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Economic Releases

Below are the weekly economic releases for this week (NZT)

Tuesday 03/03

  • 130pm, AUD, Building Approvals m/m
    • Forecast 1.1%
    • Previous -0.2%
  • 430pm, AUD, Cash Rate
    • Forecast 0.75%
    • Previous 0.75%
  • 430pm, AUD, RBA Rate Statement

Wednesday 04/03

  • 130pm, AUD, GDP q/q
    • Forecast 0.4%
    • Previous 0.4%

Thursday 05/03

  • 4am, CAD, BOC Rate Statement 
    • Previous 13.2
  • 4am, CAD, Overnight Rate
    • Forecast 1.75%
    • Previous 1.75%
  • 130pm, AUD, Trade Balance
    • Forecast 4.80B
    • Previous 5.22B
  • All Day, All, OPEC Meetings 

Friday 06/03

  • 6am, GBP, BOE Gov Carney Speaks 
  • 645am, CAD, BOC Gov Poloz Speaks
  • 130pm, AUD, Retail Sales m/m
    • Forecast 0.0%
    • Previous -0.5%

Saturday 07/03

  • 230am, CAD, Employment Change
    • Previous 34.5k
  • 230am, CAD, Trade Balance
    • Previous -0.4B
  • 230am, CAD, Unemployment Rate 
    • Previous 5.5%

Economic Releases

Below are the weekly economic releases for this week (NZT)

Monday 24/02

  • 1045am, NZD, Retail Sales q/q
    • Forecast 0.80%
    • Previous 1.70%
    • Actual 0.70%
  • All Day, JPY, Bank Holiday
  • 10pm, EUR, German Ifo Business Climate,
    • Forecast 95
    • Previous 95.9

Wednesday 26/02

  • 4am, USD, CB Consumer Confidence
    • Forecast 132.6
    • Previous 131.6

Thursday 27/02

  • 1pm, NZD, ANZ Business Confidence
    • Previous 13.2
  • 130pm, AUD, Private Capital Expenditure q/q
    • Forecast 0.50%
    • Previous -0.20%

Saturday 29/02

  • 230am, CAD, GDP m/m
    • Previous 0.10%
    • Forecast 0.10%
  • 2pm, CNY, Manufacturing PMI
    • Forecast 50

FX Update

Chinese authorities have come under scrutiny recently on how they report new cases of coronavirus cases. They have been misleading the public with underreporting actual figures. They have now taken things a step too far by changing the definition of its diagnostic criteria. All those who have been infected are now only classified as “confirmed” if they have had a positive result from a nucleic acid test or they have been clinically diagnosed by a doctor. This in effect is a method to downplay the seriousness of the virus and get Chinese back working, with the Chinese Communist Party taking its chances the virus won’t worsen.  Things could turn very ugly from here. Wuhan officials have ordered 40 mobile incinerators which are typically used for the disposal of animal carcasses. The only problem as Professor Ming Ju said is, he believes the incinerators are for bodies.

The Fed (FOMC) minutes offered nothing new to current monetary policy with the current stance and rates to remain for some time. The economy should remain on a solid footing citing recent positive data such as consumer confidence and residential construction investment. The Fed still sees a multitude of risks which could flare up, coronavirus is high on the list along with tensions in the Middle East. 

The US Dollar surged during Wednesday’s overnight sessions as investors preferred the big Dollar instead of the safe haven traditional Japanese Yen. Japanese annualised GDP printed a poor -6.3% to the December 2019 period which was mostly ignored by markets but with machinery orders down over 12.0% for the December month investors sold the Yen across the board. To make matters worse both US building Permits and the Producer Price index releases showed decent results.

Yesterday’s Australian Employment numbers met consensus at 15,000 fulltime people and 5,000 part time people added, in line with annual employment growth of around 2.0%. The Australian Unemployment Rate however received most of the attention ticking up to 5.3% from 5.2% sending the AUD lower across all currencies. Against the US Dollar it slipped below major support at 0.6665 and broke through to 0.6645 deep into a 10-year low at the time of writing. 

NZD holds small gains in thin US Holiday trading

Australia

Westpac Australian Consumer Confidence rose 2.3% m/m which is an encouraging sign given recent bushfires and Coronavirus scares. Governor Lowe said the Coronavirus is having an uncertain impact on the economy but major impact on tourism sectors. The recent Chinese policy stimulus package will help the Australian economy especially with the Iron ore price recovering off recent lows. This week’s monetary policy minutes from the RBA’s 4th Feb statement is in focus along with Wage data Wednesday and Unemployment figures Thursday.    

New Zealand

The RBNZ left the cash rate unchanged at 1.0% as widely predicted but changed their policy stance from an easing bias to a neutral tone sending the kiwi into a flurry. Employment remains above sustainable levels and economic growth is expected to accelerate over the second half of 2020. No further rate cuts are forecast for 2020 with inflation at close to the 2.0% midpoint target. Coronavirus (COVID-19) ongoing risks could pose downside volatility to the New Zealand Dollar if more new cases are reported. This week’s calendar cupboard is bare with no significant local economic data releasing. 

United States

A US holiday Monday in observance of “Presidents Day” kept markets low key to start the week with trading volumes low. US Retail Sales came in Friday at the predicted 0.3% for January and Consumer Sentiment for February released slightly higher than expected even with ongoing coronavirus fears. It was a mixed week for the US Dollar within what was mostly a ‘risk off” market. The US Dollar climbed higher over all major currencies except for the safe haven Japanese Yen. Attention reverts to the latter half of the week with Building Permits and monthly Producer figures for January. Fed Minutes from the Jan 30th policy meeting also comes into view and could add volatility Thursday.          

United Kingdom

Bank of England Governor Carney spoke late last week saying stimulus may be required to recover the economy back towards target growth. Interest would remain low for some time with any adjustments to be modest. UK Chancellor Sajid Resigned after a disagreement with Boris Johnson and has been replaced by Rishi Sunak. This caused the GBP to hold onto gains against most crosses last week as the change should create more infrastructure spending letting the Bank of England off the need to instigate more monetary stimulus. The change should also provide a better negotiating table with the EU post Brexit.      

Europe

The Euro has been the weakest currency over the past week with data not coming in too positive. German GDP for the last quarter 2019 slumped to 0.0% from the 0.1% growth forecast stagnating after a positive third quarter. The sell off across the board in the Euro has seen the currency against the big dollar fall to an April 2017 low. The US has increased tariffs on European Built aircraft from 15% from 10% increasing pressures on Brussels in a long standing dispute over aircraft subsidies. The tariff will take effect on 18th March. US negotiators have said they remained open to further chats about a settlement. French and German Manufacturing figures print this week the focus, we expect further movement in the EUR.     

Japan

Markets are continuing to monitor ongoing developments on the coronavirus front in Japan with the biggest concentration of affected people outside of China with a total of 414 affected and 1 death. Fourth quarter GDP published at -1.6% compared to -1.0% Monday, taking the Yen lower 20 points against the Dollar as the economy shrank the fastest in six years. A Sales tax hike and global demand affected global expenditure and consumption. It could go from bad to worse for the Japanese economy as first quarter figures are now being affected by coronavirus damaging tourism. Japan now sits on the edge of a recession.  

Canada

At the Australia-Canada Economic Leadership Forum in Melbourne late last week Bank of Canada (BoC) Poloz commented “The Canadian Economy is in a pretty good place. Without stimulus around Fiscal policy would have almost certainly seen rates track lower” he said. With coronavirus taking a toll of markets, competition for oil suppliers has ramped up. Chinese Oil demand has dropped to over 3M barrels a day or a drop of 30.0%. The massive 2020 decline in the Canadian Dollar is partly due to the struggling Crude price which has fallen from around 62.00 per barrel to 52.00 per barrel. Forecasters have predicted the price to be well supported throughout 2020 but only after coronavirus has been contained can we start to see any recovery. This week on the calendar is CPI for January and Retail Sales for December. 

 Major Announcements

  • NZ Keep cash rate unchanged at 1.0%
  • German quarterly GDP falls to 0.0% 
  • US Retail Sales comes in at 0.3% as predicted
  • Japanese GDP y/y narrowed by 6.3% in the fourth quarter 

FX Update

Investors seem to have forgotten about Coronavirus over the past few days with risk currencies all posting gains along with equity markets trading to fresh highs. The general feel has been that the virus has shown signs of peaking and has been contained. Not so fast – yesterday’s news of an additional 14,840 new cases sent markets back into a “risk off” tone.

RBNZ left the cash rate unchanged at 1.0% as widely predicted but changed their policy stance from an easing bias to a neutral tone sending the kiwi into a flurry. Employment remains above sustainable levels and economic growth is expected to accelerate over the second half of 2020. No further rate cuts are forecast for 2020 with inflation at close to the 2.0% midpoint target. Coronavirus (COVID-19) ongoing risks could pose downside volatility to the New Zealand Dollar if more new cases are reported. The NZD rallied across the board bouncing half a cent higher against the US Dollar and Australian Dollar post RBNZ release.   

Westpac Australian Consumer Confidence rose 2.3% m/m which is an encouraging given recent bushfires and Coronavirus scares.  The Australian Dollar piggybacked the kiwi higher Wednesday post RBNZ statement. Governor Lowe said the Coronavirus is having an uncertain impact on the economy but major impact on tourism sectors. The recent Chinese policy stimulus package will help the Australian economy especially with the Iron ore price recovering off recent lows. 

RBNZ

RBNZ Cash Rate Announcement

This afternoon the RBNZ left the cash rate unchanged at 1.0% as predicted but changed their policy stance from an easing bias to a neutral tone. Employment remains above sustainable levels and economic growth is expected to accelerate over the second half of 2020. No further rate cuts are forecast for 2020. The NZD rallied across the board and bounced half a cent higher against the US Dollar and Australian Dollar.

FX Update

Australia

The Australian Dollar has underperformed over the last week, dropping against all major currencies and over 2.0% against the Pound. The RBA left their cash rate unchanged last week at 0.75% saying they would ease policy further if it was needed to sustain growth and rates would stay low for a considerable time. The RBA expects the economy to grow by 2.75% – 3.0% in 2020 and 2021 with signs of a turning housing market in Sydney and Melbourne starting to impact. The Bushfires and coronavirus will continue to weigh on the growth forecasts but employment is expected to remain at peak levels for some time. The slowdown in the Chinese economy from the ongoing impact of coronavirus will continue to impact Australian growth. RBA’s Lowe speaks Thursday, the only point of interest this week.

New Zealand

The New Zealand Dollar continues to head mainly south versus its peers as risks to the New Zealand Economy are slanted to the downside. The Reserve Bank of New Zealand meet Wednesday and should hold rates steady at 1.0% but the decision may be closer than we think. Back at the November policy meeting the RBNZ said they were in a data dependant mode with most data coming in positive since then such as business confidence and inflation as well as a drop to the unemployment rate from 4.2% to 4.0%. With that being said the ongoing implications and fallout from the coronavirus outbreak will certainly impact GDP figures and a possible cut in the April meeting.

United States

The US Dollar sits at the top of the chain of currencies as we head into this week’s busy trading calendar. Non-Farm Payroll figures Friday grew by an unexpected 225,000 for the month of January from 163,000 expected, making the last three month average a staggering 211,000. These figures will be keeping optimism at the Federal Reserve high as the currency pushes higher. US Fed chairman Powell testifies tomorrow and is expected to confirm modest growth in the US economy which provides further support for the big Dollar. Retail Sales prints later in the week.

Europe

Lagarde testified before the European Parliament’s Economic and Monetary Affairs Committee in Brussels saying the Greek economy is on the rise and eventually the European Central Bank will buy its debt under its asset purchase scheme. Lagarde also announced the ECB will launch a review of its monetary policy strategy. It’s been 16 years since a review has been undergone. With low interest rates and inflation reducing the scope for the ECB and other central banks to ease she feels the need to factor such things as globalisation and evolving financial markets into new policy. German prelim q/q GDP prints Friday.

United Kingdom

The British Pound was mostly sold off across the board last week as bears returned and the Pound came under pressure on the back of worry linked to the trade deal outlook between the UK and the European Union. The EU wants to toughen the deal draft prepared by Michael Barnier’s team at the European Commission to enable them to suspend any deal it makes. This move could give the EU power to resolve any disputes that arise quickly and favorably than they otherwise would. January Services data showed positive numbers with a recovery in the UK Services sector expanding at a quicker pace to the end 2019 – improved consumer and business confidence should transpose into a solid 2020.

Major Announcements last week:

  • RBA keep cash rate unchanged at 0.75%
  • NZ Unemployment drops to 1.0% from 4.2%
  • US Non Farm Payroll publishes at a solid 225,000 for January
  • Canadian Unemployment Rate drops to 5.5% from 5.7%

FX Update

Australia

Australian fourth quarter inflation rose a touch to 0.7% from 0.6% expectations with improved dwelling prices having the biggest impact. Tobacco, Alcohol and transport fuel costs also had modest rises but food prices such as fruit and vegetables impacting from fire stricken areas were benign – for now. These products should filter through into inflation numbers over first quarter 2020. The annualised inflation rate moved higher from 1.7% to 1.8% which will please the Reserve Bank of Australia with some banks now predicting the RBA won’t cut rates today until April. Retail Sales and Trade Balance print late in the week.   

New Zealand

New Zealand plunged 1.5c against the US Dollar last week largely based on Coronavirus fears.  NZ are now blocking travellers who have recently travelled through mainland China in efforts to try to keep the virus out of New Zealand. The ban starts today with the government placing restricted entry into New Zealand on all foreign nationals who have travelled from China or through China. The virus has now killed over 400 people with the affected now more than 20,000. The first death outside China has been reported in the Philippines. This week on the economic calendar we have employment numbers with the unemployment rate expected to stay at 4.2% and quarterly Inflation expectations. 

United States

The Federal Reserve voted 10-0 in favour of retaining the current cash rate at 1.75%. Comments from Powell suggested the economy has been rising at a moderate rate. Recent unemployment remains low and household spending has been rising at a decent pace. The current stance which is exactly the same as the December stance/statement from the Fed on monetary policy is appropriate and supports sustained economic activity. Powell ruled out late last year’s rate cuts forecast saying such a step would require a sustained rise above the forecasted 2% inflation target. Non-farm Payroll holds attention this week, with great numbers of late we expect at least 160,000 people entered the workforce in January with a stronger big dollar.

United Kingdom

The Bank of England left their benchmark rate on hold at 0.75% with the vote 2-7 in favour of no cut. The Pound shot higher off the release which was initially based on a predicted vote of 3-6 in favour of no cut with investors expecting a closer decision. The English Pound was the best performing currency over the week climbing a whopping 4.85% against the Australian Dollar amid a big week of “risk off” movement and optimistic bank of England. The UK formally left the European Union after 47 years on the 31st of January. Brexit parties were held across the UK with Nigel Farage saying “This is the greatest moment in the modern history of our great nation”. From here through to the end of 2020 the EU will remain in charge with very few immediate changes until then.   

Europe

Euro annual inflation ticked up to 1.4% Friday from 1.3% in line with market expectations rallying the Euro across the board. German CPI m/m also published in line with expectations at -0.6% and the y/y rose to 1.7% from 1.5% a five month high due to faster increases in food prices. The risk off theme continued early this week with the coronavirus outbreak affected on the rise. With Eurozone data this week thin markets await Lagarde speaking in Paris at the end of the week for direction cues. 

Japan

The Japanese Yen dipped Monday after January manufacturing results released down on expectations. The index represented a contraction of 48.8 based on an expected reading of 49.3 signalling a tough time for manufacturers as demand remains down. Last week investors flocked to the safe haven Japanese Yen as risks around coronavirus remained elevated and affected numbers ballooned. The Yen rose to a three week high against the US Dollar as it pushed the Australian Dollar to a 4 month low. With the virus struggling to be contained, risk off sentiment could well flow into this week’s action with the Yen pushing its peers further south. Friday’s Unemployment Rate clicked lower to 2.2% from 2.3%. This is the lowest it’s been this since around 1990 based on a labour shortage and an ageing population.       

Canada

Canadian GDP for November printed above the expected 0.0 at 0.1% growth offsetting a lot of October’s decline. Movement in the Canadian Dollar was tiny with only a small reprieve for the underperforming currency. Risk concerns around the coronavirus still weigh heavily on markets across the world as “risk assets” including the Loonie continue to plunge in favour of the safe haven. This week’s data sees employment print for January with a forecast for 5.6% unemployment to remain.

Economic Releases

Below are the weekly economic releases for this week (NZT)

Monday 03/02

  • 245pm, CNY, Caixin Manufacturing PMI
    • Forecast 51
    • Previous 51.5

Tuesday 04/02

  • 430pm, AUD, Cash Rate
    • Forecast 0.75%
    • Previous 0.75%
  • 430pm, AUD, RBA Rate Statement

Wednesday 05/02

  • 1045am, NZD, Employment Change q/q
    • Forecast 0.30%
    • Previous 0.20%
  • 1045am, NZD, Unemployment Rate
    • Forecast 4.20%
    • Previous 4.20%
  • 230pm, AUD, RBA Gov Lowe Speaks

Thursday 06/02

  • 115am, EUR, ECB President Lagarde Speaks
  • 130pm, AUD, Retail Sales m/m
    • Forecast -0.20%
    • Previous 0.90%
  • 130pm, AUD, Trade Balance
    • Forecast 5.60B
    • Previous 5.80B
  • 9pm, EUR, ECB President Lagarde Speaks

Friday 07/02

  • 1130am, AUD, RBA Gov Lowe Speaks 
  • 130pm, AUD, RBA Monetary Policy Statement 
  • 9pm, EUR, ECB President Lagarde Speaks
  • 3pm, NZD, Inflation Expectations q/q
    • Forecast 1.80%

Saturday 08/02

  • 230am, CAD, Employment Change 
    • Forecast 35.2k
  • 230am, CAD, Unemployment Rate 
    • Forecast 5.60%

FX Update

Coronavirus has now claimed the lives of 213 people – as yet none of these have been outside China. The daily confirmed cases keep climbing and are now 9,692 as of 31 Jan, but the true figure may not be known for another week or two as China withhold the true numbers. The virus has impacted markets over the week with investors largely risk averse.  

Financial Market focus has been in the US with US company earnings results with Thursday’s snapshot of Microsoft, Facebook, Tesla and Paypal share prices all jumping higher on better than predicted revenue predictions.

The Federal Reserve voted 10-0 in favour of a remain yesterday morning for 1.75%. Comments from Powell suggested the economy has been rising at a moderate rate. Recent unemployment remains low and household spending has been rising at a decent pace. The current stance which is exactly the same as the December stance/statement from the Fed on monetary policy is appropriate and supports sustained economic activity. Powell ruled out late last year’s rate cuts forecast saying such a step would require a sustained rise above the forecasted 2% inflation target.

Fourth quarter Australian inflation rose a touch to 0.7% from 0.6% markets were expecting with improved dwelling prices impacting. Tobacco, Alcohol and transport fuel costs also had modest rises but food prices such as fruit and vegetables impacting from fire stricken areas were benign – for now with influences to inflation likely to filter into numbers in first quarter 2020. The annualised inflation rate moved higher from 1.7% to 1.8% which will please the Reserve Bank of Australia with some banks now predicting the RBA won’t cut rates on 4 February until April.   

The Bank of England left their benchmark rate on hold at 0.75% with the vote 2-7 in favour of no cut. The Pound shot higher off the release which was initially based on a predicted vote of 3-7 in favour of no cut with investors expecting a closer decision. 

UK Parliament has formally approved Boris Johnson’s Brexit exit deal in a vote 621 to 49 which will pave the way for the UK to exit the European Union at the end of the year after a transition period. The UK has been part of the EU since 1973.