4 Dec 2014
Busy day ahead: Aus retail sales, ECB, BoE - Westpac
FXStreet (Bali) - Australia’s crowded data calendar continues with Oct retail sales and Oct trade balance today, ahead of the key ECB polity meeting and a BoE decision, notes Sean Callow, FX Strategist at Westpac, who breaks down the Bank's thoughts on these events.
Key Quotes
"Australia’s crowded data calendar continues with Oct retail sales and Oct trade balance at 11:30am Syd/8:30am Sing/HK. AUD is most sensitive to retail sales, with this our first reading on Q4 consumer spending after the muted but not alarming 0.5% q/q rise in Q3 consumption according to the national accounts yesterday. Sep retail sales posted a startling 1.2% m/m rise, some of which was due to the iPhone 6 launch (electronics & electrical goods +9.2% m/m). This high base should prompt a modest retracement in Oct, -0.2% m/m. But with consensus of +0.1%, a reading in line with Westpac’s forecast would provide another reason to sell AUD."
"Australia’s -$2.3bn trade deficit in Sep was the widest since Nov 2012. Only a moderate improvement is likely in Oct, to around -$1.9bn (median -1.8bn). Goods imports have already been reported -2.4% m/m after a 5.6% jump in Sep; we look for total imports to slip -2%. Lower export prices should offset higher iron ore shipments, with the value of exports seen -0.7% m/m. Gold should be a negative, after a $585mn spike in Sep."
"The ECB meeting poses plenty of risk for EUR once again. The ‘flash’ Nov CPI estimate of 0.3% y/y matched the lows since the short-lived deflation of 2009. Some of this is simply energy price weakness but President Draghi has made clear he is not happy with inflation persisting so far below the near-2% target. This meeting delivers new staff forecasts, which often accompany policy change. Yet the ECB is placing great weight on the TLTRO due on 11 December, while the ABS and covered bond purchase programs are in their early stages. So there will be a lot of resistance to proposals for yet more easing steps. This does not rule out modest tweaks however and Draghi should remain dovish in his press conference, so it is hard to see any EUR bounces being sustained."
"The BoE MPC meets today, with little risk again for sterling given that a steady hand almost always means no explanatory commentary. The US data calendar is limited to weekly jobless claims though there is more Fedspeak, including in Asia today (11:30am Syd/8:30am Sing/HK) when Dallas Fed’s Fisher will no doubt deliver yet more hawkish commentary. In the NY session it’s Mester (hawk) and Brainard (governor i.e. centrist)."
Key Quotes
"Australia’s crowded data calendar continues with Oct retail sales and Oct trade balance at 11:30am Syd/8:30am Sing/HK. AUD is most sensitive to retail sales, with this our first reading on Q4 consumer spending after the muted but not alarming 0.5% q/q rise in Q3 consumption according to the national accounts yesterday. Sep retail sales posted a startling 1.2% m/m rise, some of which was due to the iPhone 6 launch (electronics & electrical goods +9.2% m/m). This high base should prompt a modest retracement in Oct, -0.2% m/m. But with consensus of +0.1%, a reading in line with Westpac’s forecast would provide another reason to sell AUD."
"Australia’s -$2.3bn trade deficit in Sep was the widest since Nov 2012. Only a moderate improvement is likely in Oct, to around -$1.9bn (median -1.8bn). Goods imports have already been reported -2.4% m/m after a 5.6% jump in Sep; we look for total imports to slip -2%. Lower export prices should offset higher iron ore shipments, with the value of exports seen -0.7% m/m. Gold should be a negative, after a $585mn spike in Sep."
"The ECB meeting poses plenty of risk for EUR once again. The ‘flash’ Nov CPI estimate of 0.3% y/y matched the lows since the short-lived deflation of 2009. Some of this is simply energy price weakness but President Draghi has made clear he is not happy with inflation persisting so far below the near-2% target. This meeting delivers new staff forecasts, which often accompany policy change. Yet the ECB is placing great weight on the TLTRO due on 11 December, while the ABS and covered bond purchase programs are in their early stages. So there will be a lot of resistance to proposals for yet more easing steps. This does not rule out modest tweaks however and Draghi should remain dovish in his press conference, so it is hard to see any EUR bounces being sustained."
"The BoE MPC meets today, with little risk again for sterling given that a steady hand almost always means no explanatory commentary. The US data calendar is limited to weekly jobless claims though there is more Fedspeak, including in Asia today (11:30am Syd/8:30am Sing/HK) when Dallas Fed’s Fisher will no doubt deliver yet more hawkish commentary. In the NY session it’s Mester (hawk) and Brainard (governor i.e. centrist)."