AU Data
- Monday 10.30 TD-MI Inflation Gauge for January previous 0.6%
- Tuesday 11.30 House Price Index for Q4 previous 3.5%
- Tuesday 11.30 Trade Balance for December previous -2,254 mln
- Wednesday 11.30 Building Approvals for December previous 8.9%
- Wednesday 11.30 Private House Approvals for December previous 0.3%
- Wednesday 11.30 Retail Sales for December previous 0.8%
- Wednesday RBA Rate Decision
AUD ended last week and starts this week firmly under-pinned by positive interst differentials and having shrugged off an IMF report that 2008 world growth will decline from 4.4% to 4.1%, the lowest growth for 5 years. The IMF also noted that the idea of economies decoupling from the US was 'exaggerated'. Australian Business Confidence also slipped to a 2 year low but this was all overshadowed by the US Fed Rate Cut and the prospect of further action to follow. This week, Building Approvals, Retail Sales and the RBA rate decision will dominate, the market is expecting a 25 bps increase in official rates to 7%.
NZ Data
- Tuesday 08.45 Employment Survey for W4 previous 1.3%
- Tuesday 08.45 Labour Cost Index for Q4 previous 0.9% m/m, 3.3% y/y
- Thursday 08.45 Employment Growth for Q4 previous -0.3%
- Thursday 08.45 Unemployment Rate for Q4 previous 3.5%
Last week New Zealand posted its smallest trade dficit (NZD 5.31b) since July 2005, the broad data shwoing a gradual rebalancing towards export-led growth and away fromdomestic consumption. Record world dairy prices, strong global demand and the newly developed Tui Oil Field were the main contibutors to the improved export performance. Sliding Building Consents (5.2%, a six year low) highlighted slowing domestic demand that may allow the RBNZ to keep rates on hold at the next meting in March. However, the positive interest rate differential is, and will remain, sizeable, therefore supporting the NZD in the near-term. Employment data this week will give further evidence as to the current state of the domestic economy.
US Data
- Monday 23.30 Challenger Layoffs for January previous 44.416k
- Tuesday 02.00 Factory Orders for December previous 1.50%
- Tuesday 02.00 ICSC Chain Stores for w/e previous -1.2% w/w, 1.3 y/y
- Wednesday 02.00 ISM Non-manufacturing for January previous 54.4 index
- Wednesday 23.00 Mortgage Market Index for w/e previous 1054.9 index
- Wednesday 23.00 Refinance Index w/e previous 5103.6
- Wednesday 00.30 Labour Costs for Q4 preliminary previous -2%
- Thursday 00.30 Productivity for Q4 preliminary previous 6.3%
- Friday 00.30 Initial Claims for w/e previous 375k
- Friday 02.00 Pending Homes Sales Index for December previous 87.6
Last the official rate decision dominated proceedings last week as the Fed cut rates by another 50 bps and left the market in no doubt that further cuts would be made in a 'timely manner'. The Fed's stated focus is firmly fixed on financial market stability. Durable Goods (+5.2%) was the only positive from last week's data, as Consumer Confidence (87.9), Jobless Claims (+69k) and Non-farm Payrolls (-17k) all disappointed. Plenty of data this week will give further clues to the direction of the US economy, though bad news is now becoming the norm and discounted by market traders.
JPN Data
- Monday 10.50 Monetary Base for January previous 0.4%
- Thursday 16.00 Coincident Indicator for December previous 30.0
- Thursday 16.00 Leading INdicator for December previous 18.2
- Friday 10.50 Bank Lending for January previous 0.1%
- Friday 10.50 Machinery Orders for December previous -2.8%
- Saturday 16.00 Economy Watchers Poll for January previous 36.6
Last weeks data confirmed that the Japanese economy continues to struggle and backs the IMF view that decoupling of the major economies is not evident. Industrial Production slowed to +1.4% in December and expected manufacturingoutput was forecast at -0.4% in January and -2.2% in February. Job Vacancies also hit a 2 year low and Housing Starts (-19.2%) highlighted Japan's dependency on export growth to drive the economy as domestic demand continues to stagnate. The JPY continues to benefit from risk aversion trading, particularly against the USD, and this looks set to continue in the short-term..
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| AUS (RBA) |
6.75% |
+25bps |
07/11/07 |
6th February |
| NZ (RBNZ) |
8.25% |
+25bps |
26/07/07 |
6th March |
| US (FED) |
3.0% |
-50bps |
31/01/08 |
18th March |
| JPN (BOJ) |
0.50% |
+25bps |
21/02/07 |
15th February |