The US Federal Reserve will take centre stage this week with its September rates announcement on Wednesday night. The local data calendar is pretty quiet heading into month-end.
The Aussie dollar will start the week at 0.7291 US cents, unchanged from the previous session. All the action in currency markets was with the UK pound, which slumped by almost 1.5% following a Brexit speech by UK Prime Minister Theresa May.
US stocks were flat after hitting new record highs on Thursday, as markets continued to brush of the US-China trade tensions. ASX futures closed 23 points lower ahead of Mondays’s open.
Most of the big tech stocks lost ground, and then news broke over the weekend that US authorities are considering an anti-trust investigation in Google and Facebook.
Benchmark US 10-year bond yields, which have risen by 23 basis points since the start of August, held steady at 3.07%.
To the week ahead:
It’s a quiet week locally, with August job vacancy data on Wednesday the only release of note from the ABS.
As usual, CoreLogic will kick things off on Monday morning with a summary of weekend auction activity and weekly house price moves.
“Auction clearance rates are tepid, so we watch consumer confidence (Tuesday) for whether the slow housing market is hitting sentiment,” ANZ said.
And rounding out the week on Friday there’s monthly private sector credit data from the RBA.
“Credit growth has eased in recent months, as demand for credit by investors for housing assets reduces. Buyers are reassessing lower price estimates for dwellings to more sober levels,” said CBA’s Belinda Allen.
All eyes will be on the US Fed on Wednesday night, with the central bank almost certain to hike rates to a range between 2-2.5%.
“The focus by market participants will be on the post-meeting statement, particularly whether the FOMC will change or drop the term ‘accommodative’ to describe the current stance of monetary policy,” Allen said.
Dropping “accommodative” would be dovish, as it would suggest that committee members are of the view that the Fed is now closer to the end of its current tightening cycle.
However, “we continue to expect the FOMC will increase the Fed Funds rate by 0.25% in September and December this year, and twice more in 2019,” said Allen.
“Strong data supports further tightening, but uncertainty lingers,” added ANZ’s currency team.
“In particular the dot plot may look more dovish, with newly appointed Vice Chair Richard Clarida contributing his first forecasts.”
Following the Fed on Thursday morning, New Zealand’s central bank will also make a rates announcement, with rates expected to stay on hold at 1.75%.
Then on Friday night there’s CPI data in Europe, followed by US income & expenditure numbers for August which include the PCE inflation reading.
Westpac expects annual core inflation to remain around trend at 2%.
Here’s this week’s full calendar, via ANZ:
Business Insider Emails & Alerts
Site highlights each day to your inbox.