Domestically this week, all eyes will be on Wednesday’s CPI inflation figures for the December quarter.
Key data internationally starts on Monday night in the US, with the release of personal income and spending data for December including the PCE inflation reading — the preferred inflation measure of the US Fed.
It was another rough week for the US dollar, which stayed under pressure on Friday night amid mixed messages from senior members of the Trump administration, who advocated for a stronger US dollar over the long-term.
The AUD reached a multi-year high of 0.8133 US cents on Friday night and will start the week at 0.8110 US cents:
Further weakness in the greenback gave US stocks added impetus and the S&P500 climbed by more than 1% on Friday night to reach its 14th record high in the month of January.
Benchmark US 10-year bond yields also rose back to their recent high of 2.66%, as the first reading of US Q4 GDP missed expectations — although the market assessed that the miss was largely due to one-off factors.
Key data kicks off on Tuesday with the release of NAB’s widely-read December business survey at 11:30am AEDT.
The survey showed Australian business conditions declined sharply in November compared to the previous month.
However, stepping back from the monthly volatility, NAB remains cautiously optimistic that Aussie businesses are in good shape.
Then Q4 inflation data from the ABS at 11:30am AEDT on Wednesday will be the main data event of the week, given its central importance to the outlook for interest rates.
The market forecast is for a quarterly increase in headline inflation of 0.8%, leaving annual growth at 2% — up from 1.8% in Q3 which missed expectations.
The pickup in headline inflation is expected to be driven by higher petrol costs, while core inflation is forecast to remain below the RBA’s 2-3% target range.
On Thursday, CoreLogic will release monthly house price data for January, which is expected to show a continued slowdown in the Sydney market.
Also on Thursday, the ABS has December data for international trade and domestic building approvals and the RBA releases its monthly figures for private sector credit.
US personal consumption and expenditure (PCE) data for December is scheduled for Monday night.
Most of the attention will be on the PCE inflation reading, with the market forecasting a 1.6% annual rise — a slight uptick from the November rate of 1.5%.
Also in the US, the Federal Reserve meets for its monthly policy meeting on Wednesday night, with no change expected to benchmark interest rates.
And then on Friday after Asian markets close, the US has monthly employment data for January, with another 176,000 non-farm jobs to be added with no change in quarterly average earnings growth.
In Europe, there’s preliminary readings for Q4 GDP and January inflation on Tuesday and Wednesday night respectively.
Annual GDP growth is forecast at 2.6%, with annual headline inflation at 1.3%.
A strong result in either release would add further weight to the market’s view that the Eurozone economy is continuing to strengthen.
Looking regionally, Chinese has official government PMI data for January on Wednesday, followed by non-government Caixin PMIs on Thursday.
And around the world on Thursday, there’s a wave of January PMI data releases.
PMI figures for Japan, the UK, Europe and the US will be assessed for further evidence of the synchronised global growth seen in the second half of last year.
Have a great week.
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