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Economies of note this week :

Written by Sam Coxhead on April 12th, 2013.      0 comments

1:50 PM (NZT)
Australia
The sole domestic focus of note in Australia this week has been yesterday’s employment numbers. The disappointing drop of 36.1k jobs was driven by a mix of falling part and full time employment. The unemployment rate increased .2% to 5.6% as a result and comes in against a market expectation of a unchanged unemployment rate of 5.6%. This result is not a good number and will keep the RBA on watch for further weakness in indicators. Softening indicators over the coming weeks and months would certainly see the easing bias towards future cash rate moves re-emerge. Also of indirect impact this week has been economic news from China. The latest inflation numbers undershot expectations and will have reduced the pressure on authorities to tighten monetary policy. The latest trade balance numbers show a trade deficit of .9billion USD. This is of interest as they had a surplus with the US of around 25 billion, and this means they will have had a significant deficit with their largest trading partner, Europe. Increasing import demand is a positive sign for the domestic Chinese economy, as well as the manufacturing sector in Europe. Both of these factors will be positive for the Australian economy overtime. Next week is a quiet one for Australian economic news, and sees the minutes from the last RBA monetary policy meeting offer passing focus. These minutes should not be of direct impact on price action next week.
 
New Zealand
This week has been a quiet one for economic news in New Zealand. The latest NZIER Business Confidence Survey reveals a consolidation of confidence at recently increased levels. The NZ Government bond market continues to see increased levels of interest from offshore investors as the relatively high interest rates remain attractive. Of material influence over the last couple of weeks appears to have been significant re-insurance flows, similar to those that we saw periodically throughout 2012. This would explain the recent latent demand for the NZD that has seen it increase materially on a trade weighted basis over the last few weeks. Next week sees Wednesday provide the focus in the form of the first quarter inflation numbers. These will be closely watched, but should be of limited impact on demand for NZD in the current environment.
 
United States
It has been a relatively quiet week for economic news in the US so far, though the latest retail sales and consumer sentiment numbers will be released later today. The minutes from the last Federal Reserve monetary policy meeting were released on Wednesday and revealed little in the way of new insight. In a similar vein to the previous minutes, they reveal discussion about the process of withdrawal of monetary stimulation, albeit that is a while off at this stage. As the soft nature of the economic activity for the 1st quarter has come to light, the potential withdrawal of stimulus has been pushed further out in the calendar. The prospect of a longer than expected QE stimulus program has renewed enthusiasm in the share markets that have again forged new highs this week. While longer term interest rates have bounced a little from their recent lows, consolidation at the current lower levels has certainly helped undermine demand for the US dollar in the short term. Next week sees the release of the latest inflation and manufacturing numbers provide the focus, and the corporate earnings season on Wall Street could also be of influence.
 
Europe
It has been a relatively quiet week for economic news in Europe. Of interest has been the increase in 2013 growth forecasts from the German economic ministry as the important European core economy recovers from its contraction in the 4th quarter of 2012. The ECB has also commented they will continue to monitor the economy closely, but expect a gradual recovery in growth in the 2nd half of the year. Europe is China's number one trading partner and this week’s Chinese trade deficit indicates increased Chinese demand for European goods. This is positive and a likely result of the lower level of the EURO over the last few months. Fragility remains in the periphery member states, but certainly the sentiment has been more resilient in the last couple of weeks. European finance minister meetings provide a focus in Europe over the weekend, and come ahead of economic sentiment and inflation numbers next week.
 
United Kingdom
There has been little of note to report in the UK economy this week. The latest manufacturing numbers were slightly better than expected and the trade balance slightly wider. Next week provides increased focus for the UK economy. Tuesday's inflation numbers start the week. Wednesday offers the latest employment numbers and Thursday the important retail sales numbers are due for release.
 
Canada
This week saw the release of the latest BOC Business Outlook Survey. This revealed a more tempered outlook over the coming 12 months than the previous survey. Businesses remain cautious of investment, although it remains positive, and hiring intentions were little changed.  The latest building permit numbers were slightly lower than expected. Next week sees the focus on the economy increase. The statement that will accompany an unchanged monetary policy decision from the BOC will be the primary focus. Manufacturing and inflation numbers provide further focus, albeit somewhat secondary in nature. 
 
Japan
This week has seen the release of the minutes from last week’s notable BOJ monetary policy meeting. The minutes show board members believe the economy has stopped deteriorating, although uncertainty still exists. The economy is expected to rebound to a "moderate recovery path". Separately, Governor Kuroda stated that the BOJ had done what was necessary and possible for now. There was room for patience to see how the aggressive policy impacts pricing pressures. The market will remained focused on statements from Governor Kuroda in the coming months, two of which will be on Monday. Thursday sees the latest trade balance numbers released and these will be closely watched as usual. The YEN remains under pressure across the board. This can be expected to continue as a trend, with brief periods of retrenchment providing opportunity to sell YEN at better levels. Targeting levels with limit orders provides the opportunity to benefit from what could be rapid moves.
Topics: Economic news
 

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