AU Data
- Monday – Market Holiday
- Tuesday 11.30 NAB Business Confidence, previous -22
- Thursday 11.30 RBA Monthly Bulletin
- Friday 11.30 Import Prices, previous 10.8%m/m
Last week’s RBA decision had polarised market opinion with anything from on hold to a 50bps cut deemed as possible, the RBA went for the middle ground with 25bps cut. It has become apparent that the pace of monetary has slowed markedly and a period of relative stagnation could be around the corner. Australian Unemployment eclipsed market expectations and jumped to 5.7%, despite this the AUD was well supported all week, as returning risk appetite fuelled by the equity market recovery provided more directional stimulus then any economic data. This week the market will focus on the RBA’s monthly bulletin for an indication on the health of the economy however, the equity market is likely to remain the dominating influence on the AUD’s direction.
NZ Data
- Monday – Market Holiday
- Tuesday 08.45 Retail Sales, previous -1.1%m/m
- Thursday 08.30 Business Manufacturing Index, previous 38.6
In a light data week the principal highlight was a further deterioration in business confidence with 64% of firms expecting business conditions to worsen over the next 6 months. However, like the AUD the equity market recovery and potential recovery signs in the US housing market led to a resurgent Kiwi and although this week’s retail sales will be of interest it will take a back seat to the price action in global equity markets.
US Data
- Tuesday 22.30 Retail Sales/Core, previous -0.1%/0.7%m/m
- Tuesday 22.30 PPI/Core PPI, previous 0.1%/0.2%m/m
- Wednesday 03.30 Ben Bernanke Speaks
- Wednesday 22.30 CPI/Core CPI, previous 0.2%/0.4%
- Wednesday 22.30 Empire State Manufacturing, previous -38.2
- Wednesday 23.00 TICS, previous – US$43bn
- Wednesday 23.15 Industrial Production, previous -1.5%m/m
- Thursday 04.00 Beige Book
- Thursday 22.30 Unemployment Claims, previous -654k
- Thursday 22.30 Housing Starts, previous 0.58m
- Friday 00.00 Philly Fed Manufacturing Index, previous -35
- Friday 23.55 University of Michigan Consumer Sentiment Survey, previous 57.3
Despite a mid week stumble US equity markets held on well as investors looked to buy stocks on dips and the recovery extended to 5 straight weeks, on hopes of a bottom in the US housing market. The FOMC minutes provided an opportunity for profit taking as the Federal Reserve downgraded GDP forecasts and stated that the credit market is still not functioning properly. The US trade deficit continued its recent contraction falling to $26bn, interestingly the deficit with China decreased by over USD20bn. This week sees a plethora of data from the US accompanied by an array of corporate earnings realeases. Headline grabbers will be CPI and PPI for the inflationary picture, Retail Sales and the University of Michigan sentiment survey for an indication on the health of American consumerism. The Philly Fed and Empire state will be watched closely for any returning optimism in US manufacturing. TICs is expected to show signs of recovery as some of the capital flowing back into US equities must be from offshore. Housing starts will confirm whether house builders have any renewed confidence in the US housing market.
JP
N Data
- Monday 09.50 CGPI, previous 1.1%y/y
- Wednesday 14.30 Industrial Production, previous 9.4%m/m
- Friday 09.50 Tertiary Industry Activity, previous 0.4%m/m
As widely expected the BoJ left interest rates on hold at 0.1% last week, as inflation remains non-existent and the prospect of a recovery still in the far distance. This was further confirmed by the BoJ’s monthly report which cited a serve downturn in exports, employment, private investment, corporate profits and sentiment. The report also stated the economic conditions in Japan are expected to deteriorate further. The JPY remained on the back foot last week as it fell victim to poor economic data and returning risk appetite. This week the market will pay attention to the industrial releases but in reality risk appetite will be the principal determinant of the Yen’s direction. The Yen at its current levels is still relatively strong and should equity markets continue their recovery an exodus from it in search of yield may well continue.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| AUS (RBA) |
3.00% |
-25bps |
07/04/09 |
5th May |
| NZ (RBNZ) |
3.00% |
-50bps |
12/03/09 |
30th April |
| US (FED) |
0-0.25% |
-75bps |
16/12/08 |
29th April |
| JPN (BOJ) |
0.10% |
-20bps |
19/12/08 |
28th April |