AU Data
- Wednesday 10.30 Westpac/Melbourne Institute Leading Index previous 0.0% m/m
- Wednesday 11.30 Construction Work Done previous -1.0% q/q
- Thursday 11.30 Private New Capital Expenditure previous 5.1% q/q
- Friday 11.30 Housing Credit previous 0.8% m/m
The AUD made a new 24 year high against the USD after release of the RBA Minutes from the monetary policy meeting earlier this month. The decision not to raise rates was not as clear cut as the market had expected and considerable time was spent discussing a further increase before a wait and see approach prevailed in order to give the already restrictive policy time to work. The Leading Index and New Capital Expenditure will draw attention this week as a gauge of business confidence flowing into the second half of 2008.
NZ Data
- Monday 08.45 Trade Balance previous -$0.05b
- Tuesday 11.00 NBNZ Business Confidence previous -54.8
- Tuesday 12.00 RBNZ Inflation Expectations previous 2.7% q/q
The NZD regained significant market support after Finance Minister Cullen announced a four year, $10.6b programme of personal tax cuts and a modest increase in spending in the 2008/09 Budget. The fiscal stimulus was much larger than expected and has forced the market to reappraise the scope of the RBNZ to reduce official interest rates this year. The NZD rebounded sharply against the AUD, increasing 1.1% on the week and even more impressively against the USD with a 1.55% weekly appreciation. Business Confidence and Inflation Expectations will hold centre stage this week.
US Data
- Tuesday 22.15 Fed Governor Kroszner Speech
- Tuesday 23.00 National Home Price Index Composite-20 previous -12.7% y/y
- Tuesday 24.00 New Home Sales previous 562k
- Tuesday 24.00 Consumer Confidence previous 62.3
- Tuesday 24.00 Richmond Fed Index previous 0.0
- Wednesday 22.30 Core Durable Goods Orders previous 0.9% m/m
- Wednesday 22.30 Durable Goods Orders previous -0.3 m/m
- Thursday 22.30 Preliminary GDP previous 0.6% q/q
- Thursday 22.30 Preliminary GDP Price Index previous 2.6% q/q
- Thursday 22.30 Unemployment Claims previous 365k
- Friday 04.30 Fed Chairman Bernanke Speech
- Friday 22.30 Core Personal Consumption Expenditure Price index previous 0.2% m/m
- Friday 22.30 Personal Spending previous 0.4% m/m
- Friday 22.30 Personal Income previous 0.3% m/m
- Friday 23.45 Chicago Purchasing Managers Index previous 48.3
FOMC minutes released last week of the April 30 meeting gave the market little reason to buy USD, as Fed policy makers downgraded 2008 economic growth from 1.3%-2.8% to 0.3-1.2% range, increased their inflation projection to 3.1%-3.4% from 2.1%-2.4% (January’s projection) and increased the jobless rate projection 5.5%-5.7% from 5.2%-5.3%. Producer Prices (+0.2% m/m) remained surprisingly subdued in April given surging energy and food costs. This has led analysts to question the seasonal smoothing of input prices that may have significant implications for headline inflation indicators later in the year. A full diary again this week will keep currency markets volatile; Fed Chairman Bernanke, Consumer Confidence and preliminary GDP will be of particular interest to traders.
JPN Data
- Tuesday 09.50 Corporate Services Price Index previous 0.4% y/y
- Wednesday BOJ Governor Shirakawa Speech
- Thursday 09.50 Retail Sales previous 1.0% y/y
- Friday 09.15 Manufacturing Purchasing Managers Index previous 48.6
- Friday 09.30 Core CPI previous 1.2% y/y
- Friday 09.30 Overall Household Spending previous -1.6% y/y
- Friday 09.30 Unemployment Rate previous 3.8%
- Friday 09.50 Industrial Production (preliminary) previous -3.4% m/m
- Friday 15.00 Housing Starts previous -15.6% y/y
The BOJ left both its general view of the domestic economy and official interest rates unchanged in May. A slowing global economy and rising costs for energy and raw materials are eroding business confidence, which has led to slowing fixed asset investments and capital expenditure. Trade figures released last week showed how resilient Japan’s export markets have been as export rose 4.0% in April, despite exports to the US falling 9.1% in the same period. Retail Sales and Housing Starts will be watched this week for evidence of any home grown stimulus to the flagging domestic economy.
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 |
13th June |