The RBA will take centre stage in Australia this week, with two key announcements on the schedule.
Offshore, US politics will be in focus with the mid-term elections on Tuesday night.
Friday night’s bumper US jobs report moved markets, as October jobs growth beat expectations and annual wage growth rose to the highest level since 2009.
The strong result reinforced expectations around the US Fed’s current rate hiking cycle, and US bond yields rose across the curve.
ASX futures are pointing slightly lower after US stocks fell, led by a sharp decline in Apple shares.
And Trump’s top economic adviser Larry Kudlow tempered expectations around a possible trade deal with China.
The Aussie dollar fell back from its weekly highs to close at 0.7199 US cents, after surging in Asian trade on Friday following reports of a possible breakthrough on trade negotiations.
To the week ahead:
The RBA will hold its monthly policy meeting on Tuesday, with rates almost certain to stay on hold at 1.5%.
ANZ’s currency strategists will be watching for tweaks to the bank’s language around the effects of credit tightening on house prices. However, “any caution will be offset by a confident view of the labour market”.
Then on Friday, markets will get an update on the central bank’s outlook with the quarterly Statement on Monetary Policy (SoMP).
“We expect the RBA to nudge its forecast for the unemployment rate lower, but leave its forecasts of GDP and inflation unchanged,” ANZ said.
Ahead of Tuesday’s US elections, the ruling Republican party is expected to maintain control of the Senate but lose its majority in the lower house.
“This is also the market’s consensus and is unlikely to drive a market reaction,” ANZ said, although the bank thinks the result could be closer than expected.
Two central banks abroad will also hold policy meetings on Thursday, with the Reserve Bank of New Zealand followed by the US Fed on Thursday night.
Neither bank is expected to move rates, with the US Fed still on track to raise rates in December.
Also on Thursday there’s China trade data, followed by Chinese inflation figures on Friday.
CBA expects China’s trade surplus to increase slightly in October.
“Exports to the US will likely be supported for the remainder of the year, as US importers seek to avoid the prospective increase in tariffs,” the bank said.
The full calendar is here, (via ANZ):
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