AU Data
- Mon 11.30 Producer Price Index previous -0.4% m/m
- Tue 11.30 Monetary Policy Meeting Minutes
- Tue 11.30 New Motor Vehicle Sales previous 5.4% m/m
- Wed 11.30 Consumer Price Index previous 0.1% q/q
- Wed 11.30 Trimmed Mean CPI previous 1.0% q/q
NAB Business Confidence (4) recorded the 1st positive reading since December 2007 and Business Conditions (-2) hit the best level in 9 months. Encouragingly for future growth, sales and forward orders helped the employment conditions section to a record monthly improvement and to reach a level not seen since before the Lehman’s collapse. Australia’s Terms of Trade (-14.3% q/q) deteriorated sharply in Q2 as Export Prices (-20.6% q/q) were dragged down by a 34.5% q/q fall in mineral fuels and related materials. Import Prices (-6.4% q/q) also fell, but only modestly considering the 28% q/q decline in crude material prices. The RBA monthly bulletin showed that the central bank sold a record net A$1.94b in June, which followed net sales of A$1.4b in May. The RBA is clearly keen to keep the A$ from appreciating sharply and to preserve international competiveness, this objective will also keep a lid on interest rates in the medium-term. This week Monetary Policy minutes will be scrutinized but most market moving data will come from the US corporate earnings releases that continue in earnest this week.
NZ Data
- Tue 08.45 Visitor Arrivals previous 0.2% m/m
- Tue 13.00 Credit Card Spending
May Retail Sales (+0.8% m/m) posted the biggest monthly rise in 18 months but underlying activity remains weak and a single month’s data will not have any implications for official interest rates that look set to remain at record low levels for at least the remainder of the year. One reason not to increase rates too early is to avoid a sharp appreciation of the NZ$; RBNZ Governor Bollard highlighted the need for the NZ$ “to be persistently weak over the coming years” to encourage investment in export-oriented business and be supportive of improvement in NZ’s external liability position. However, this may be easier said than done once global risk appetite becomes firmly established once again. Perversely the current account deficit (8% GDP) and high external indebtedness (90% GDP) could assist the RBNZ’s wish to cap the NZ$, as the rating agency Fitch put the long-term country rating on negative watch. A thin domestic diary this week will have traders looking at US corporate earnings for direction this week.
US Data
- Tue 00.00 CB Leading Index previous 1.2% m/m expectation 0.5%
- Wed 00.00 Fed Chairman Bernanke Testifies
- Thu 00.00 House Price Index previous -0.1% m/m expectation -0.2%
- Thu 00.00 Fed Chairman Bernanke Testifies
- Thu 00.30 Crude Oil Inventories previous -2.8M
- Thu 22.30 Unemployment Claims previous 522K
- Fri 00.00 Existing Home Sales previous 4.77M expected 4.80M
- Fri 23.55 Revised UoM Consumer Sentiment previous 64.6 expectation 64.6
- Fri 23.55 Revised UoM Inflation Expectation previous 3.0%
Headline Retail Sales (+0.6% m/m) posted a stronger than expected gain in June but excluding autos and gasoline sales actually fell by 0.2% m/m. Spending in department stores and restaurants was particularly subdued, suggesting consumer confidence remains fragile. Industrial Production (-0.4% m/m) fell at the slowest pace in 8 months and the Empire State (New York) Manufacturing Index (-0.6) recorded its highest level since April 2008; encouragingly the forward looking New Orders sub-index (5.9) rose above zero for the 1st time since September 2008 and with inventories at record lows there is good reason to expect a gradual pick in activity over the rest of 2009. Manufacturing activity remains patchy though, as seen in the Philly Fed Manufacturing survey that slipped back to -7.5 from -2.2 and has now shown a negative reading for 10 straight months. The NAHB Housing Market Index (17) jumped to its highest level since September 2008, as improved sales conditions boosted confidence in the market for new single-family homes, but, with the index below 50, more builders still consider general conditions to be poor than favourable. This week will be dominated by the US corporate earnings reporting season that sees a host of releases from benchmark companies and Fed Chairman Bernanke’s testimony to Congress starting on Tuesday night.
JP
N Data
- Mon All Day Bank Holiday
- Tue 09.50 Monetary Policy Meeting Minutes
- Thu 09.50 Trade Balance previous 0.22
- Fri 14.30 All Industries Activities previous 2.6% m/m
The Reuters Tankan survey showed Japanese manufacturing confidence (-43 from -50) has improved for 4 straight months as exports and industrial output pick up, but service-sector sentiment (-38 from -31) slipped back to near record lows. Rising unemployment and weak wages are weighing on domestic consumption, which accounts for 60% of GDP, and retailers’ profits are being squeezed by price wars and flagging consumer spending; more than ever manufacturers are looking to international markets to pull the Japanese economy out of the worst recession since World War Two. Encouragingly, revised May Industrial Production (+5.7% from +5.9% m/m) held on to most of its gains (3rd straight monthly increase) and Capacity Utilisation (72.6%) rose 8% in May, which is the largest increase since 1953. The BOJ left interest rates unchanged at 0.10% but voted to extend its commercial paper and corporate bond buying programmes for another 3 months from the scheduled expiry on September 30; the 3 month extension to special measures introduced to support corporate funding was less than general expectations of 6 months. The BOJ remains very cautious about GDP growth and lowered its estimate for the year to March 2010 to a contraction of 3.4% from its earlier April forecast of a 3.1% contraction. A holiday shortened week will see traders looking to US corporate earnings for signs that Japan’s largest export market is starting the long haul out of recession.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| AUS (RBA) |
3.00% |
-25bps |
07/04/09 |
4th Aug |
| NZ (RBNZ) |
2.50% |
-50bps |
30/04/09 |
30th July |
| US (FED) |
0-0.25% |
-75bps |
16/12/08 |
11th Aug |
| JPN (BOJ) |
0.10% |
-20bps |
19/12/08 |
11th Aug |