AU Data
- Friday 11.30 Housing Credit for December previous 0.8% m/m
- Friday 11.30 Private Sector Credit for December previous 1.7% m/m
Last week highlighted the divergent directions for US and Australian official interest rates as the US Fed made an emergency rate cut and the RBA came under pressure to hike rates on February 6, after core CPI jumped to 3.4% y/y (previous 2.9%). The AUD gradually clawed back lost ground during the week as global equity markets regainsed some composure and retraced steep declines. In the absence of Australian economic data, most attention will be focussed off-shore, particularly the US, and on the path of commodity prices.
NZ Data
- Tuesday 08.45 Building Consents for December previous -0.1% m/m
- Wednesday 08.45 Merchandise Trade for December previous NZD 3.948bln
RBNZ has little scope to cut official interest rates any time soon with CPI to continue to read at or above 3.0% through 2008. RBNZ Bollard commented that the Carbon Trading Scheme and income boosts from record dairy prices will indeed only fuel inflationary pressure. Bollard also commented that the NZD was broadly over-valued; however this is unlikely to adjust when interst rate differentials remain heavily NZD positive. The 'no change' on official interest rates from the RBNZ last week was expected and gave some support to the currency especially as the US Fed were making unscheduled rate cuts.
US Data
- Tuesday 02.00 New Home Sales for December previous -9.0% m/m
- Tuesday 04.00 Midwest Manufacturing previous for December 105.0
- Wednesday 00.30 Durable Goods Orders for December previous -0.10% m/m
- Wednesday 02.00 Consumer Confidence for January previous 88.6 index
- Thursday 00.30 GDP advance Q4 previous 4.9%
- Thursday 06.15 FOMC Rate Decision
- Friday 00.30 Core Personal Consumption Expenditure for December previous 2.20 y/y
- Friday 00.30 Personal Income for December previous 0.40%
- Friday 01.45 Chicago PMI for January previous 52.0 index
- Friday 02.00 Help Wanted Index for December previous 21
- Saturday 00.30 Non-Farm Payrolls for January previous 18.0k
- Saturday 02.00 University of Michigan Sentiment Survey for January previous 80.5 index
Despite a relatively quiet week in terms of data, the Federal Reserve stole the show by announcing an emergency, between meetings, rate cut on Tuesday. The Fed cut by 0.75% to 3.5% and was the first emergency reduction since September 11. The Fed too action after Asian and European stock markets tumbled, citing concerns about a weakening economy and turmoil in the financial markets. While the initial reaction in currency mrakets was muted, the Dollar weakened against the majors through the week. This week sees plenty of data to engage the equity and currency markets but all eyes will be on the FOMC scheduled meeting where another rate cut has been heavily discounted.
JPN Data
- Tuesday 10.30 All Household Spending for December previous -0.6% m/m
- Tuesday 10.30 Unemployment Rate for December previous 3.8%
- Tuesday 10.50 Retail Sales for December previous 1.6% m/m
- Wednesday 10.50 Industrial Production (Preliminary) for December previous -1.6% m/m
- Thursday 10.15 Manufacturing PMI for January previous 52.3
- Friday 16.00 Construction Orders for December previous -3.8% m/m
- Friday 16.00 Housing Starts for December previous -27.0% m/m
Last week saw headline core CPI prices in Japan jump to 0.8% m.m from previous 0.4%, which was higher than market forecasts; however stripping out energy and non-fresh food prices resulted in price deflation. The BoJ will remain on a steady to lower interest rate bias in the near term while equity market price action remains volatile, and US economic activity and credit markets continue to be fragile. Industrial Production and Manufacturing PMI will be watched closely for knock-on effects from the US slowdown and Retail Sales for a gauage of domestic consumer activity.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| AUS (RBA) |
6.75% |
+25bps |
07/11/07 |
6th February |
| NZ (RBNZ) |
8.25% |
+25bps |
26/07/07 |
6th March |
| US (FED) |
4.25% |
-75bps |
23/01/08 |
30th January |
| JPN (BOJ) |
0.50% |
+25bps |
21/02/07 |
15th February |