After a quiet fortnight of key data in Australia, it’s a much busier schedule to finish the month.
All-important Q3 inflation data will headline the week on Wednesday.
ASX futures closed 17 points lower on Friday night after another wave of selling on US markets.
Safe-haven assets found demand as US 10-year bond yields fell to a three-week low and the Japanese yen strengthened.
But after falling to its lowest level since February 2016 on Friday, the AUD bounced back amid broader weakness in the US dollar. The Aussie will start the week at 0.7092 US cents.
The washup is that Asian markets will open on Monday with a long list of factors keeping market on edge: rising US interest rates, concerns about China’s falling currency, trade fears, Italy’s debt crisis and Brexit uncertainty.
Combined with a number of key data releases on the local calendar, it should make for an interesting week. Here are the main events to watch out for:
Ahead of Q3 CPI data on Wednesday, the median forecast is for inflation to rise by 0.5% q/q, leaving annual growth at 1.9%.
Back in August, the RBA brought the inflation near-term inflation outlook into focus when it downgraded its 2018 CPI forecasts, citing changes to electricity prices and child-care costs.
For their part, the economics team at UBS are forecasting a downside surprise.
Also of key importance, monthly retail sales data for September on Friday.
The median forecast is for sales to increase by 0.3%, repeating the growth rate seen in August after sales were flat in July.
This week’s data will also include “Q3 volumes estimates, which are the first partial indicator of Q3 GDP (due 5 December)”, CBA said. Volume growth of 0.4% is expected, down from a solid 1.2% lift in Q2.
September building approvals data on Tuesday will also get some attention, after a sharp fall in August which indicated the slowdown in residential construction is about to become a drag on GDP growth.
Also on Tuesday, the RBA’s Michelle Bullock will give a speech at CBA’s global markets conference called “Economic and Financial Stability in Australia”.
“No doubt there will be comments around conditions in the housing market and household debt levels,” CBA’s Kristina Clifton said.
Then on Wednesday, CoreLogic will release its widely-read monthly summary of house price movements for October.
Rounding out a big week, the RBA has private sector credit data on Wednesday and the ABS has Australia’s September trade balance on Thursday.
Key data kicks off in the US on Monday night with the release of September PCE inflation data — the preferred inflation measure of the US Fed.
Commonwealth Bank expects “core PCE will remain sticky near the Fed’s 2% inflation target in September”.
Key data for the Eurozone will be led by Q3 GDP (Tuesday night) and October inflation data (Wednesday night).
Then on Thursday night, the Bank of England will hold its policy meeting (no change to rates expected).
Prior to that, the Bank of Japan will hold its rates meeting on Wednesday, after Westpac highlighted last week that the BoJ is still carrying out a “stealth taper” of its bond purchasing program.
Then there’s all-important US employment data on Friday night, with markets forecasting another 190,000 jobs to be added.
And importantly, ANZ’s curreny strategists noted that US politics will also come into play next week ahead of the mid-term elections.
“The push for votes by both parties is likely to play into market sentiment, and could mean that data prints have a more volatile market reaction than expected,” ANZ said.
Here’s this week’s full calendar, via ANZ:
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