The Federal Reserve will deliver its monetary policy statement on Thursday morning but watch for possible moves from the Bank of England and the Bank of Japan which also hold policy meetings, also on Thursday.
On top of that, the minutes of the last RBA policy meeting a fortnight ago will be issued tomorrow which will give us a better understanding of the central bank’s view on the sluggish economy’s immediate direction.
Australian employment and jobless data will be out on Thursday as well and no real change is expected, except another rise in the jobless rate to a year high of 5.4%.
As well the final outcome for the 2018-19 budget will be released this week by the Federal Government.
Across the Tasman, the GDP figures for the June quarter are out this week and some leading economists reckon there’s a chance the NZ economy dipped into negative growth in the second quarter. Those figures are due on Thursday.
And the final release of August economic data from China will happen later today with figures on industrial production, retail sales, urban investment especially housing investment.
The attacks on the Saudi Arabian oil facilities will be the biggest immediate issue for markets and investors to confront but that will generate a lot of confusion and tension before anything accurate is known.
Apart from that, it’s the Fed meeting Tuesday and Wednesday which will hold the serious attention of investors.
Another 0.25% rate cut is expected to be announced early Thursday morning Sydney time which will take the Fed Funds rate down to a range of 1.75% to 2%.
The AMP’s Dr Shane Oliver says “US growth is solid and the labour market remains tight but the threat to US growth from the trade war and slower global growth is significant, business indicators have softened, the inversion in parts of the yield curve is warning of increased risk of recession and inflation remains below target so it makes sense for the Fed to undertake another insurance cut.
“The Fed’s commentary is likely to remain dovish and we see another 0.25% coming in October,” according to Dr. Oliver.
So far as data is concerned there are the figures for industrial production, housing starts and a slight fall in existing homes sales. All are expected to be solid enough to question whether another rate cut is needed.
The Bank of England on Thursday evening (Sydney time) is not expected to change monetary policy but is likely to be dovish ahead of the looming Brexit crisis in the next month or so.
The Bank of Japan, also Thursday, is not expected to change monetary policy either but is also likely to remain dovish. Core inflation on Friday is expected to remain weak at 0.5%yoy and along the way from the BoJ’s target of 2%!
Dr. Oliver says the Chinese activity data later today for August is expected to show slightly stronger growth in industrial production of 5.2% year on year and retail sales of 8%yoy but investment growth remaining unchanged at around 5.7%.
In Australia, there are the minutes from the RBA’s last board meeting tomorrow and the August jobs data to be released on Thursday.
“Leading jobs indicators have been slowing and we expect employment to have risen by just 10,000 in August and unemployment to have edged up to 5.3%, keeping alive our expectation for another 0.25% rate cut next month.
“Meanwhile, ABS house price data for the June quarter (Tuesday) is expected show a 1.6% fall but is very dated given private sector surveys showing a rise since then.
“March quarter population data (Thursday) is expected to show population growth remaining around 1.6% year on year,” Dr Oliver wrote at the weekend.
