SYDNEY: The Australian and New Zealand dollars were set for weekly gains on Friday with a helping hand from the yen, although focus is now on the US inflation report later in the day that could challenge or reinforce market wagers of more rate cuts there.
The Aussie was flat at $0.6513, having gained 0.4% overnight to as high as $0.6518.
Support seems to hold for now at 65 cents, with resistance around $0.6525 and $0.6628.
For the week, it was up 0.4% against the dollar, in part thanks to a 1.7% rise against the yen which has been pressured by hardline conservative Sanae Takaichi’s election as Japan’s prime minister.
The kiwi was little changed at $0.5751, after eking out a small gain of 0.2% overnight.
It was set for a weekly rise of 0.5%, helped by a 1.9% gain against the yen.
Overnight, Wall Street finished higher after the White House confirmed US President Donald Trump will meet Chinese President Xi Jinping next week in South Korea, fuelling hopes of a resolution to the escalating trade war between the two countries.
Chinese Vice Premier He Lifeng is set to meet US Treasury Secretary Scott Bessent from Friday.
The next major event for investors is US consumer inflation data for September where expectations are for an uptick in annual headline inflation to 3.1% and for the core to hold steady.
“Today’s US CPI inflation should not change the expectation for the two 25-bps Fed cuts this year,” said Philip Wee, a senior FX strategist at DBS.
“The Fed is in risk management mode, driven by a prolonged US government shutdown that led to data lapses and increased uncertainty for furloughed federal workers.”
In Australia, third-quarter CPI - due next Wednesday - dominates the calendar next week and again will likely decide whether the Reserve Bank of Australia cuts its 3.60% cash rate at its November 3-4 meeting.
ANZ analysts expect the closely watched trimmed mean measure to print at a quarterly rate of 0.9%, preventing a cut in November.
“With a pick-up in consumer spending and a faster pace of GDP growth than was the case a year ago, we still think that no move in November and a final easing in February are the most likely outcomes if the CPI print is as we expect,” they said in a note to clients.
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