The Week Ahead: The AUD has opened the week struggling to hold on to 0.7600 against the USD. A relatively stable week for the AUD on the back of continued USD weakness started to unravel as FOMC members took to the stage to speak late last week and over the weekend. The USD had remained under pressure following the release of the FOMC meeting minutes last week. It was only the more hawkish comments of FOMC members Williams and Fischer since the minutes were released that reversed the USD fortunes with their more rosy outlook for the US economy. It is now even more likely that US Fed Chair Yellen’s speech at the Fed’s Jackson Hole Symposium late this week will be dissected ever more closely.
Whilst the FOMC members are all entitled to their individual opinion it is unlikely that they will have diverted too far from the collective song sheet that Yellen will also be using this week. Fed member Fischer in particular was clear to note that the economy is within striking distance of hitting the Fed’s economic goals that would signify the right time to raise rates. Short of expecting Yellen to overtly say that a rate hike is imminent we are anticipating that there will be a more positive and glowing review of the state of the US economy emerging from the symposium.
The Australian economic data calendar this week is as thin as the current Australian Test cricket team’s batting order with nothing of substance appearing at the start, middle or end. Offshore cues will drive the AUD performance ahead of the Jackson Hole Symposium at week’s end. Trade balance data across the Tasman in New Zealand on Wednesday is the only significant release there as well.
European data this week will be dominated by manufacturing and services PMI and consumer confidence data with a raft of key German data also due for release. British data is limited although a second estimate of GDP and a variety of data from the Confederation of British Industry will be closely watched and anticipated. Commercial property markets in London appear to have been bearing the brunt of the fallout from the lead up and outcome of the Brexit vote in June with data from Jones Lang LaSalle suggesting that capital flows were down 44% in the first half of the year. New York has taken the mantle from London as the number one city for foreign investment in commercial property.
Chinese data this week is limited to its Leading Index on Tuesday. Japanese manufacturing data will be released on Tuesday ahead of a speech by Bank of Japan Governor Kuroda. His speech will be heavily anticipated with recent murmurings that the BOJ will not shy away from additional interest rate cuts into further negative territory. This is despite the move taken in February this year failing to stimulate growth sufficiently or have any real impact upon inflation. The latest series of inflation data will be released on Friday.