AU Data
- Monday 11.30 RBA Monetary Policy Statement
- Tuesday 11.30 NAB Business Confidence previous -9
- Wednesday 10.30 Westpac/Melbourne Institute Consumer Sentiment previous -6.7% m/m
- Wednesday 11.30 Wage Price Index previous 0.9% q/q
Better than expected but lagging economic indicator, Employment Change (+10,900) failed to offset the disappointments of the House Price Index (-0.3%) and Home Lending (-3.7%) that confirmed the view of a slowing domestic economy. The RBA left the official cash rate unchanged and acknowledged the ‘considerable uncertainty surrounding the outlook for demand and inflation’ in the post-decision statement but was still able to signal rate cuts in the coming months. The market has fully discounted at least 25 basis point rate cut at the next monetary policy meeting on September 2.
NZ Data
- Thursday 10.00 Business NZ Manufacturing Index 45.7
- Friday 08.45 Core Retail Sales 0.7% m/m
- Friday 08.45 Retail Sales -1.2% m/m
Better than expected Employment Change (+1.2%) did not change the market view that the RBNZ will be able to cut rates further in the months ahead in response to slowing global and domestic economic conditions. The RBNZ will be carefully watching the pace of NZD currency depreciation (last week 3.76% against the USD) to gauge the appropriate rate of monetary policy easing, mindful not to fuel inflation by cutting rates too quickly and seeing the currency collapse.
US Data
- Tuesday 22.30 Trade Balance previous $59.8b
- Wednesday 22.30 Retail Sales previous 0.1% m/m
- Wednesday 22.30 Import Price Index previous 2.6% m/m
- Thursday 00.00 Business Inventories previous 0.3% m/m
- Thursday 22.30 Consumer Price Index previous 1.1% m/m, core 0.3% m/m
- Friday 22.30 Empire State Manufacturing Index previous -4.9
- Friday 23.00 TIC Net Long-term Transactions previous $67.0b
- Friday 23.15 Capacity Utilisation Rate previous 79.9%
- Friday 23.15 Industrial Production previous 0.5% m/m
- Friday 23.55 Preliminary University of Michigan Consumer Sentiment previous 61.2
Core PCE Price Index was within expectations and the Federal Reserve was able to leave official rates on hold at 2.0%. Some hope that the US housing market maybe starting to stabilise came from Pending Home Sales that recorded a 5.5% monthly increase beating expectations of -1.0%. Not surprisingly Personal Income (+0.1%) and Personal Spending were (+0.6%) subdued given current employment and consumer confidence conditions. The USD was able to benefit dramatically from poor offshore data, particularly from Europe, with any slightly positive US data sparking another round of USD buying. This week, Retail Sales will be watched for any signs of life from beleaguered consumers, and Capacity Utilisation and Industrial Production for a current assessment of US manufacturing.
JPN Data
- Monday 16.00 Machine Tool Orders previous -2.5%
- Tuesday 09.50 Corporate Goods Price Index previous 5.6%
- Tuesday 15.00 Household Confidence previous 32.6
- Wednesday 09.50 Preliminary GDP previous 1.0% q/q
- Wednesday 09.50 Preliminary GDP Price Index -1.5% y/y
- Thursday 09.50 Tertiary Industry Activity Index previous -0.2% m/m
Last week saw further evidence that Japan is feeling the pinch of the global slowdown as Core Machinery Orders fell 2.6%, a key indicator of future manufacturing growth, and was unable to maintain the promising rise of 10.4% the previous month. As the global economy continues to recede it’s difficult to see where stimulus will come from for the Japanese economy, certainly the Bank of Japan is unwilling to cut rates further in the face of severe imported inflationary pressure and consumers remain extremely cautious. This week manufacturing and household data is unlikely to show any trend reversing signs of recovery.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| AUS (RBA) |
7.25% |
+25bps |
04/03/08 |
2nd September |
| NZ (RBNZ) |
8.00% |
-25bps |
24/07/08 |
11th September |
| US (FED) |
2.00% |
-25bps |
30/04/08 |
16th September |
| JPN (BOJ) |
0.50% |
+25bps |
21/02/07 |
19th August |