While tomorrow’s Reserve Bank board meeting is the big news locally this week, nothing will happen and investors should really be watching Friday night’s February jobs report from the US and trying to glean what it means for next week’s two day meeting of the Federal Reserve.
The February jobs is the last major data release ahead of the Fed’s March 14-15 meeting (see separate story).
Economists, such as the AMP’s Dr Shane Oliver say the number of jobs is expected to rise by around 185,000 with US unemployment falling back to 4.7% and wages growth edging up to around 2.8% annual, from 2.5% in January.
He says that, “Coming on the back of a run of solid data releases this should be enough to get the Fed over the line on a March rate hike.”
Meanwhile, The US January trade deficit (Tuesday) is forecast to worsen slightly from December’s blowout.
The European Central Bank is expected to make no change to monetary policy on Thursday.
It has already committed to continue its 60 billion euro a month asset buying program to year end and analysts say it will be premature to expect any announcement regarding a 2018 reduction, particularly with risks around the French election and core inflation remaining well below target at 0.9%.
China’s National People’s Congress started on Sunday and will reveal a growth target of around 6.5% for this year, down from 6.7% in 2016,a deficit target of around 3%, inflation around 2.5% to 3% and a slowing in the size of the country’s defence budget.
China-watchers will also be watching closely to see who could make it to China’s 25-member Politburo and possibly the Politburo Standing Committee (PSC), following a reshuffle of some senior provincial and central government leaders, particularly with the 19th Party Congress scheduled for the northern autumn (which will elect the leadership for another five years).
This week also sees Chinese trade data for February (on Wednesday) which (according to the AMP’s Dr Shane Oliver) is likely to show a further acceleration with imports up 18% yoy and exports up 14% yoy. Thursday sees CPI inflation (down) and producer prices (up sharply, again) released.
In Europe, the European Central bank meets Thursday night, while on Wednesday in London UK chancellor Philip Hammond will present his first budget.
In Australia The Reserve Bank will leave interest rates on hold when it meets tomorrow, while on the data front January retail sales are ot later today with a small rise forecast, while housing finance on (Friday) could fall by 1.5%.
