HiFX: Foreign Exchange Specialists

• Weekly briefings

AU Data

• Mon 09.30 AIG Manufacturing Index previous 51.0  
• Mon 09.45 RBA Governor Stevens Speech    
• Mon 10.30 MI Inflation Gauge previous previous 0.8%  
• Mon Tentative HIA New Home Sales previous -4.6% m/m 
• Mon 11.30 Current Account previous 16.2b expectation 17.3b
• Mon 11.30 Company Operating Profits previous -2.1% q/q expectation 0.4%
• Mon 16.30 Commodity Prices previous -11.7% y/y 
• Tue 11.30 Building Approvals previous 2.2% m/m expectation 0.6%
• Tue 11.30 Retail Sales previous -0.7% m/m expectation 1.0%
• Tue 14.30 RBA Interest Rate Decision previous 3.75% expectation 3.75%
• Tue 14.30 RBA Rate Statement      
• Wed 09.30 AIG Services Index previous 47.4  
• Wed 11.30 GDP previous 0.2% q/q expectation 0.9%
• Thu 11.30 Trade Balance previous -2.25b expectation -1.57b
• Fri 09.30 AIG Construction Index previous 57.7

Private Capital Expenditure (+5.5% q/q) beat market expectations as a government tax break for small business boosted new vehicle sales. Spending on plant and machinery also surged by 12.4% and this bodes well for the Q4 GDP release this week. Planned capital expenditure for 2009/10 ($110.4b from $103.7b) and 2010/11 ($101.1b) remains historically high and is a measure of confidence in the business community about future prospects; this is particularly true of the mining sector that is priming itself for strong demand for resources from China and India. Despite the improving outlook, Q4 Wage Prices (+0.6% q/q) eased to the slowest pace in a decade, though pay deals would likely pick up from here as demand from labour intensive industries (construction and mining) steadily increases. A broad range of data this week will give the market much to ponder but the RBA decision on Tuesday will dominate; traders are only pricing in a 30% probability of a rate hike this month.

NZ Data

• Mon 08.45 Visitor Arrivals previous 8.5% m/m 
• Mon 13.00 ANZ Commodity Prices previous 0.4% m/m

US Data

• Tue 00.30 Core PCE Price Index previous 0.1% m/m expectation 0.1%
• Tue 00.30 Personal Spending previous 0.2% m/m expectation 0.4%
• Tue 00.30 Personal Income previous 0.4% m/m expectation 0.5%
• Tue 02.00 ISM Manufacturing Index previous 58.4 expectation 57.9
• Tue 02.00 Construction Spending previous -1.2% m/m expectation -0.5%
• Tue 02.00 ISM Manufacturing Prices previous 70.0 expectation 68.3
• Wed Tentative Total Vehicle Sales previous 10.8m expectation 10.6m
• Wed 23.30 Challenger Job Cuts previous -70.4% y/y 
• Thu 00.15 ADP Non-farm Payrolls previous -22k expectation -9k
• Thu 02.00 ISM Non-manufacturing PMI previous 50.5 expectation 51.0
• Thu 06.00 Beige Book       
• Fri 00.30 Unemployment Claims previous 496k expectation 474k
• Fri 00.30 Revised Non-farm Productivity previous 6.2% q/q expectation 6.2%
• Fri 00.30 Revised Unit Labour Costs previous -4.4% q/q expectation -4.3%
• Fri 02.00 Pending Home Sales previous 1.0% m/m expectation 1.6%
• Fri 02.00 Factory Orders previous 1.0% m/m expectation 1.2%
• Fri 05.15 FOMC Member Bullard Speech    
• Sat 00.30 Non-farm Payrolls previous -20k expectation -35k
• Sat 00.30 Unemployment Rate previous 9.7% expectation 9.8%
• Sat 00.30 Average Hourly Earnings previous 0.3% m/m expectation 0.2%
• Sat 07.00 Consumer Credit previous -1.7b m/m expectation -3.6b

Federal Reserve Chairman Bernanke held firm in testimony to Capital Hill that rates would remain on hold for an extended period but some doubts about the effect of near-zero levels were heard later in the week from FOMC member Thomas Hoenig, who expressed concern that ultra-low rates, and the certainty that they will stay low for a long time, may invite unwelcome levels of speculative activity. Overall, given the high rate of unemployment, soft housing market, low levels of inflation rates and doubts about the sustainability of the recovery rates are unlikely to change for at least another 8 months. Manufacturing continues to be a bright spot in the economy as seen in the Richmond (+2) and Chicago (62.6) Manufacturing Indices that both beat expectations. However, housing is showing far less robustness and is likely to undermine consumer confidence, along with job security, for a good while yet; New Home Sales (309k), House Price Index (-1.6% m/m) and Existing Home Sales (5.05m) all disappointed last week. A plethora of data this week will culminate with Non-farm Payrolls early Saturday.

JPN Data

• Tue 10.30 Household Spending previous 2.1% y/y expectation 2.6%
• Tue 10.30 Unemployment Rate previous 5.1% expectation 5.1%
• Tue 10.50 Monetary Base previous 4.9% y/y expectation 4.8%
• Wed 12.30 Average Cash Earnings previous -6.1% y/y expectation -1.2%
• Thu 10.50 Capital Spending previous -24.8% q/y expectation -18.1%

January National Core CPI (-1.3% y/y) matched a record annual fall and highlighted that weak domestic demand is forcing firms to cut prices to try to stimulate consumer spending. The on-going deflationary environment will fuel government demands for the BOJ to increase, or at least extend, stimulus through quantitative easing. The BOJ has so far resisted ruling party pressure but may expand its fund-supply operations or increase outright government bond purchases in June, just ahead of upper house elections in July. The Trade Balance (+0.73t) beat expectations and highlighted the growing importance of Asia, particularly China, as a destination for Japanese exports; exports to China surged 79.9% y/y while those to US ‘only’ jumped 24.2% y/y. This week Household and Capital Spending will be the domestic focus.

Interest rate outlook