AU Data
- Monday 11.30 Merchandise Trade for April previous $16.8b
- Wednesday 10.30 Consumer Sentiment for May previous -1.3%
Last week the Wage Price Index (4.1%) for Q1 was softer than expected and will relieve some pressure on the RBA to raise interest rates in the short-term. Australian business conditions stayed tough in April as the NAB survey equalled its lowest reading since December 2002. The business confidence section of the survey dropped 4 points to -8, with steep falls in retail, transportation and personal services overshadowing a strong mining sector. A thin data diary this week from Australia is unlikely to lessen the volatility in FX markets as reaction to US economic releases will continue to dominate market sentiment.
NZ Data
- Tuesday 08.45 Migration & Visitors for April previous 5.0%
- Tuesday 08.45 Permanent/Long Term Migration for April previous 490
- Thursday 12.00 Half Year Economic & Fiscal Update – CPI previous 2.8%
Retail Sales (-1.2% sa m/m) and House Sales (-13% m/m) continue to lead the slowdown in the domestic economy as high interest rates take their toll on consumer and business confidence. However Producer Prices (+2.3% q/q) rose more than market expectations, underpinned by energy and dairy prices, and highlights the balancing act the RBNZ must perform to manage an economic slowdown that brings inflation into line without inducing a full blown recession. Thursday’s Economic & Fiscal Update will be studied carefully for current thinking on the pace of the slowdown and outlook for inflation.
US Data
- Monday 24.00 Leading Indicators for April previous 0.1%
- Thursday 22.30 Producer Price Index for April previous 1.1%
- Thursday 24.00 IBD Consumer Confidence Index for May previous 39.2
- Friday 24.00 Existing Home Sales for April previous 4.9m
Equity markets were able to shrug off poor economic data throughout the week as Machinery Orders (-8.3%), Philadelphia Fed Activity Index (-15.6), Industrial Production (-0.7%) and Capacity Utilisation (79.7%) all continued to show weakness. Retail Sales (+0.5 ex-auto) indicated that the US consumer is not quite ready to capitulate just yet, but Friday’s University of Michigan Consumer Sentiment (59.5) hit its lowest level since early 1980 and doesn’t bode well for future retail activity. Unlike equity markets, the US$ weakened sharply across the board as speculative long positions were hastily squared and pushed the AUD to a new 24 year high above 0.9560.
JPN Data
- Monday 10.30 Reuters Tankan for May previous 1.0
- Tuesday Bank of Japan Rate Decision
- Tuesday 10.50 Tertiary Activity Index for March previous -1.7%
- Tuesday 17.00 BOJ Economic Report for May
- Thursday 10.50 Trade Balance for April previous -30.2% y/y
- Thursday 10.50 Exports for April previous 2.3%
- Thursday 10.50 Imports for April previous 11.1%
- Thursday 10.50 All Industries Index for March
- Friday 10.50 Corporate Services Price Index for April
- Friday 10.50 BOJ Policy Meeting Minutes for April
Japan’s economy grew 0.8% in Q1 from the previous quarter, which was better than expectations (+0.6%) but companies cut capital spending as uncertain domestic and global market conditions continue to erode confidence. Wholesale Inflation (+3.7% y/y) rose on higher oil and raw material prices and will concern the BOJ as to its effect on future domestic growth. Corporate Bankruptcies (+8.4% y/y) rose for the 4th straight month as manufacturers and construction firms were hit by the rise in raw material prices and slower consumer expenditure. Despite difficult market conditions, the BOJ is unlikely to change monetary policy on Tuesday and the Economic Report and Friday’s Policy Meeting Minutes will watched for any hint of a policy adjustment.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| AUS (RBA) |
7.25% |
+25bps |
04/03/08 |
3rd June |
| NZ (RBNZ) |
8.25% |
+25bps |
26/07/07 |
5th June |
| US (FED) |
2.00% |
-25bps |
30/04/08 |
25th June |
| JPN (BOJ) |
0.50% |
+25bps |
21/02/07 |
20th May |