HiFX: Foreign Exchange Specialists

• Weekly briefings

AU Data

• Mon All Day  Bank Holiday
• Mon 08.30 AIG Services Index previous 48.0
• Mon 11.30 ANZ Job Advertisements previous 4.1%
• Tue 11.30 Trade Balance previous -1.56bn expectation -0.91bn
• Tue 13.30 Cash Rate previous 3.00% expectation 3.00%
• Tue 14.30 RBA Rate Statement
• Wed 08.30 AIG Construction Index previous 42.4
• Wed 11.30 Home Loans previous -2.0% expectation -0.4%
• Thu 11.30 Employment Change previous -21.1K expectation -9.7K
• Thu 11.30 Unemployment Rate previous 5.8% expectation 6.0%

Last week saw retail sales recover strongly (+0.9%) from last month’s disappointment fuelling AUD buying (resulting in a 13 month high for AUD/USD) on the expectation of future RBA monetary tightening. However, Friday’s MI Inflation gauge illustrated that for now price pressures remain in check and the RBA are certainly going be cautious about raising rates too soon and thus it remains highly unlikely that the RBA will move on Tuesday. The AUD came under pressure late in the week following the Dow Jones’s biggest one day fall since July. This week’s highlights will be the aforementioned RBA announcement and the unemployment figures, as the market attempts to gauge the likelihood of two rate hikes before year end.

NZ Data

• Mon 12.00 ANZ Commodity Prices previous 4.3%
• Tue 07.00 NZIER Business Confidence previous -25

NBNZ Business Confidence continued its climb from May this year with 49.1% expecting improved conditions going forward. Such robust levels have not been observed in the last decade - since the Asian Economic Crisis took hold of the region. Meanwhile, new Building Consents remained low (1.7%) despite being the highest monthly figure in a year. Markets this week will be evaluating further figures on Business Confidence to establish whether they reflect the previous respondent’s optimism. The recent stalling of equity and commodity markets has applied the brakes to the NZD rally and thus market participants will again be watching these closely for indication on the NZD’s direction.

US Data

• Tue 00.00 ISM Non-Manufacturing PMI previous 48.4 expectation 50
• Tue 08.30 FOMC Member Dudley Speaks
• Thu 00.30 Crude Oil Inventories previous 2.8M
• Thu 05.00 Consumer Credit  previous -21.6bn expectation -10.2bn
• Thu 22.30 Unemployment Claims previous 551K expectation 543k
• Fri 00.00 Wholesale Inventories previous -1.4% expectation 0.9%
• Fri 00.30 Natural Gas Storage previous 64B
• Fri 22.30 Trade Balance previous -32.0bn expectation -32.7bn

Despite recent economic optimism reasons for concern over the health of the US economy remain; as US factory orders disappointed (falling by 0.8%), non farm payrolls losses (-263k) significantly eclipsed consensus expectations and unemployment rose 9.8%.  However, the ISM manufacturing report showed that economic activity in manufacturing (52.6) increased for the second consecutive month and the economy as a whole delivered its fifth consecutive month of growth. Personal spending (1.3%) rose the most it has in eight years advancing on stimulus provided by the governments “cash for clunkers” scheme. Recent USD weakness halted towards the end of last week following a sell off in risky assets, as the market expressed concerns over the sustainability of the recovery in the face of removing stimulus and the upcoming earnings season.  In a relatively light data week equity markets will again be a key determinant of USD’s direction with market also paying close attention to Tuesday’s ISM release to see if the service sector can follow manufacturing and move out of contraction. Consumer demand remains key to a sustainable recovery and consequently consumer credit will also be a closely watched measure this week.

JPN Data

• Wed 15.00 Leading Indicators previous 82.5%
• Thu 09.50 Current Account  previous 1.16T expectation 1.17T
• Thu 15.00 Economy Watchers Sentiment previous 41.7 expectation 42.5
• Thu 16.00 Prelim Machine Tool Orders previous 71.5%
• Fri 09.50 Core Machinery Orders previous -9.3% expectation 2.2%

The nation’s CPI fell rapidly by 2.4% topping the previous month’s decline of 2.2% as deflation remains here to stay and Japan’s recovery from its worst post-war recession continues to stall. Preliminary Industrial Production fell to 1.8%, worse than expected, signaling that positively correlated indicators such as employment levels and earnings are likely to share the same fate. Wages fell 3.1%, a slower fall on the previous months’ figure of -5.6%, but nonetheless marking the fifteenth consecutive month of declines. This week, the market will once again be looking for encouragement, paying particular attention to the Economy Watchers Sentiment which fell unexpectedly in August. Following an improved outlook relating to The BOJ’s Tankan Manufacturing Index (-24) as global stimulus packages helped boost demand overseas, Core Machinery Orders will also be under observation to see if big businesses are any more confident in an economic recovery.

Interest rate outlook