Investors will be looking for leads from the latest economic data and the US Federal Reserve monetary policy meeting that ends early Thursday morning, Sydney time.
It will be the most important of a series of central bank meetings or releases this week in Japan, Indonesia, Europe with an important speech from the head of the Bank of England at a conference in the US. As well there are two elections of note – the people of New Zealand go to the polls on Saturday which could see a change of leader, while on Sunday Chancellor Merkel is expected to retain power in german’s national elections, though she will have to rule via a coalition, as she did last time.
The spotlight this week will be on the meeting of the Federal Reserve along with central banks in the UK, Japan and Europe and Australia, while US Prime Minister Theresa May makes give a speech on Brexit that is billed as a critical moment in the country’s negotiations over its divorce from the EU.
In Australia the Reserve Bank’s September board meeting minutes are out tomorrow and there will be several profit reports from companies in the Washington Soul Patts group.
In the US the Federal Reserve will gather for its two-day September meeting, with a press conference by chair Janet Yellen for Wednesday, and the the latest quarterly forecasts from the central bank, especially the so-called dot plot which shows where Fed members think interest rates will be in coming months.
While The Fed is widely expected to hold off on another interest-rate increase, investors are hoping for a long-awaited detailing of the central bank’s plans for unwinding the massive balance $US4.5 trillion sheet it built up in the wake of the financial crisis and the repeated serves of quantitative easing via huge bond buying exercises.
The Fed has been laying the groundwork for winding back its easing over the course of this year, and with unemployment sinking and inflation under control.
Bank of American Merrill Lynch analysts said in a note on Friday night in the US that the likely focus after the meeting will be not the balance sheet “normalisation, but the dot plot.
The market will focus on whether the dot plot shifts lower and the degree to which Fed officials revise their inflation forecasts.
”Central banks US monetary policymakers won’t be the only ones in focus next week, with investors set to hear from several other key central bank figures from around the world,” the firm noted.
US data releases will be overshadowed by the Fed meeting. There are the mid month surveys of manufacturing activity in the US and elsewhere that will be out this week (but not for China). As well monthly figures on housing starts and building permits will be issued mid week, as well as existing home sales.
In Asia, Japan’s trade figures for August will be out this week, along with Chinese house prices for the same month later today. The Bank of Indonesia’s monetary policy decision will be out later in the week.
And Thursday sees the Bank of Japan decides on monetary policy, but no changes are expected. Low inflation remains a key issue for the central bank despite stronger economic growth and a tighter labour market.
Tonight, Bank of England governor Mark Carney will speak at the IMF in Washington. It will be a speech watched closely for comments on UK rates (about to rise) and the impact of Brexit.
The European Central Bank’s governing council will have a non-monetary policy meeting in Frankfurt on Wednesday and, a day later, its general council will convene in the same city, President, Mario Draghi set to deliver welcome remarks at the European Systemic Risk Board’s annual conference that afternoon.
The UK has started down the path of its divorce from the EU, and on Friday, Prime Minister Theresa May, is set to give a keynote speech in Florence that will set out her plans for a transition deal seen in London as “key” to addressing concerns in Brussels about a €30 billion budget hole.
In Australia besides the RBA board meeting minutes tomorrow, Assistant Governor (Economic) Luci Ellis speaks at the Australian Business Economists conference on Wednesday and Governor Philip Lowe speaks at American Chamber of Commerce in Australia business briefing in Perth the day after.
Today sees the release of Australian Bureau of Statistics new motor vehicles sales for August while the Supreme Court judgement on Bruce Gordon v Ten administrators is expected this afternoon.
ABS home prices for the June quarter are out tomorrow and there’s the second meeting of Ten creditors expected.
Full year results are expected from TPG Telecom tomorrow, New Hope tomorrow, Brickworks and Washington H. Soil Pattinson on Thursday.
Suncorp Group annual general meeting will be held on Thursday and OrotonGroup’s full year results are due Friday.
