AUSTRALIAN DIARY: Everything you need to know about the week ahead for markets

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Key events domestically will be led by December retail sales data and the Reserve Bank’s monthly interest rate announcement, both on Tuesday.

The RBA will also provide an update on its economic outlook with Friday’s quarterly Statement on Monetary Policy (SoMP).

Looking abroad, the central banks of New Zealand and the UK will make their interest rate announcements and there’s a wave of speakers from the US Federal Reserve.

Volatility returned to global markets on Friday night in the wake of US employment data which showed wage growth is finally starting to climb.

That gave rise to another spike in bond yields, given the strong connection between wage growth and the outlook for inflation and interest rates.

The move in bond markets triggered a selloff in equities, and the Dow had its biggest one-day points decline since the global financial crisis in 2008.

Higher yields also provided support for the US dollar. And amid the backdrop of strength in the USD and broader risk-off sentiment, traders hit the sell-button on the Aussie dollar which closed the week 1.42% lower at 0.7926 US cents.

Australia

Key data kicks off on Tuesday with December retail sales data from the ABS at 11:30am AEDT.

After a strong result in November amid a challenging period for the industry, the market’s attention will be focused on whether momentum continued through the all-important Christmas trading period.

Also on Tuesday, the RBA will make its first interest rate announcement of the year at 2:30pm AEDT.

Rates are expected to stay on hold at 1.5%, and as usual the focus will be any clues offered by the bank in its accompanying statement about the 2018 rates outlook.

RBA Governor Philip Lowe will give a speech on Thursday night (8:00pm AEDT) at the Australian Economic Forum dinner, ahead of the RBA’s quarterly SoMP at 11:30am AEDT on Friday.

After dialing back its inflation forecasts in November, the latest data will provide an update on the RBA’s outlook for economic growth, unemployment and inflation through to June 2020.

Here’s a summary of this week’s headline domestic data releases (via ANZ):

International

Headline data globally kicks off in New Zealand on Wednesday with the release of Q4 employment figures, including average hourly earnings and the unemployment rate.

Then on Thursday, the Reserve Bank of New Zealand will make its monthly interest rate announcement, with rates forecast to stay on hold at 1.75% after inflation data missed by a mile in January.

That’s followed by the Bank of England on Thursday night which is also expected to keep rates on hold at 0.5%.

In other central bank activity, ECB President Mario Draghi will give a speech on Tuesday night and markets will be watching a wave of US Fed speakers throughout the week (see table below).

To end the week, China has CPI/PPI inflation data on Friday followed by Canadian employment data on Friday night.

A summary of the main international events this week is below (via ANZ):

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