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

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Data in Australia this week will be led by two key releases from the ABS — the quarterly wage price index on Wednesday and October employment figures on Thursday.

On global markets a wave of CPI releases are on the schedule, led by the all-important US inflation data on Wednesday night.

Uncertainty around US tax reform weighed on stocks and the US dollar after Asian markets closed on Friday. Senate Republicans unveiled their own tax plan with a number of key changes, setting up a showdown with their colleagues in the lower house which adds to speculation that tax reform won’t be completed by the end of the year.

There was also a move in bond markets to end the week, with benchmark US 10-year bond yields climbing by 7 basis points to 2.40% after recently trending lower.

And Australian markets will open on Monday in the wake of more political instability at home due to the dual-citizenship crisis, as the resignation of Liberal MP John Alexander leaves the Turnbull government with a minority in the lower house.

The Aussie dollar didn’t benefit from lingering pressure on the USD on Friday night. It fell against all the major currencies and finished the week at 0.7661 US cents.

Australia

Wednesday’s quarterly wage data is likely to be a key event for the Australian dollar this week, given the link between wage growth and the outlook for inflation.

It’s an area of the economy which has noticeably lagged, with recent wage growth readings — particularly for the private sector — consistently among the lowest on record.

The market is currently forecasting quarterly wage growth to edge higher, with growth of 0.7% (up from 0.5%), as the Q3 data will absorb the impact of minimum wage increases on July 1, while continued strength in the labour market helps provide a floor for wages.

And analysts expect Thursday’s labour market data to reveal a continuation of the recent strength in jobs growth.

The consensus forecast is for the economy to add around another 20,000 jobs in October, which would extend the current streak of monthly jobs growth to 13. The unemployment rate is expected to hold steady at 5.5%.

Also this week there’s two monthly indicators which are widely seen as a useful guide on the state of the economy — NAB’s business survey and the Westpac consumer confidence index.

Here’s this week’s data schedule (via ANZ):

International

Inflation data in the US is always a key event for markets, and Wednesday night’s figures are expected to show core inflation edged higher by 0.2% in October, leaving the annual rate of growth at 1.7%.

The US Federal Reserve is on track to raise rates again in December, but the outlook for further rate rises next year is mixed as core inflation remains below the Fed’s 2-3% target range.

Also on Wednesday night the US has retail sales figures, while the UK has Q3 data for average weekly earnings and unemployment.

Prior to that, on Monday during Asian trade, the Fed’s Patrick Harker (a voting committee member) will give a speech in Tokyo discussing the US central bank’s ongoing reduction of its monetary stimulus program.

On Tuesday night the Eurozone gets a second reading for Q3 GDP, and the UK has inflation data for October. UK CPI growth is expected to climb above the key 3% barrier, which will require Bank of England Governor Mark Carney to write a letter to Treasury explaining the rise.

On Thursday night there’s CPI data in Europe — with core inflation growth forecast to remain subdued at 0.9% — along with a wave of central bank speakers.

Canada rounds out the week of inflation figures on Friday night, while ECB President Mario Draghi is scheduled to give a speech in Frankfurt called “Europe in a New Era”.

A full schedule of the main international data points is below (also via ANZ):

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