Sean Callow, an analyst at Westpac Banking Corporation explained the key events for the day ahead.
Key Quotes:
“As Q1 2016 illustrated dramatically, Australia’s CPI data can be a game-changer for the monetary policy outlook, unlike any given monthly data release. Westpac looks for a very subdued consumer price update in Q3 (11:30am Syd/8:30am Sing/HK): 0.5%qtr, 1.9%yr overall, with the average of the underlying measures 0.3%qtr, 1.8%yr. The latter is 0.1ppt below consensus. Petrol prices and the impact of drought on fresh fruit, lamb and cereal product prices should prevent headline inflation from being too weak. Changes to childcare rebates are a wildcard. The RBA says it expects “once-off declines in some administered prices” in Q3 but obviously broad-based softness would be a different story.”
“Due at the same time but bound to be overlooked is RBA Sep credit data, which we see up 0.3%mth.”
“The Bank of Japan is fully expected to hold policy steady today (decision any time from 11:30am Tokyo/1:30pm Sydney) but there will be plenty of new information as the release includes the quarterly outlook on the economy and prices. The “around zero percent” yield target on the 10 year government bond seems likely to be maintained for many more meetings though newswire stories indicate a desire at the BoJ to alter the timing of its JGB purchases to try to stoke some life into the market which it dominates. There is no sign that the bank is brave enough to drop the commitment to purchase JPY80 trillion of JGBs per year even though it clearly does not need to buy so many in order to hit its 10yr yield target.”
“China’s official manufacturing and non-manufacturing PMI surveys for Oct are due at 12pm Syd/9am local. Consensus is for little change vs Sep at 50.6 and 54.6 respectively, though the lengthy holidays at the start of the month could produce some distortion.”
“In Europe we see a flurry of October CPI data, with the policymakers’ focus on Eurozone core CPI. Consensus is for an uptick from just 0.9%yr in Sep to 1.1%yr, while petrol prices boost headline CPI to 2.2%.”
“The US data calendar features Q3 employment cost index, which is important but not volatile, Oct ADP private payrolls, which provides an unreliable guide to the official data on Friday and the Oct Chicago PMI.”
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