This week, Australia finds out how big the capital expenditure hole is going to be after the mining boom, with the release of Q4 2014 capital expenditure (Capex) and the forecasts for the 2014/15 and 2015/16 financial years.
But that’s Thursday and the in early part of the week stocks, the Euro, the Aussie dollar and interest rates all look biased higher.
That’s because it seems that the Greek saga is over for the moment with the announcement of an extension of the current arrangement for 4 months.
All that needs to be done now is for Greek Finance Minister Varoufakis to present his plan Monday night. Of course the plan must pass muster with his German counterpart Wolfgang Schauble. But, it seems the doctrinaire Schauble has had his wings clipped by Chancellor Merkel who, with French President Hollande, has weighed the long term goals of keeping the Euro together against any need to push Greece out of the Euro – or at least break the new Government.
Locally besides Capex on Thursday it’s as close to a data drought as you can get here in Australia with only the release of the Q4 Wages Index, construction work done and private credit.
Of course in the current environment where consumer confidence can’t rise sustainably, news that wage growth remains weak is likely to reflect the underlying level of disquiet in the community about economic prospects.
Elsewhere national security is one of the key themes of the reset and relaunch of Tony Abbott’s Prime Ministership. Already he’s reframed the problems of the Budget and the Government’s fiscal strategy as matters of “economic security” and Monday he will make announcements about the Commonwealth’s response to the Sydney Seige review, “and a parallel review of Australia’s counter-terrorism machinery” in a public address on the issue.
You can get a sense of where he will go from this quote from last week’s Prime Ministerial video message.
We are a free and fair nation which doesn’t mean we should let bad people play us for mugs and all too often, they have.
Abbott will still be wrestling with the fallout from the damaging story in The Australian on Saturday which claimed the PM canvassed the idea of sending 3500 troops into Iraq to pursue ISIS.
The House is sitting this week so expect his performance to be scrutinised closely by colleagues and enemies alike.
Turning offshore the Chinese New Year holidays continue. German IFO Monday and Q4 GDP Tuesday (along with a speech from ECB boss Mario Draghi) are the early highlights. Janet Yellen walks up Capitol Hill to speak to US lawmakers. This is super important given that the Fed and its intentions with regard to when it starts hiking rates are so important to markets – especially the US dollar – at the moment.
Thursday night our time both Draghi and Yellen speak again and we get the release of German unemployment and US CPI as key releases. Durable goods are also out.
Rounding out a week when we’ll get a solid guide on where the big global economies are we get Japanese CPI, UK GDP and US GDP on Friday.
It may not be the biggest week in Australia but there are enough events and risks offshore to keep traders watching closely.
Here is Westpac’s great summary of all the key events and data releases for the week.