Central banks hold the line as oil near $116 tests every rate call this week
Brent crude starts the week at about US$116.50 a barrel, above its early-May peak and closing on its June 2022 high of US$119, as the Federal Reserve, European Central Bank and Bank of Japan all prepare to leave rates unchanged this week. Only the Bank of Canada is expected to move, with a 25 basis point increase tipped, according to Token Times.
For Pakistan and other import-reliant emerging markets, the oil print is the week's real monetary event. Hormuz transits stayed at a trickle, with six ships exiting in 24 hours, no tankers escorted and seven entering for new loads, Token Times reported. US factory and services surveys showed firms raising selling prices briskly behind tariff protection, and year-ahead US inflation expectations edged up to 4.7% from 4.6%, a combination that complicates any pause.
New Zealand is the outlier on policy. Most analysts expect the Reserve Bank to raise the official cash rate by 25 basis points at its review, a pre-election hike, with September household living costs and October consumer and business confidence due later in the week. Australia's September CPI is expected at 4.2% and producer prices at 4.5%, while its services PMI slipped into contraction with input and output price inflation both rising.
Bond markets have already turned defensive. The US 10-year yield sits at 4.99%, down 12 basis points on the week, with the 2-10 curve at +31 basis points; the Japanese 10-year is at 2.80% and the New Zealand 10-year at 4.97%. Gold fell US$163 over the week to US$3,994 an ounce and silver slipped US$3 to just under US$54.
In digital assets, bitcoin starts the day at US$81,510, up 0.5% since Saturday and 0.3% on the week, with 24-hour volatility a low +/-0.6%. The kiwi dollar is little changed near 57 US cents, leaving the trade-weighted index just under 60.7.
