USD/JPY got to 145.19 in early trade, but now sits back at 145.60/65, slightly above NY closing levels from Tuesday. The Q4 Tankan survey was at the margin better than expected, showing solid business conditions and Capex intensions.
• The main upcoming focus will be the US FOMC decision. Prior to that we have UK monthly GDP figures.