The Week Ahead
The start of the month and the second quarter of 2017 brings with it a raft of economic data, central bank meetings and minutes and speeches around the globe. The AUD has opened the week around 0.7635 against the USD , 0.6084 against the GBP and 0.7159 versus the euro. Australian markets won’t have long to wait before retail sales, commodity prices, manufacturinfg and building approvals data hits the presses on Monday.
The RBA will meet on Tuesday and we are expecting that interest rates will remain on hold again at 1.50%. Whilst the housing market continues to remain ever buoyant prticularly in Sydney and Melbourne the emergence of tighter lending practices in the banking sector will be welcomed in Martin Place by the RBA. The US Federal Reserve’s decision to increase interest rates in March will also have been welcomed by the RBA as a lever to try and put a lid on the AUD’s surge since January. Australian trade balance data is due on Tuesday and the recent strengthening of commodity prices should begin to flow through to the resulting figure. Both RBA Governor Lowe and Deputy Governor Debelle are scheduled to speak this week and the content of these talks will likely be eagerly debated.
It will be a relatively quiet week on the New Zealand economic news front with business confidence data the first off the rank on Tuesday. GlobalDairyTrade auction results will be revealed in the early hours of Wednesday morning before commodity price data later in the day. Dairy farmers will hoping for another rise in the dairy auction prices following the 1.7% increase at the last event in March reversing the trend of the previous two events. The NZD has held at 0.7000 against the USD the start the week whilst also remaining steady against the AUD.
In the US this week a number of FOMC Members will be taking to the lectern and the release of the most recent FOMC minutes later in the week will also attract enormous attention. It will be interesting to look for the depth of opposition to the most recent move higher in US iinterest rates as the decision was not unanimous. Signals for any diversion from the expected pace of rate hikes will also be eagerly sought out. Personal income data showed another increase last week with spending also increasing although at a slower rate.
There will also be a range of US data released this week and the trade balance data will be intriguing as it will now be viewed in sharper focus following the most recent Presidential Executive Orders in regard to “unfair” global trade practices. Non-farm payrolls data will close out the week on Friday US time with an expectation of an increase of approximately 160k new jobs.
With the Brexit trigger pulled last week in the UK political tensions have increased with the EU and we can expect the relationship to be marked by terse interactions as the divorce unfolds. There will be a constatnt flow of British data this week with the GDP estimate, manufacturing production and trade balance data on Friday a highlight.
Across the channel the French election is continuing to doiminate headlines and will likely do so for the foreseeable future. There will be a large number of data releases in the eurozone and major economies this week however the highlight will surely be the release of the meeting minutes from the latest ECB Monetary policy meeting.
The People’s Bank of China has announced that it has raised interest rates for small and medium sized financial institutions over the weekend. There is a bank holiday in China on Monday and Tuesday to start the week with the Caixin Services PMI data on Thursday the major data for the week. China has also weighed in on the latest US Executive Orders targeting “unfair” trade calling on the US to respect internation al trade rules and also improving communication to ensure mutual benefit is realised.
Japanese data this week starts early with the Tankan manufacturing and non-manufacturing index and manufacturing PMI on Monday. Core CPI figures will be released Tuesday and consumer confidence on Thursday. It is interesting toi note also that Japanese carmakers domestic output rose 12.5% in February compared to last year. This is the fourth consecutive monthly increase in production that has benefited from stronger sales of new models as well as an increase in exports.