Consumer price growth in the euro area is expected to accelerate for a second straight month in November, an increase that might be enough to dissuade the European Central Bank from a “jumbo” rate cut of 50 basis points, according to analysts.  

“The ECB’s December meeting is just over two weeks away, and the debate on a 25bp rate cut versus a 50bp rate cut continues in earnest,” it said in a note. “This is largely because the euro area PMIs have surprised markedly to the downside. However, not all the data suggest a 50bp rate cut is warranted.” It pointed to a sharp jump in Q3 wage growth of 5.5%, last month’s rise in euro area price growth, and this month’s expected increase as obstacles to a jumbo cut from the self-described “data-dependent” ECB. (LS – Continue Reading) 

Tokyo inflation accelerated more than expected in November while other data showed the economy moving broadly in line with Bank of Japan projections, feeding into speculation over a possible December rate hike and bumping the yen.

Consumer prices excluding fresh food in the capital climbed 2.2% from a year earlier in November, picking up from 1.8% largely on a winding down of energy subsidies, according to the ministry of internal affairs Friday. Overall inflation sped up to 2.6%, as food prices also pushed up the gauge, also outpacing economist expectations. 

Japan’s currency strengthened after the report from 151.34 against the dollar to as much as 150.01 as the outcome offered support for the view that the BOJ may hike rates again in December. Overnight swaps point to a 63% chance of the central bank moving at its next meeting. (BBG – Continue Reading) 

The yen jumped as much as 1% to a six-week high at 150 per dollar on Friday, after faster than expected inflation in Tokyo supported bets for a Bank of Japan interest rate hike next month. 

The dollar sagged against most major peers in trading thinned by the U.S. Thanksgiving holiday, with sterling at the highest since Nov. 20. 

The euro edged back toward Wednesday's one-week high after recovering from a small decline in the previous session to end that day little changed. (RTRS – Continue Reading) 

Australia’s easing cycle will begin later and prove shallower than previously anticipated, ANZ Group Holdings Ltd. said after the Reserve Bank chief warned that core inflation is still too high to consider interest-rate cuts in the near term.

ANZ sees a first rate reduction in May, from February previously, and two rather than three cuts in total, according to a research note on Friday. It cited the RBA’s tone staying “on the hawkish side,” stronger jobs growth, business conditions holding up and consumer sentiment rising for the shift in forecasts. 

Governor Michele Bullock said in a speech last night that there’s still some way to go before core prices return sustainably to the central bank’s 2-3% target. (BBG –Continue Reading)