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Key insights from the week that was.

It was a historic week in Australia, marked by the ABS publishing the October CPI – the first complete set of monthly inflation data. In the event, it surprised markets materially to the upside on both a headline (3.8%yr) and trimmed mean (3.3%yr) basis, although headline came in marginally lower than our forecast of 3.9%. Base effects around electricity prices, due to government subsidies, was the chief culprit behind the lift in headline inflation. On the firmer trimmed mean result: around a third of the basket is running above 5%yr, but most of these components are administered prices, known supply shocks or volatile items, downplaying the impact of demand-side strength. Given this, we do not suspect such a pace of inflation to be sustained in 2026, so we retain our view on the outlook for inflation and interest rates.

Another surprise this week was APRA’s decision to limit high debt-to-income ratio mortgage loans. In this week’s note, Chief Economist Luci Ellis explains the policy change and why it is slightly dovish for the interest rate outlook.

In the run-up to Q3 GDP next Wednesday, we also received two partial indicators of investment.

Construction activity fell –0.7% in Q3, although this was mostly driven by an unwind in mining infrastructure installations. This is treated on a ‘completion’ basis and hence will not impact the National Accounts’ accruals-based estimates of construction activity. Rather, the strong lift in residential construction (4.2%) and bounce-backs in other infrastructure (3.1%) and non-res building (3.7%) point to a strong result for Q3.

Private CAPEX subsequently surprised to the upside, surging 6.4% in Q3 to be up 6.9% over the year. This latest move reflects a large pick-up in machinery and equipment spending (11.5%), centred on data centres and aircrafts. That said, strength was broad-based across many other non-structural industries, suggesting the cyclical upswing is broadening to businesses. The latest estimate to 2025-26 CAPEX plans were upgraded significantly off the back of the latest actual increase, and even after adjusting for inflation, the data suggests real investment intentions are on a firmer footing.

Together, these releases point to a stronger outcome for Q3 GDP. Our preview will be published later today on Westpac IQ.

In the UK, the government handed down the Autumn Budget touted as a classic ‘tax and spend’ budget. On taxation, the government announced a freeze on income tax thresholds until 2031 which will allow bracket creep to boost revenues over time. This is not dissimilar to Australia’s experience and, as we have previously discussed, can lead to a greater squeeze on household incomes over time. Other measures include a ‘mansion tax’ – a surcharge on properties valued above £2 million – and the removal of the two-child benefit cap, ending the limit on tax relief for families with more than two children. The government is also planning to raise the minimum wage by 4.1%, freeze fuel duty and rail fares and cut energy bills. All together, these measures aim to address cost of living measures while remaining fiscally prudent. The proposed budget provides the government with £22bn of headroom under its fiscal rules with borrowing expected to increase by £57bn over the forecast horizon.

Across the pond, the Fed’s Beige Book reported that even though consumer activity appears to have softened, manufacturing activity increased despite businesses remaining cautious about tariff activity. Respondents also noted that there was labour demand has weakened though businesses are opting for hiring freezes and similar strategies rather than outright layoffs. On prices, respondents reported an increase in input cost pressures though not all businesses are passing on these costs. They are being guided by “demand, competitive pressures, prices sensitivity and pushback from customers”. These comments highlighted to clear risks for activity, margins and potential inflationary pressure heading into 2026.

Closer to home, the Reserve Bank of New Zealand cut the OCR by 25bps to 2.25% reflecting greater spare capacity in the economy than previously thought. The RBNZ’s OCR track was revised down to a terminal rate of 2.20% (from 2.55% in August) with the first hike now pushed out to mid-2027. Current monetary policy settings are thought to be stimulatory and are expected to support an economic recovery. We anticipate 2.25% will be the low point for the OCR and the resulting stimulatory conditions will work to support the economy. Policy normalisation will be guided by the timing of recovery; we expect the first hike to occur in December 2026. You can read more about our RBNZ view here.

Finally, the Tokyo CPI print for September came in at 2.7% in headline terms and 2.8% excluding fresh food and energy, in line with market expectations. Food prices decelerated for a fourth month though rice prices, a key staple for Japanese consumers which shape inflation expectations and consumer sentiment, remain elevated. Prices of discretionary items in the CPI basket such as clothing and recreation items also remain high and could help justify another rate increase come December. This week BoJ dove Noguchi reiterated that the Policy Board remain on a path to raise rates but was tight-lipped on timing. Governor Ueda’s speech next week is anticipated to provide more colour on timing.

Foreign exchange (FX) intervention in Japan is defined by a unique division of labor where the Bank of Japan (BoJ) acts strictly as an agent for the Ministry of Finance (MOF). FX policy is fundamentally a fiscal decision, executed under the authority of the Minister of Finance to "contain excessive fluctuations" and stabilize exchange rates deemed inconsistent with economic fundamentals.

Operational Mechanics

How the Process Works

Who Decides? The Ministry of Finance (MOF) is the boss. They decide if and how to intervene after looking closely at the currency market.

Who Executes? The Bank of Japan (BoJ) handles the actual buying and selling of currency, following the MOF's specific orders.

Where Does the Money Come From?

To Make the Yen Stronger (Buying Yen): The MOF uses the government’s existing foreign currency reserves (money saved in U.S. dollars, etc.).

To Make the Yen Weaker (Selling Yen): The MOF has to borrow yen by issuing special government debt called Financing Bills (FBs).

Controlling the Money Supply: Even when the BoJ carries out the trade, it makes sure these currency operations don't mess up its main goal of controlling the country's money supply. The intervention is factored into its daily financial planning.

Why Interventions Work (or Don't)

Currency intervention works in two main ways:

Portfolio Balance (Changing the Supply): This involves changing the amount of different assets (like yen vs. dollars) available in the market.

Signaling (Changing Expectations): This is when the government sends a strong message to traders about what future economic policy will be.

The Big Problem for Japan: Japan has had near-zero interest rates (ZIRP) for a very long time.

Normally, actions that change the money supply (unsterilized intervention) are very effective.

However, under ZIRP, cash and short-term government debt are viewed as almost the same thing. This means changing the money supply doesn't have its usual big impact.

The Key to Success: Because the first method is weakened, the success of Japan's currency intervention depends almost entirely on the Signaling channel. The government must show strong credibility and commitment to back up its currency trades with future policy action.

The Limit: Intervention cannot permanently overcome powerful economic forces, such as the persistent difference between Japan's low interest rates and higher rates in other countries. It is only a temporary tool to reduce quick and extreme price swings.

Key Historical Interventions

Japan has historically executed interventions for two distinct purposes:

JPY-Weakening (2003–2004): This phase involved selling JPY and buying vast quantities of USD to prevent the yen's rapid appreciation, which was perceived as a hinderance to the fledgling economic recovery. The scale was record-breaking, totaling approximately ¥35 trillion (USD 340 billion) over 15 months, an amount equating to roughly 7% of Japanese GDP. This massive, concentrated scale was essential to generate a persistent, temporary impact on the exchange rate by leveraging the signaling channel.

JPY-Strengthening (2022 and 2024): Facing extreme depreciation driven by widening interest rate differentials, the MOF executed its first "buy-yen" intervention since 1998 on September 22, 2022, selling USD and buying JPY worth ¥2,838.2 billion.

Japanese Yen Index, Daily Chart

Source: TradingView

Similar apparent actions were taken in April/May 2024. In this modern context, intervention serves strategically to dampen imported inflation and buy time for the BoJ to execute its cautious, gradual monetary normalization path focused on achieving sustainable, wage-led inflation.

The Current Dynamic, USD/JPY

In recent weeks there has been a lot of chatter around possible FX intervention from Japanese officials. In the past, comments made by officials at times did the job as it served to strengthen the Japanese Yen.

Market participants have gotten wiser over time and nowadays tend to ignore comments. This means only action will suffice if the BoJ are really concerned about the value of the Yen.

USD/JPY Daily Chart, November 27, 2025

Source: TradingView

While US Markets are away for the Thanksgiving holiday, leaving the broader session fairly calm, the FX markets remain open and active, with all eyes turning to the Kiwi Dollar (NZD), posting yet another strong session.

1-Day FX Performance – NZD demarks itself in the calm Thanksgiving Session – Source: Finviz

The Antipodean currency has faced its share of struggles this year, weighed down by a slowing New Zealand economy that proved more sensitive than its neighbor Australia to the slowdown in global trade post-tariffs—a weakness that was starkly evident in a terrible Q2 GDP growth rate of -0.9%.

However, after 325 basis points of cuts, the data has started to come back in a flash. New Zealand Retail Sales just posted a strong beat of 1.9% versus the 0.5% expected, a sign of strong recovery that follows stronger inflation prints and improving Manufacturing PMIs.

New Zealand's Main Interest Rate (OCR) since 2020 – Source: Reserve Bank of New Zealand

Adding to the shift in sentiment, RBNZ Governor Christian Hawkesby mentioned that a future rate cut faces "significant hurdles."

This wording sufficed the market to assume that the 2.25% rate is the lower bound for the Kiwi rate, with markets now pricing rates to stay put throughout 2026.

This fundamental pivot is a clear sign of renewed strength for the NZD, which is up 2.65% against the US Dollar since last Friday.

Let's look at the major Kiwi pair, NZD/USD, to spot where that takes the action looking forward.

NZD/USD Multi-Timeframe Technical Analysis

Daily Chart

NZD/USD Daily Chart, November 27, 2025 – Source: TradingView

Since July 1st and the comeback of the US Dollar, the NZD/USD has been in a one-way descent, exacerbated by diverging policies between the Fed and the RBNZ.

Taking the pair all the way down to a retest of the Liberation Day troughs in a Monthly Downward Channel, the action is now marking a first clear rebound in months.

Propulsed by changing fundamentals and bullish daily divergences, the ongoing action is strong and will face hurdles at the 50-Day Moving Average (0.57268) and Channel highs.

Still, when looking at how strong the current candles are, these hurdles could be breached soon. For confirmation, look at a session close above the 50-MA.

4H Chart and Technical Levels

NZD/USD 4H Chart, November 27, 2025 – Source: TradingView

The ongoing rally is also facing a few hurdles on the intraday timeframe:

Overbought RSI levels within the Pivot Zone (0.5720 to 0.5750) could trigger some small mean-reversion.

A retest of the 4H-MA 200 (0.5690) could see higher probability for the action to continue its path higher.

NZD/USD Technical Levels to keep on your charts:

Resistance levels (NZDUSD)

• Main Support turned Pivot 0.5720 to 0.5750 (testing)
• Daily highs 0.5730
• 0.58 Key Resistance
• 0.59 (+/- 150 pips) Resistance

Support levels

• 4H 200 MA at 0.5690
• October Rebound Support at 0.5660 to 0.57
• 4H 50-period MA 0.56385
• January 2025 Support 0.5650

1H Chart

NZD/USD 1H Chart, November 27, 2025 – Source: TradingView

Looking even closer, the action is strongly following the 20-Hour MA at 0.57140;

• A break below would point to a retest of the 4H MA 200 mentioned on the 4H Timeframe
• A break and close above the Daily highs (0.5730) will then face a 100-pip resistance to breakout of the Weekly bear Channel
• Above this, the next Resistance is 600 pips higher.

Safe Trades!

NZDUSD: ⬆️ Buy

• NZDUSD broke daily Falling Wedge
•  Likely to rise to resistance level 0.5800

NZDUSD currency pair recently reversed from support area between the powerful support level 0.5550 (which has been reversing the price from January) and the lower daily Bollinger Band.

The upward reversal from this support area stopped the previous minor impulse wave 5 of the intermediate impulse wave (C) from September.

Having recently broken the resistance level 0.5700 and the daily Falling Wedge from August, NZDUSD can be expected to rise to the next resistance level 0.5800.

EURNZD: ⬇️ Sell

• EURNZD reversed from resistance area
• Likely to fall to support level 2.015

EURNZD currency pair recently reversed from resistance area between the key resistance level 2.065 (which stopped the previous minor impulse wave iii), upper daily Bollinger Band and the resistance trendline of the daily up channel from June.

The downward reversal from this resistance area started the active short-term correction iv.

Given the strength of the resistance level 2.065 and the bearish US dollar sentiment seen today, EURNZD can be expected to fall to the next support level 2.015 (target price for the completion of the active correction iv).

DAX: ⬆️ Buy

• DAX reversed from support area
• Likely to rise to resistance level 24000.00

DAX index recently reversed from support area between the support level 23000.00 (lower border of the sideways price range inside which the price has been moving from June) and the lower daily Bollinger Band.

The upward reversal from this support area stopped the previous minor impulse wave C of the intermediate ABC correction (4) from July.

Given the clear daily uptrend, DAX index can be expected to rise to the next resistance level 24000.00.

Markets

Global markets developed as one could expect with US markets closed for Thanksgiving. A lack of guidance from US markets and too little ‘new news’ on this side of the Atlantic resulted in technical, order-driven trading. Minutes of the October 29-30 ECB policy meeting didn’t bring much directional insights. The ECB looks very happy to hold on to a status quo scenario. Minor short-term shocks/surprises, if they were to occur, probably won’t steer the policy rate away from the 2% equilibrium level. Inflation has moved close to 2%. A technical dip is possible in 2026, but inflation is expected to stay close to target over the policy horizon. On activity, the ECB assesses that the economy continues to grow despite the challenging global environment. The robust labour market, solid private sector balance sheets and past interest rate cuts are mentioned as sources of resilience. Even a rather elevated level of uncertainty “justifies keeping interest rates unchanged. Maintaining policy rates at their current levels would allow for more information to become available”. “The current level of policy rates should be seen as sufficiently robust for managing shocks, in view of the two-sided inflation risks and taking into account a broad range of possible scenarios”. As said, the bar to deviate from the current 2% level remains (very) high. EMU/German yields understandably are going nowhere, changing 1 bp or less across the curve. After this week’s rebound, European equites held on to recent gains, but without US guidance, momentum dwindled (Eurostoxx 50 perfectly unchanged). Similar story on FX, EUR/USD yesterday/this morning tried a test of the 1.16 big figure, but in the end the status quo. (EUR/USD 1.159) was unavoidable. In the UK, there was also no ‘new news’, but investors had time to give a second look at yesterday’s UK budget announcement. This second opinion at least doesn’t lead to follow-through market enthusiasm. Yesterday’s easing in UK risk premia already came to a standstill. The higher budgetary buffer provides some breathing space, but doesn’t profoundly improve the overall picture, as illustrated by the decline in trend growth from the OBR. UK yields add 1.5-3.5 bps across the curve. It will be interesting to see first comments from the BoE post-budget. A softer inflation due to some subsidies/price caps shouldn’t change the BoE’s LT view on the neutral policy rate, but helps the short term narrative to err on the dovish side. Sterling also runs into resistance after yesterday’s rebound. At EUR/GBP 0.876, the pair still struggles to clear first minor support (uptrend line since June).

News & Views

Belgian headline inflation accelerated from 0.36% M/M in October to 0.56% M/M in November. The most significant price increases last month were registered for travels abroad and city trips (+11.7%), domestic appliances and repairs (+9.1%), motor fuels (+1.9%), information processing equipment (+14.6%), electricity (+1.4%), smartphones (+18.2%) as well as bread and cereals (+0.8%). However, plane tickets (-13.8%), holiday villages (-5%) and natural gas (-0.8%) have had a decreasing effect on the index. Annual inflation increased from 2% to 2.4%, the highest level since April. Core inflation accelerated from 2.58% Y/Y to 3.1% Y/Y. Energy prices fell by 2.15% Y/Y (from -1.85%). Rent inflation was broadly stable at 3.91% Y/Y while food price inflation went up from 2.68% to 3%. Services inflation surged from 3.62% to 4.52%.

The European Commission’s EMU economic confidence indicator remained broadly stable (97 from 96.8) in November. Details showed employment expectations improving, but remaining below the long term average (98.8 vs 100). On a sectoral level, more upbeat confidence in services (broad-based), retail trade (significantly better backward looking view) and construction (employment) was almost entirely offset by lower confidence in industry. Industrial managers’ confidence worsened significantly when it comes to product expectations and the current overall level of order books (both intern & extern). Selling price expectations picked up in all four business sectors, exceeding long-term average in all of them and most so in services. EC consumer confidence was confirmed at -14.2.

Daily Pivots: (S1) 1.1563; (P) 1.1582; (R1) 1.1617; More…

Intraday bias in EUR/USD stays neutral as sideway trading continues. Further decline is expected with 1.1655 resistance intact. On the downside, below 1.1490 and 1.1467 will resume the whole decline from 1.1917 high. Next targets are 1.1390, and then 38.2% retracement of 1.0176 to 1.1917 at 1.1252.

In the bigger picture, considering bearish divergence condition in D MACD, a medium term top is likely in place at 1.1917, just ahead of 1.2 key psychological level. As long as 55 W EMA (now at 1.1328) holds, the up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2000 will carry larger bullish implications. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

Daily Pivots: (S1) 0.8027; (P) 0.8055; (R1) 0.8072; More…

Intraday bias in USD/CHF stays neutral at this point. Outlook is unchanged that current rise from 0.7877 is still seen as the third leg of the corrective pattern from 0.7828 low. Above 0.8101 will target 0.8123 resistance, and then 138.2% projection of 0.7828 to 0.8075 from 0.7877 at 0.8218. However, sustained break of 55 D EMA (now at 0.8012) will bring deeper fall back to 0.7877 support instead.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8332 support turned resistance holds (2023 low).