The UK and US are out Monday and even though there are only a few key data points out in Australia, it’s already shaping up as a potentially big week, particularly for Aussie dollar traders after the Euro ended trade Friday at 1.1015 under heavy selling pressure.
It’s likely to open the week with a bias to fall further after ECB President Mario Draghi said over the weekend that big structural differences between the countries within the EU could “threaten the existence of the union, the monetary union.”
The Euro’s woes, and associated US dollar strength, will see the Aussie opening the week around 78 cents. That’s a long way from 0.8150 it was trading at just a week and a half ago – proof again it’s not the RBA who controls the Aussie dollar but a mix of many inputs and global forces.
On the data front this week traders get the second post-budget read of Australia’s consumer mood this week with the release of the weekly ANZ consumer confidence index on Tuesday. It’s an important release in context of whether the Federal budget is really going to be the boost many hope for.
Westpac’s Chief Economist Bill Evans wrote on Friday, after a 6.4% jump in the bank’s survey this month that “Consumer Sentiment raises prospects of stronger household spending. He added that it is the “key for (the) rates outlook.”
That’s true because some economists, like Bank of America’s Saul Eslake, are questioning the real impact of the small business boost expected from the budgets tax cut and instant depreciation measures. We won’t know for months, but in the meantime, an important part of the economic transition is going to be consumers and consumption.
Also out this week is Australia’s first quarter construction work done on Wednesday and Private new capital expenditure on Thursday. These are both important partial indicators of Australian growth and NAB economists in their ‘What to Watch’ weekly said that both pieces of data “will help form the RBA’s view of Australia’s economic growth in the March quarter as it prepares its brief for the June RBA Board meeting,” the following week.
Phil Lowe, RBA Deputy Governor, is speaking at a summit on regulation on Wednesday.
Internationally, when the US and UK come back on Tuesday night we get the release of US durable goods orders and house price index. After the big spike in housing starts last week, which has emboldened many US economists about the prospects for growth, the Case-Shiller home price index and new home sales will be important.
The Bank of Canada announces its decision on interest rates at midnight Wednesday.
Japanese retail trade is out Thursday while Japanese CPI is out Friday. Also out Friday is Q1 GDP in the UK, Italian CPI and then the 2nd read of US GDP Friday night.
All through the week Greece will be slowly be smouldering on the back burner as well. Over the weekend Greek Prime Minister Tsipras said “We are on the final stretch of a painful and tough period shaped by the government’s negotiations with the institutions.”
And added “Rest assured that in this negotiation we will not accept humiliating terms. The overwhelming majority of Greek people want a solution and not just an agreement … it supports the government in this tough negotiation.” Time will tell.
Here’s Westpac excellent calender of all the key events and data fore the week.