Global markets had a relatively quiet session on Friday night, as US stocks edged higher to cap a weekly gain of 4.3% — partially offsetting the previous week’s 5.2% fall.
Yields on longer-term US treasuries ticked lower with benchmark US 10-year bond yields ending the week at 2.87% — just off the recent four-year high above 2.9%.
And the US dollar staged a modest recovery as the USD index climbed off a three-year low with gains against most major currencies. That strength in the greenback saw the AUD finish the week lower at 0.7905 US cents.
On the domestic data front this week it’s all about the prospects for wage growth — or lack thereof — in the Australian economy.
Wednesday’s release of the December quarter Wage Price Index from the ABS (11:30am AEDT) is expected to show annual wage growth remains subdued at just 2%.
And given Australia’s extended run of low wage growth, the report takes on extra significance in shaping the outlook for inflation and interest rates.
Looking abroad, the minutes from the US Federal Reserve’s January 31 meeting will be closely watched for any indication of a change in its 2018 economic forecasts in the wake of expansionary fiscal policy measures by the US government.
Key events kick off on Tuesday, with the release of the minutes from the RBA’s February meeting where the the bank looked like it was in no rush to raise rates.
The last rates decision was followed by the RBA’s quarterly Statement on Monetary Policy on February 9, with updated forecasts which showed the outlook for inflation remains subdued.
And that outlook for inflation is due at least in part to stubbornly low wage growth, with the bank forecasting that any pickup in wages is likely to remain gradual despite a healthy labour market.
But while Australia’s economy added a record number of jobs last year, analysts expect that Wednesday’s December quarter wage data won’t provide much relief to long-suffering Australian workers, after the September result missed to the downside.
Elsewhere this week, ASX200 company reporting season is in full swing with headline results including BHP (Tuesday), Wesfarmers (Wednesday), Qantas (Thursday) and Woolworths (Friday).
Here’s the local calendar of key events (via ANZ):
Markets will get an update on the global growth picture on Wednesday, with the release of February manufacturing PMI data for the US, Japan and the Eurozone.
And in addition to the US Fed minutes on Wednesday night, the UK also has December employment data — including the unemployment rate and average hourly earnings — which ANZ’s currency strategists say will be crucial for the near-term direction of the UK pound.
Then on Thursday night the UK has a final reading for Q4 GDP, followed by January inflation data on Friday for Japan, Canada and the Eurozone.
There’s also the usual lineup of speakers from the US Federal Reserve scheduled throughout the week.
Here’s the full international calendar of key data and events (also via ANZ):
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