Analysts at ANZ Bank New Zealand Limited explained that the US data is still solid.
Key Quotes:
“US consumer confidence beat expectations in October, rising to yet another 18-year high. Both current and future conditions rose. The Dallas Fed Services PMI was more circumspect, falling in October. Six-month-ahead general business activity fell; employment and wages were generally stable; capital expenditures fell to 12.6 from 18.5.”
European growth slowing:
Euro area growth slowed in Q3, at 1.7% y/y compared to 2.2% in Q2. This was the slowest pace of growth since 2014. French GDP (0.4% q/q) and Italian GDP (0.0%) disappointed, with German and Spanish results due later this week. It’s no secret that growth momentum in the EU has slowed recently, but ECB President Draghi has yet to acknowledge this growth risk. As the ECB has a pure inflation mandate, they may take solace in German CPI ticking up to 2.4%, from 2.2%. German inflation is at a six-year high.
Looking ahead of Aussie CPI today.
“ANZ is expecting a soft print, with headline inflation up 0.4% q/q, decelerating slightly in annual terms to 1.9%. Core inflation is forecast to be broadly stable on an annual basis, just below the RBA’s target band (trimmed mean 0.3% q/q, weighted median 0.4% q/q). While global inflation has picked up, domestic inflation pressures remain subdued. ANZ expect continued retail price deflation, weak rental inflation, and subdued administered inflation. Results in line with our forecasts (or even 0.3% q/q for the core measures) would be consistent with the RBA’s existing inflation forecasts, but further deceleration in domestic market services inflation would be worrisome.”
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