The Week Ahead:
The AUD has again performed strongly over the past week defying gains by the USD and weaker than anticipated Chinese trade data to open the week around 0.7629 against the greenback. Strength for the AUD was across the board opening the week at 0.6280 against the GBP and 0.6954 versus the EUR. After a recent subdued trading period against the NZD the AUD has also pushed higher to 1.0750 in a move that will no doubt be well received across the Tasman.
On the local Australian front this week the new RBA Governor Lowe will be speaking on Tuesday at a trans-Tasman focused investment forum ahead of the release of the October RBA meeting minutes.
Thursday is shaping up as the main day for Australian data this week with employment figures due and the NAB Quarterly Business Confidence index. The AUDs fortunes will most likely be tied to offshore data and events this week with commodity prices, US data and the ECB meeting key events.
In New Zealand this week inflation data is due for release on Tuesday and it will be closely monitored for signs of further action being implemented by the RBNZ in the last part of the year. GlobalDairyTrade Auction results will emerge in the early hours of Wednesday morning.
Recent inclement weather has impacted dairy production in New Zealand and this has resulted in a significant decline in the volume offered at this week’s auction. The weather has impacted dairy production by around 10% in some regions according to Fonterra.
As the stakes appear to rise ever higher in the UK around the Brexit strategy a war of words has erupted between the Bank of England Governor Carney and Prime Minister May. Effectively a message of “don’t tell me how top do my job”, Governor Carney has reiterated at a meeting in Birmingham that whilst politicians set the broad objectives they are best to remain far away from the policy settings.
With Brexit dominating the British political and economic landscape for the foreseeable future it will be interesting to watch this Punch and Judy-style double act in coming months. The GBP appears likely to remain under considerable pressure this week with the political machinations in particular continuing to take their toll.
Prime Minister May is being urged to release the plan for Brexit ahead of the triggering of the divorce proceedings. Scotland is continuing to agitate for its own potential agreement with the EU in the wake of Brexit whilst Germany is warning the UK that it can’t cherry pick the elements it values (single market access) without accepting the others it does not (most notably freedom of movement).
The ECB is scheduled to meet on Thursday and its recent policy settings are not expected to change at this month’s meeting. A more aggressive policy setting has effectively been ruled out by ECB President Draghi. The EU economic summit will also take place this week with current account figures also due to be released.
United States inflation data will be eagerly anticipated this week as will a number of speeches by FOMC members. The Beige Book data will also be released midweek as the Fed prepares for the next FOMC meeting. Key manufacturing data will also be presented during the week in the US.
As the Presidential Election campaign continues on full steam ahead this will also continue to dominate both political and economic discussions.
Chinese GDP data will be released on Wednesday and it is expected to come in at around 6.7%, consistent with both first and second quarter figures this year. Industrial production figures and retail sales data will also be released alongside the National Bureau of Statistics press conference.