AU Data
- Monday 11.30 Internet Job Ads for January previous 7.4%
- Monday 11.30 Housing Finance for December previous 4.0%
- Monday 11.30 Investment Housing Finance for December previous -2.8%
- Tuesday 11.30 Busindess Confidence for January previous 5.0 Index
- Wednesday 10.30 Consumer Sentiment for February previous -8.3%
- Thursday 11.30 Unemployment for January previous 4.3%
As expected, the RBA increased official rates by 25 bps to 7.0%, an 11 year high, and with underlying inflation running at 3.5% further increases may be necessary this year to reign in inflation in to the 2-3% target range. Capacity constraints and skilled labour shortages continue to outweigh the threats of the global credit crunch and US economic slowdown. The AUD was able to hit an 11 week high (0.9100) during the week and resisted the sharp gains achieved by the USD versus EUR and GBP. The strong Australian economy and Federal Reserve that has resulted in two-year treasury yields spreads stretch to 469 basis points, a gap not seen in more than a decade.
NZ Data
- Wednesday 08.45 Producer Prices for Q4 previous 2.3%
- Wednesday 08.45 Producer Prices Index for Q4 previous 1.6%
- Thursday 08.45 Food Price Index for January previous 0.9%
- Friday 08.45 Retail Sales for December previous 2.0% m/m
Last week's data showed that New Zealand added mor jobs than expected in Q4 2007, driving unemployment to a 22 year low at 3.4%. Looking forward, strong immigration and resulting increases in domestic demand that has fuelled job growth and hosuing demand has been steadily slowing in the last12 months; however the RBNZ is not expected to ease rates until at least Q3 2008. This week, Producer Prices, Food Price Index and Retail Sales will be watched for continued inflationary pressures and continued domestic economic strength despite a general slowdown in global demand.
US Data
- Wednesday 00.55 Redbook previous -0.4% m/m
- Wednesday 02.00 IBD Economic Optimism for February previous 43.2
- Wednesday 03.00 MC Spending Pulse Core for January previous 24.2%
- Wednesday 06.00 Federal Budget for January previous $38.24 bln
- Thursday 00.30 Retail Sales for January previous -0.4% m/m
- Friday 00.30 Trade Balance for December previous -$63.1 bln
- Saturday 01.15 Capacity Utilisation for January previous 81.4%
- Saturday 01.15 Industrial Production for January previous 0.0%
Last week, Non-manufacturing Index data (41.9) showed that service industries are now being severely hit by the slowdown in the US. This sent the Dow Jones down by 2.3% that prompted risk-aversion USD buying versus the many of the G10 currencies. This theme was continued through the week and was fuelled by ECB President Trichet accepting that global market uncertainty may hurt the euro-zone economy; the market concluded that the odds of interest rate cuts had greatly increased despite stubbornly persistent euro-zone inflation. The EUR got a brief and unsustained boost on a newswire report that OPEC may adopt the euro and abandon the USD when pricing oil. For the week the USD Index was +1.6% in relatively thin trade with Asian markets shut for Lunar New Year. This week’s focus will be on Retail Sales, Capacity Utilisation and Industrial production as well as various Fed speakers plus former Fed Chairman Greenspan late on Friday.
JPN Data
- Wednesday 10.50 Corporate Goods Prices for January previous 0.4% m/m
- Wednesday 10.50 Current Account nsa for December previous 2.1%
- Wednesday 10.50 Unadjusted Trade for December previous -9.7%
- Wednesday 15.30 Bankruptcies for January previous -9.6& m/m
- Wednesday 16.00 Consumer Confidence Index for January previous 38.0
- Thursday 10.50 GDP Deflator for Q4 previous -0.4
- Thursday 15.30 Capacity Utilisation for December previous -1.6%
- Thursday 15.30 Industrial Output revision for December previous 1.4%
- Friday BoJ Rate Decision
Japanese Machinery Orders (-3.2%) continued to contract in December providing further evidence that the US slowdown was inexorably moving east. In this slowing economic climate the BOJ will be unable to take its preferred course of ‘normalising’ interest rates (increasing official rates) and a reluctant rate cut may be forthcoming in the near-term. Though no change in official rates is expected from the BOJ this week..
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| AUS (RBA) |
7.00% |
+25bps |
05/02/08 |
5th March |
| NZ (RBNZ) |
8.25% |
+25bps |
26/07/07 |
6th March |
| US (FED) |
3.00% |
-50bps |
31/01/08 |
18th March |
| JPN (BOJ) |
0.50% |
+25bps |
21/02/07 |
15th February |