Central banks hold centre stage this week in Australia tomorrow and the European Central Bank on Thursday night our time. And, don’t forget the November jobs report in the US on Friday night, our time. Oh, and there’s also the half yearly OPEC meeting in Vienna which has suddenly become interesting.
On top of this in Australia there’s the September quarter economic data today and tomorrow, culminating in the 3rd quarter National Accounts, plus the start of October’s figures on retail sales, trade and building approvals, not to mention house prices and car sales and new home sales.
And there’s the big climate change conference starting in Paris tonight, our time.
And, tonight a big decision from the IMF – the possible inclusion of the Chinese yuan as one of the Fund’s reserve currencies – a decision postponed from mid-year. If it is positive, it could change market sentiment about China.
As well we get the usual start of month surveys of manufacturing from the world’s major economies – for Australia the two most important are for China from the government, while the other is from Caixin/HSBC.
A big, big week for the Australian, US, European, Chinese and global economies.
In Australia, the RBA is expected to leave interest rates on hold again for the year at tomorrow’s final board meeting in Perth.
While the central bank has an easing bias for the past few months, it now seems more content to do nothing until the new year at the earliest while more up to date data emerges.
Last week’s data on third quarter investment and construction work was weak, but given the strong October jobs report, rising retail sales from more and more companies, strong car sales and easing property prices, the bank will be content to sit and wait.
And don’t expect any change in the RBA’s stance in tomorrow’s post-meeting statement from governor Glenn Stevens. Remember he told us last week to “chill out” and go away and come back in the New Year.
Mr Stevens also makes his last speech for the year in Perth on Wednesday morning on the outlook for the economy.
The RBA meeting will be the major event in a week of a massive data dump in Australia.
That starts late this morning with the RBA’s credit figures for October. That is expected to show a further slowing in investment loans, but more importantly, continuing strong lending to business.
Tuesday’s September quarter trade data are expected to show a strong contribution to GDP growth. The AMP’s chief economist Dr Shane Oliver estimates the contribution at 1.2 percentage points and will be the major component of growth for the third quarter.
But he says the public spending data, also out tomorrow, is likely to show a fall.
As well, October’s building approvals are likely to show further signs of having peaked and the Core Logic/RP Data figures for home prices in November may show price falls in Sydney and perhaps Melbourne.
Dr Oliver says Wednesday’s September quarter national accounts are expected to show GDP growth bouncing back to a solid 0.7% quarter on quarter (from 0.2% in the June quarter) or 2.3% year on year, driven by net exports and consumer spending offsetting weak business investment.
October’s trade balance (out Thursday) is expected to have remained in deficit and retail sales (out Friday) to show continued modest growth.
But retail sales could surprise on the upside, given the recent solid sales figures emerging from the likes of David Jones, Myer, Kathmandu, Harvey Norman and OrotonGroup.
And towards the end of the week we will get local car industry sales data for November.
In the US, the main focus will be on the November jobs and unemployment reports on Friday night, our time.
A solid 190,000 to 210,000 new jobs are forecast to have been created last month.
That will be after the high 271,000 jobs were reported for October. Watch for any revision of that figure as well.
A solid figure will be enough to complete the data the US Fed needs to back a rate rise at its December meeting. Unemployment will remain steady around 5%.
Congressional testimony by Fed Chair Yellen (on Wednesday and Thursday nights, our time) will add to expectations for that rate rise before year end. She will indicate that any subsequent rises will be gradual, as she did a couple of weeks ago.
Apart from that report, tonight sees data on pending home sales, the start of month manufacturing conditions index (Tuesday night, our time) and the non-manufacturing conditions index (on Thursday night) to remain strong.
US car sales data will also be out this week and are expected to show another month of solid sales in November.
In Europe, the other major event of the week is European Central Bank meeting on Thursday night, our time, which is widely tipped to announce further monetary easing.
Dr Oliver says this is likely to take the form of an expansion of its quantitative easing program and another 0.10% reduction in its deposit rate taking it to -0.3% (yes, that’s minus 0.3%).
This “will be designed to pump more cash into the Eurozone economy and encourage banks to lend it out with the aim of ensuring inflation will head higher,” according to Dr Oliver.
“However, such a move is not assured as not all ECB officials are in favour and there is risk that the ECB will simply indicate an ongoing bias to ease more,” he wrote at the weekend.
Eurozone inflation data for November (Wednesday night, our time) is expected to show that inflation remains well below target. Unemployment figures out on Tuesday night should show a small improvement. Retail sales figures for the eurozone will also be released on Thursday night.
In Asia, the results of the two surveys of Chinese manufacturing for November will dominate, with analysts hoping for a small improvement from the depressed levels reached in October.
Similar surveys will be issued for other major Asian economies and India. Japan is expected to show a higher level of activity than in China.
Japan also sees the publication of industrial output, housing starts and retail sales numbers later today.
In India, third quarter GDP figures are issued later today while the country’s central bank releases its monetary policy decision tomorrow afternoon.
