Daily Financial Breakfast 28 October 2026: Australian Underlying Inflation Runs Above RBA Projection; RBNZ Maintains Rate at 2.75%

Market News Today: Surprise RBNZ Hold Weighs on Kiwi as Oil Advances

• A 4–3 vote left the Reserve Bank of New Zealand's cash rate at 2.75%, an unexpected hold that saw the New Zealand dollar lose as much as 1.6% against the US dollar.
• At a seasonally adjusted 1% quarter on quarter, Australian third-quarter trimmed mean inflation came in above the Reserve Bank of Australia's projection of 0.8%.
• Yemen's Houthis said they had launched a missile towards Saudi Arabia's Ras Tanura refinery, after which WTI crude futures advanced 1.42% to near $101.00.
• Below-average gas storage in Europe, combined with restricted LNG supply, had made the region more reliant on flexible LNG imports, Commerzbank said.
• At 3.1%, Canadian headline inflation for September surpassed the Bank of Canada's third-quarter projection of 2.5%; market pricing indicated an 80% chance of a 25-basis-point rate rise.
• According to Danske Bank, September credit-growth momentum in the eurozone was at its highest since 2022, despite banks tightening credit standards more than expected in the third quarter.

Currencies, Equities and Gold Register Mixed Moves

Dow Futures Fall as S&P 500 and Nasdaq 100 Advance

A 0.22% decline took Dow Jones futures to around 52,460 in Wednesday's European trading. S&P 500 futures, however, were up 0.08% at around 7,760, with Nasdaq 100 futures gaining 0.45% to near 29,950.

Sterling Slips as EUR/USD Remains Near Its Yearly Low

Near 102.40 in early European dealing, the U.S. Dollar Index accompanied EUR/USD trading close to its yearly low of 1.1113. EUR/USD had stood at around 1.1145 on Tuesday, then near 1.1125 during Wednesday's early Asian session. Having traded down 0.14% at 1.3321 on Tuesday, sterling subsequently fell below 1.3300. A fourth successive daily advance took USD/CHF to around 0.8300 in Asian dealing. USD/CAD recorded a second day of gains and subsequently remained above 1.4000, while Tuesday had seen USD/JPY at around 157.85.

Gold Retreats After Setting a Weekly High

Tuesday's rebound in gold took the price from a daily low of $3,989 to $4,061, a recovery of more than 1%. Prices were then around $4,065 in Wednesday's early Asian session before a further rise established a weekly high near $4,070. A retreat from that peak followed.

Asia-Pacific Rate Outlook Shifts on RBNZ Hold and Inflation Data

RBNZ Keeps Rate at 2.75%, Sending the New Zealand Dollar Lower

An Official Cash Rate of 2.75% was retained by the Reserve Bank of New Zealand following a narrow 4–3 vote. The decision ran counter to widespread forecasts of a 25-basis-point rise: ahead of the announcement, money markets had priced in a 100% chance of an increase to 3%.

Further tightening might nonetheless be needed to counter rising fourth-quarter inflation, the central bank indicated. Against the US dollar, the New Zealand dollar slipped below 0.5600 during the Asian session. Reports later put its fall at as much as 1.6%, following an earlier Wednesday reading of a 1.28% decline to near 0.5600.

Stronger Australian inflation figures, coupled with New Zealand's unexpected decision to keep rates unchanged, also lifted the Australian dollar against the New Zealand dollar. It reached its highest level since March 2013.

Australian Inflation Overshoot Lifts the Dollar

The Reserve Bank of Australia's 0.8% projection was exceeded by a seasonally adjusted quarterly rise of 1% in third-quarter trimmed mean inflation, according to Standard Chartered's Nicholas Chia. Short-term inflation expectations registered a modest increase as well.

Improvements in labour-market indicators, including vacancies, had tempered policymakers' concern over steadily rising unemployment, Chia said, drawing on RBA communications and the September meeting minutes. In addition, he pointed to high oil prices and existing capacity pressures as influences on the inflation outlook.

Following the inflation release, AUD/JPY notched up a fourth successive day of gains, reaching around 111.30 in Asian dealing. The Australian dollar was also up 0.15% against the US dollar on Wednesday, at near 0.7035.

Supply Concerns Shape Energy & Geopolitical Developments

Houthi Missile Claim Pushes WTI Towards $101

A ballistic missile had been launched towards eastern Saudi Arabia's Ras Tanura oil refinery on Tuesday, Yemen's Iran-aligned Houthis claimed, according to Reuters. The refinery is Saudi Arabia's largest. This was a claim by the Houthis, not confirmation that damage had occurred or output had been disrupted.

Returning concerns over Saudi supply brought an end to WTI crude's two-day decline. From around $100.30 per barrel in Wednesday's Asian session, the benchmark moved to around $100.75 early in European trading. Later European dealing saw NYMEX WTI futures up 1.42% at near $101.00.

Low Gas Inventories Deepen Europe's LNG Dependence, Says Commerzbank

Greater dependence on flexibly available LNG cargoes has resulted from Europe's relatively low gas inventories and diminished LNG supply, according to Commerzbank economist Norman Liebke. Competition for LNG had grown stronger despite European gas consumption remaining below previous years' levels.

Among the constraints on supply, Liebke pointed to the loss of 17% of Qatar's capacity over the medium term. The focus of his assessment was restricted LNG availability alongside lower storage, rather than any reported fresh interruption to deliveries to Europe.

Canadian & Eurozone Data Reshape Monetary Conditions

Canadian Data Overshoot Central Bank Forecasts as Rate-Rise Bets Build

A September headline consumer inflation rate of 3.1% year on year put Canada above the Bank of Canada's 2.5% third-quarter projection, according to Brown Brothers Harriman's Elias Haddad. Growth also exceeded the bank's forecast: second-quarter real GDP expanded at an annualised 3.3%, against a projection of 2.5%.

More subdued underlying inflation left the September average of CPI trim and CPI median at 1.85%, slightly below the central bank's third-quarter projection of 2.0%. That did not prevent an increase in firms' one- and two-year inflation expectations. As Governor Tiff Macklem recently cautioned, “the risk that inflation broadens and becomes more persistent has gone up”.

An 80% chance of a 25-basis-point rise to 2.50% was reflected in market pricing, with rates unchanged since December 2025. For National Bank of Canada economists Taylor Schleich and Ethan Currie, contained core inflation and economic slack had previously given policymakers room to be patient. Their assessment had changed in light of sustained high oil prices and a firmer growth backdrop.

Eurozone Credit Gains Momentum Despite Stricter Bank Standards

Banks tightened credit standards by more than anticipated in the European Central Bank's third-quarter Bank Lending Survey, according to the research team at Danske Bank. Much of the tightening came from French banks, though the net share reporting stricter standards was still low in historical terms.

A further acceleration in credit-growth momentum emerged from separate September figures, taking it to its highest level since 2022. Broad-based euro weakness on Tuesday was accompanied by a small widening in the French OAT–German Bund yield spread, Danske Bank also reported.

Policy Announcements and UK Budget Lead the Calendar

• Bank of Canada to Set Policy and Release Monetary Policy Report (28 October 2026, 9:45am New York): A policy announcement and publication of the Monetary Policy Report are scheduled from Canada's central bank.
• Federal Reserve to Announce Rates Before Press Conference (28 October 2026): The scheduled Federal Open Market Committee interest-rate decision will precede a press conference.
• UK Government to Publish Budget (28 October 2026): The budget is scheduled for release by the UK government.
• Reserve Bank of Australia to Review Policy After Inflation Reading (3 November 2026): Third-quarter underlying inflation data precede the RBA's next policy meeting.
• European Central Bank Prepares to Announce Rates: A monetary-policy announcement is due from the ECB.
• Bank of Japan Prepares to Set Monetary Policy: A decision on monetary policy is due from the Bank of Japan.