While trade tensions remain, there appeared to be little reaction to the enactment of US import tariffs on $US34 billion worth of Chinese goods.
It followed a strong turnaround for Chinese stocks, as the Shanghai Composite index started Friday in the red but closed 0.5% higher.
US bond yields edged lower and the greenback was sold off against all the major pairs. The Aussie dollar closed the week at 0.7430 US cents.
To the week ahead, and the economic calendar in Australia is looking relatively quiet, while key data abroad will be highlighted by US inflation figures on Thursday night.
Markets will get an update this week on business and consumer sentiment, with the monthly release of NAB’s business survey (Tuesday) and the Westpac consumer confidence index (Wednesday).
Domestic business conditions hit record highs earlier this year, although NAB data for May showed sharp declines, with a more negative outlook recorded in Victoria and New South Wales.
Conversely, the recent trend for consumer confidence has been more downbeat amid the combination of low wage growth and high household debt.
Results in May from the Westpac survey showed the number of optimists still outnumber pessimists, but Westpac economists Matthew Hassan said the reading “remains well below the levels typically associated with a robust consumer”.
Aside from data releases, there’s a key event on Wednesday at 12:30pm AEST when APRA chairman Wayne Byres is scheduled to give a speech called “Developments in housing markets”.
Byres will outline the banking regulators’ supervisory strategy towards mortgage lending and its current assessment of bank balance sheets — both topics that are likely to get plenty of attention from market observers.
Also on Wednesday there’s housing finance data from the ABS on Wednesday — likely to reaffirm the recent trend of a slowdown in investor lending.
June CPI for the US on Thursday night will highlight key data aboard, given the importance of inflation growth to the US Fed’s outlook for interest rates. Core inflation growth is forecast to hold steady at 2.2%.
“Both headline and core CPI have been trending higher in recent months, with base effects expected to push headline CPI higher,” CBA economist Belinda Allen said.
China also has June inflation data on Tuesday in Asian trade, with markets expecting annual growth of 2%.
It’s a relatively quiet schedule in Europe, with key data highlighted by Germany’s ZEW business survey (Tuesday night) and Eurozone industrial production (Thursday night).
There’s also UK industrial production on Tuesday night and the Bank of Canada (BoC) will make its interest rate announcement on Thursday night.
A majority of economists surveyed by Bloomberg expect the BoC to raise rates by 25 basis points to 1.5%, although the base case for CBA analysts is that rates won’t rise until October.
Here’s this week’s full calendar, via ANZ (key events for currency markets in dark blue):
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