China, the European Central Bank (ECB), Australian jobs, the rebound in commodity prices and the rise on the Aussie dollar will dominate markets here and offshore this week to varying degrees.
Commodity prices and the dollar are covered in separate stories, and of the other, China and this week’s policy meeting of the ECB on Thursday night, our time, will grab the attention of markets and investors.
The ECB is expected to respond to an intensification of deflation and bank risks in Europe by expanding its monthly quantitative easing program from 60 billion euros to around 70 billion.
Another round of cheap bank financing is also possible, but low interbank lending rates mean that would no make much difference.
The big deal for markets will be if the ECB again cuts its deposit rate by another 10 basis points (from -0.3% currently).
The Bank of Japan’s mishandling of its move to negative rates on some bank deposits on January 29 (which helped spark a huge and nasty sell-off in all financial markets for three weeks) might make the ECB think again.
In China, February’s economic data will start to flow but they will be distorted by the Lunar New Year holidays.
Trade data tomorrow will show continuing softness in exports and imports.
The key for imports will be the mix between volume changes and price movements as Chinese buyers have been taking advantage of price falls to snap up extra supplies of key products.
Watch data for iron ore, coal, oil and gas and copper imports. They will give us a good idea of just what Chinese buyers are up to.
February’s consumer inflation figures on Thursday will likely remain at 1.8%, year on year, with producer price deflation continuing to moderate slightly, but remaining deeply negative.
Bank lending is likely to slow from the huge surge seen in January.
And on Saturday the last monthly batch of Chinese economic indicators will be released – retail sales, production and investment. All will be for January and February – combined to try and smooth out peaks and troughs caused by when the Lunar New Year falls (it fell in mid February).
Property investment figures will also be released on Saturday, and late next week the property price figures will be issued.
So they will be interesting, but nothing more, such as the dislocation caused by the week long holiday and huge number of people who travel inside and out of China.
Elsewhere in Japan we get the second estimate of 4th quarter GDP – another contraction estimate is forecast.
In the US, only second level data, such as small business confidence, inventories and import prices are due for release.
A speech by Fed Vice Chair Stanley Fischer will be watched for any clues on rates as in the view of the markets, he is now the chief arguer for the central Fed policy at the moment.
In Australia, we get modest growth in ANZ job ads later today, the monthly business confidence and conditions surveys from the NAB, the monthly consumer confidence survey on Wednesday and housing finance (also on Wednesday) from the Bureau of Statistics.
Tomorrow Reserve Bank Deputy Governor Philip Lowe delivers a speech at the Urban Development Institute of Australia’s (UDIA) National Industry Congress in Adelaide.
On Friday the Bureau of Statistics issues the latest lending figures – the most comprehensive figures on lending in the economy including housing, personal, commercial and lease loans.
Businesses have been gradually borrowing more in recent months, according to Reserve Bank data.
