A much quieter week ahead and monetary policy decisions of the Reserve Bank and its NZ counterpart will dominate markets in this neck of the woods.
China’s monthly trade and inflation data midweek will give us further confirmation of growth in our biggest export market, while in the US it’s the turn of retailers to update on what is expected to be weak third quarter performances, unlike the boom-like results from tech giants like Amazon, Apple, Microsoft, Alphabet (Google) and Facebook.
Central banks in Malaysia, Thailand and the Philippines will also announce monetary policy decisions.
In Australia, the RBA is expected to leave interest rates on hold for the 15th month in a row at tomorrow’s meeting, the second last board gathering of the year.
The AMP’s Chief Economist, Dr Shane Oliver says that while the RBA’s forecasts for stronger growth along with solid business conditions and employment growth argue against rate cuts, “ongoing low inflation, record low wages growth, uncertainty around consumer spending, signs that the housing cycle is slowing and the still strong $A argue against a rate hike.”
“We remain of the view that the RBA will leave the cash rate on hold until a probable rate hike at the earliest late next year,” he wrote at the weekend.
Friday sees the last major statement from the centra bank on the economy with the publication of the 4th quarterly Statement on Monetary Policy.
The Statement will contain new growth and inflation forecasts. The reporting of the forecasts could change though to a ‘central ’tendency’ or point style of outlook rather than a range.
Dr Oliver says the RBA is not expected to revise its growth forecasts "but its move to providing point forecasts may imply a slower recovery in underlying inflation. This along with likely ongoing RBA wariness regarding the outlook for wages and inflation is expected to reinforce the RBA’s short term neutral bias on interest rates.”
On the data front in Australia, ANZ job ads (later) could show a softening in job vacancies and September’s housing finance data (on Thursday) is expected to show modest growth.
There are a number of corporate events this week – besides Westpac’s annual figures out this morning, Orica releases its full year figures as well today. BT Investment management releases its final figures midweek and James Hardie issues its second quarter figures on Thursday. 21st Century Fox releases its first quarter figures on Thursday morning, Sydney time and News Corp releases its first quarter figures a day later.
In NZ the central bank will remain in a holding pattern as well – the economy is solid, jobs growth OK but inflation is very weak. And the advent of a new government with a different set of policies which will need time to have an impact, will see no change to the official cash rate of 1.75%.
On top of this the new government is moving to change the central bank’s way of deciding rates (similar to the RBA and the Bank of England) and introducing the release of board minutes (like other major central banks) and adding a jobs component to its inflation target mandate.
China’s trade data on Wednesday is likely to show exports up 8% and imports up 18%, according to Dr Oliver.
But more important will be signs of any impact on imports of coal and iron ore from the cuts to steel making and other polluting activities in the industrial northeast of the country for winter.
The October inflation data on Thursday is expected to show CPI inflation rising to 1.7% but PPI inflation dipping to 6.7%. Credit data will also be released.
In the US it will be much quieter than a week ago with data on job openings and hiring (out tomorrow night, our time) will show continued labour market strength and the first of two readings of November consumer sentiment (on Friday night) is likely to show that consumer confidence remains strong.
The US September quarter earnings results slow with around 50 major companies due to report, including a host of retailers such as Macy’s and Kohl’s.
President Donald Trump starts a 12-day trip to Asia visiting Japan, then South Korea, and after that China.The US president will then head to Vietnam and attend a regional summit before wrapping up his Asia tour with a stop in Phillippines.
In Europe, Brexit returns to the fore with The European Commission’s chief negotiator Michel Barnier and UK Brexit Secretary David Davis resuming talks on the terms of Britain’s exit from the European Union on Thursday. The previous round of talks, in October, left Mr Barnier warning of “deadlock” over the UK’s exit bill.
UK GDP data for the third quarter is out midweek.
