AU Data
- Monday 10.00 Leading Index previous 0.3% m/m
- Tuesday 11.30 NAB Quarterly Business Confidence previous -4
- Wednesday 11.30 Building Approvals previous -6.5% m/m
- Thursday 11.30 Retail Sales previous 0.7% m/m
- Thursday 11.30 Trade Balance previous -1.0b
- Thursday 11.30 Private Sector Credit previous 0.6% m/m
- Friday 09.30 Manufacturing Purchasing Managers Index previous 47.0
- Friday 11.30 TD Securities/Melbourne Institute Inflation Gauge previous 0.5% m/m
Last week saw core Q2 CPI (+1.1%) accelerate at its fastest pace in 17 years as fuel, financing and rents all rose. The average annual pace of core inflation rose to 4.4% from 4.2% in Q1; well above the 2-3% RBA target range. The RBA flagged that inflation was expected to rise in the near-term and therefore had no implications for official rates that are expected to remain at 7.25% for the rest of the year. This week Retail Sales and Manufacturing PMI will be watched to gauge current activity for consumers and business respectively.
NZ Data
- Monday 08.45 Trade Balance previous -0.20b
- Tuesday 08.45 Building Consents previous -42.3% m/m
- Thursday 13.00 Business Confidence previous -38.7
The Official Cash Rate was cut by 25 basis points to 8.00% last week as the RBNZ looked to a rapidly slowing domestic economy to cool inflationary pressure in the months ahead. Governor Bollard also flagged further cuts on the proviso that ‘the outlook for inflation continues to improve and there is no excessive exchange rate depreciation’. Market expectations are that the OCR will be at 7.25% by year-end. This week further evidence of the pace of decline in the domestic economy will come from Building Consents and whether the prospect of falling official rates can halt the decline in Business Confidence.
US Data
- Tuesday 23.00 S&P/Case Schiller House Price Index previous -15.3% y/y
- Wednesday 00.00 Consumer Confidence Index previous 50.4
- Wednesday 22.15 ADP Nonfarm Employment Change previous -79k
- Thursday 22.30 Advance GDP previous 1.0% q/q
- Thursday 22.30 Advance GDP Price Index previous 2.7% q/q
- Thursday 22.30 Employment Cost Index previous 0.7% q/q
- Thursday 22.30 Unemployment Claims previous 406k
- Thursday 23.45 Chicago Business Barometer previous 49.6
- Friday 03.00 Treasury Secretary Paulson speech
- Friday 22.30 Nonfarm Payrolls previous -62k
- Friday 22.30 Unemployment Rate previous 5.5%
- Friday 22.30 Average Hourly Earnings previous 0.3% m/m
- Saturday 00.00 ISM Manufacturing Index previous 50.2
- Saturday 00.00 Construction Spending previous -0.4% m/m
- Saturday 00.00 ISM Manufacturing Prices previous 91.5
Oil below $125 per barrel (down $24 in two weeks) and stronger than expected Durable Goods Orders (rising 0.8% vs expected fall 0.4%) helped to support the USD; the USD trade weighted index appreciating by 0.87% on the week. A full diary this week will keep traders busy, culminating in Nonfarm Payrolls on Friday, which are expected to contract by 72k. Oil prices and Treasury Secretary Paulson’s speech on the economy and financial markets will add to the mix of official data releases.
JPN Data
- Tuesday 09.30 Overall Household Spending previous -3.2% y/y
- Tuesday 09.30 Unemployment Rate previous 4.0%
- Tuesday 09.50 Retail Sales previous 0.3% y/y
- Wednesday 09.50 Preliminary Industrial Production previous 2.8% m/m
- Thursday 11.30 Average Cash Earnings previous 0.8% y/y
- Thursday 15.00 Housing Starts previous -6.5% y/y
Last week saw Core CPI (+1.9% y/y) at a 10 year high, fuelled by energy and food prices, but these cost-push inflationary pressures are unlikely to spur the BOJ to raise rates anytime soon as uncertainties about the domestic economy continue to grow. An indication of these concerns was seen in the Trade Balance data that showed total exports falling by 1.7% y/y (first fall in 5 years) and exports to the US falling by 15.4% y/y. Retail Sales data this week is unlikely to show any great consumer drive to the economy and preliminary Industrial Production forecast has already been marked down sharply at -1.7%
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| AUS (RBA) |
7.25% |
+25bps |
04/03/08 |
5th August |
| NZ (RBNZ) |
8.00% |
-25bps |
24/07/08 |
11th September |
| US (FED) |
2.00% |
-25bps |
30/04/08 |
5th August |
| JPN (BOJ) |
0.50% |
+25bps |
21/02/07 |
19th August |