By sacking the government chief whip Philip Ruddock on Friday Prime Minister Tony Abbott managed to keep his political misfortunes on the front pages over the weekend. Likely, he will be the hot topic of conversation again in Canberra and amongst his colleagues after making what looks like another dubious “captain’s call”.
He has signalled his intent to shift focus to other issues – including national security and immigration – over the days ahead, however.
Among traders and the investment community, however, is the politics of Greece, and that country’s future in the Eurozone, which will be the early talking point among traders this week.
On Monday night (Australian time) Greek Finance Minister Yanis Varoufakis squares off once more against German Finance Minister Wolfgang Schauble and the rest of the EU financial powerbrokers. After Athens vetoed the deal Varoufakis had agreed to last week, his position looks weakened. That won’t please the game theory guru and while the chances of a Grexit remain remote they are not non-negligible and the impacts on markets non-linear.
Back in Australia the data this week is second-tier and mostly not market-moving.
Monday is a holiday in the US for Presidents day, while domestically we see the release of new motor vehicle sales. Japanese GDP is likely to overshadow either way with the market looking for a very solid 0.9% for the quarter.
On Tuesday we get the RBA Minutes.
The RBA has had plenty of opportunity to take the nation into its confidence recently with both the Quarterly Statement on Monetary Policy and Governor Stevens appearance before the House Economic Committee Friday. But Westpac Chief Economists Bill Evans thinks the minutes might still be significant.
Evans wrote Friday:
it would not surprise to see the Bank express an easing bias in the Minutes of the February RBA Board meeting… Fostering expectations that domestic interest rates are likely to move lower is a key mechanism for maintaining downward pressure on the Australian dollar, particularly in an environment where a number of other central banks are actively easing monetary policy.
Aussie dollar and interest rate traders, take note.
Chinese house price data, UK CPI, German ZEW survey, and US NAHB building confidence are out Tuesday.
Wednesday sees the release of the RBA and Westpac Leading Indices of economic activity. Wednesday night the Bank of England releases the minutes to its last meeting and forex traders will be watching closely. Housing starts and PPI are out in the US and Chinese New Year celebrations begin.
On Thursday it’s the FOMC minutes with traders looking for hints on the timing of the first rate hike. Friday ends the week with the release of a raft of “flash” PMI data around the globe.
But it seems only Greece is capable of destroying the positive sentiment that has been pushing stocks to new highs again recently. If we get a positive resolution Euro should rally hard and the DAX will burst through 11,000.
Locally the ASX and Aussie dollar will tag along for the ride.
Here is Westpac’s excellent calendar of all the key events for the week.
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