8 May 2014
Australian jobs and plenty more ahead - Westpac
FXStreet (Bali) - Sean Callow, FX Strategist at Westpac, describes the main events to watch for during Thursday's trading day.
Key Quotes
"As usual there is plenty of potential for AUD reaction to Australia’s frequently surprising monthly jobs data (11:30am Syd/9:30am Sing/HK). March’s report was stronger than expected on both jobs and the unemployment rate. The unusually late Easter could add to the usual volatility. We look for a 5k rise in jobs, just short of the 9k median which disguises a range of -10k to +27k, with many in the 5-10k range. But the RBA may well be looking more closely at the unemployment rate, having this week dropped its prediction of further cycle highs. Mar saw a surprise drop to 5.8% from 6.1%, so the consensus expectation (which we share) for a tick up to 5.9% is mostly a statistical correction. The participation rate is seen steady at 64.7%."
"The first of China’s hard data releases for April, trade, is due at 12pm Syd/10am local. Consensus is for another gloomy headline reading, exports -3% y/y, imports -2% y/y, though this would produce a bounce in the trade surplus to $16.7bn from $7.7bn. But there has been some official commentary suggesting a better reading in April, so perhaps the consensus for exports is too gloomy. AUD, NZD and Asia currencies should correlate positively with any surprise. Also in Asia we will see policy decisions in the Philippines, Malaysia and Indonesia. All are expected to remain on hold but BSP is closest to a change, with Governor Tetangco showing some concern over inflation."
A crowded European calendar kicks off with German Mar IP (4pm Syd/2pm Sing/HK), seen up 0.2% m/m, 4.4% y/y. There is again little tension over the Bank of England MPC meeting, given policy is firmly on hold and any internal dissent will not be public until the minutes are released in two weeks’ time.
"The ECB of course is a reliable source of volatility on EUR, particularly during the press conference by President Draghi. As we wrote yesterday, a wide range of policy options is likely to be on the table at each meeting in coming months. A steady hand on policy seems likely today, with April CPI ticking up to 0.7% y/y from 0.5% in Mar and quarterly forecasts due in June providing further reason to procrastinate. It is clear that ECB members are not very tempted by the array of options so a delay seems the consensus outcome, while reiterating a willingness to act. If there is a surprise move, the most likely options seem to be a cut in the 0.25% refinancing rate or boosting liquidity by suspending sterilization of the 2010-12 bond purchases."
"Fed chair Yellen highlights a busy calendar of Fedspeak when she testifies to the Senate Budget Committee. Obviously we would expect very similar remarks to Wed’s appearance. Her colleagues Plosser, Evans and Tarullo are listed to speak, though none are listed to directly discuss the economy. The US data calendar is quiet – just weekly jobless claims."
Key Quotes
"As usual there is plenty of potential for AUD reaction to Australia’s frequently surprising monthly jobs data (11:30am Syd/9:30am Sing/HK). March’s report was stronger than expected on both jobs and the unemployment rate. The unusually late Easter could add to the usual volatility. We look for a 5k rise in jobs, just short of the 9k median which disguises a range of -10k to +27k, with many in the 5-10k range. But the RBA may well be looking more closely at the unemployment rate, having this week dropped its prediction of further cycle highs. Mar saw a surprise drop to 5.8% from 6.1%, so the consensus expectation (which we share) for a tick up to 5.9% is mostly a statistical correction. The participation rate is seen steady at 64.7%."
"The first of China’s hard data releases for April, trade, is due at 12pm Syd/10am local. Consensus is for another gloomy headline reading, exports -3% y/y, imports -2% y/y, though this would produce a bounce in the trade surplus to $16.7bn from $7.7bn. But there has been some official commentary suggesting a better reading in April, so perhaps the consensus for exports is too gloomy. AUD, NZD and Asia currencies should correlate positively with any surprise. Also in Asia we will see policy decisions in the Philippines, Malaysia and Indonesia. All are expected to remain on hold but BSP is closest to a change, with Governor Tetangco showing some concern over inflation."
A crowded European calendar kicks off with German Mar IP (4pm Syd/2pm Sing/HK), seen up 0.2% m/m, 4.4% y/y. There is again little tension over the Bank of England MPC meeting, given policy is firmly on hold and any internal dissent will not be public until the minutes are released in two weeks’ time.
"The ECB of course is a reliable source of volatility on EUR, particularly during the press conference by President Draghi. As we wrote yesterday, a wide range of policy options is likely to be on the table at each meeting in coming months. A steady hand on policy seems likely today, with April CPI ticking up to 0.7% y/y from 0.5% in Mar and quarterly forecasts due in June providing further reason to procrastinate. It is clear that ECB members are not very tempted by the array of options so a delay seems the consensus outcome, while reiterating a willingness to act. If there is a surprise move, the most likely options seem to be a cut in the 0.25% refinancing rate or boosting liquidity by suspending sterilization of the 2010-12 bond purchases."
"Fed chair Yellen highlights a busy calendar of Fedspeak when she testifies to the Senate Budget Committee. Obviously we would expect very similar remarks to Wed’s appearance. Her colleagues Plosser, Evans and Tarullo are listed to speak, though none are listed to directly discuss the economy. The US data calendar is quiet – just weekly jobless claims."