New Prime Minister Scott Morrison’s first week in office will be accompanied by a relatively quiet economic calendar to close out the month of August.
Last week’s political chaos weighed on the Aussie dollar, which had fallen back towards US72 cents on Friday morning.
But after a sharp spike following Morrison’s victory, the AUD continued to find demand in global markets and will start the week back above US73 cents.
The Aussie also got a boost from weakness in the US dollar, following a highly-anticipated speech from US Fed chair Jerome Powell on Friday night.
Powell said the central bank remains committed to a “gradual” pace of rate hikes — a more dovish view than anticipated which saw the USD fall and stocks rise. But ASX futures traders have marked the local index unchanged to start the week.
Benchmark US 10-year bond yields also fell, which left the yield spread with US 2-year bonds at less than 20 basis points.
To the week ahead:
Markets will be watching the next round of GDP inputs ahead of the Q2 GDP print on Wednesday, September 5.
On Thursday, the ABS has private sector capex data for the June quarter — another input which includes the third estimate of 2018/19 investment expectations.
Commonwealth Bank expects Q2 capex to rise by 0.9%, leaving annual growth at 3.5%. “For the 3rd estimate, a number around $97 billion wwould imply no change to investment intentions compared to the second estimate,” CBA said.
On Thursday there’s also data on July building approvals, which rebounded strongly in June but have been subject to significant volatility in recent months.
And on Friday the RBA will release July data on private sector credit. June figures showed credit growth to housing investors turned negative for the first time since 2009.
Key data abroad is also weighted towards the end of the week, starting with July PCE inflation data in the US on Thursday night.
“We predict that core PCE inflation stabilised at 1.9% y/y for the third consecutive month,” CBA said.
On Friday, “investors will scrutinise China’s PMIs with particular interest, as the August print will be the first showing a full-month impact of the trade war,” ANZ said.
Then on Friday night the Eurozone gets data prints for July unemployment (forecast 8.2%, down from 8.3% in June) and August inflation (core inflation forecast at 1.1%).
Earlier in the week, it’s a public holiday in the UK on Monday and the US has trade data on Tuesday night.
Here’s the full calendar (via ANZ):
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