ForexLive Asia-Pacific FX news wrap: AUD dropped after CPI inflation data

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• Reminder – China, Hong Kong and Singapore are all on holiday today
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It
was a more subdued day in Asia today with no tariff talk like we had
on Monday and Tuesday this week to spur outsized volatility.

The
Bank of Japan published the minutes of its December 2024 meeting.
Members expressed various shades of confidence in the outlook for
inflation, wages, the economy, and monetary policy. But, for us here
today on January 29 the meaning of it all was moot (having little or
no practical relevance). After all, the Bank of Japan raised its
short-term rates just last week, at its January 24 meeting.

From
Australia, we had Q4 inflation data, which came in lower than in Q3,
below market central estimates, and below Reserve Bank of Australia
projections.

• headline
  inflation fell to 2.4%, just under the midpoint of the RBA’s 2 –
  3% target band
• the
  trimmed mean, a measure of core, or underlying, inflation came in at
  3.2% y/y, which while still above the top of the band was a 3-year
  low (0.5% y/y)
• a caveat to all this is that some of the inflation moderation was driven by government rebates on electricity and other subsidies, which may reverse once they expire

This
was all encouraging and indeed has prompted a repricing of a Reserve
Bank of Australia February RBA cut to around 90% now.

AUD/USD
was marked lower on the data release and has seen a small retracement
since.

Major
FX, otherwise, traded in a subdued fashion.

China,
Singapore and Hong Kong were all on holiday today for Lunar New Year.
Happy New Year to those celebrating!

This article was written by Eamonn Sheridan at www.forexlive.com.