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Focus on Asian Data

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It’s looking like an interesting week for Asian and Australasian economies; Australian and New Zealand Inflation data will be due for the previous quarter as well as Chinese GDP growth. All are likely to be market movers as well as potential new information from the RBA on the path of interest rates. Australian dollar volatility should be expected through the week.

Tuesday will start with two crucial points of information – the RBA Monetary Policy Meeting Minutes (03:30 server time), followed shortly by Chinese GDP (05:00 server time). The RBA has continually signalled a period of interest rate stability while it tries to give some leeway to a hot property market in order to offset the end the mining capital expenditure boom that peaked in 2013. If the RBA board begins to lean one way convincingly it is likely to show up in the minutes first, followed by a change in the wording of the policy statement at subsequent meetings. By the time a rate decision comes there should have been ample clues dropped through both of these channels.

Chinese GDP is also likely to be watched closely; it has been 3 months since the last figure and global fears have accelerated as the US Federal Reserve has been removing its stimulus measures. During this time the Chinese housing market has been in a broad decline, and Iron Ore prices have been plummeting with other commodities such as oil. Such weakness indicates both an oversupply from Australia’s mining boom, as well as a general weakness in demand from the world’s largest Iron Ore importer. Such weakness it expected to be reflected by a slowdown in Chinese growth; economists now expect the manufacturing powerhouse is now growing at 7.2%. Any deviation towards the psychological panic level of 7% is likely to bring calls for stimulus measures – something the Chinese government wishes to avoid if possible in order to re-balance its economy away from unsustainable sources of growth.

The first half of the week should wrap up with the Australian CPI figure on Wednesday (03:30 server time) – another release which is likely to be in strong focus. The quarterly inflation figure is forecast to be 0.4% in Q3, with inflation due to the rapidly depreciating Australian dollar not expected to show up until the next quarter as it occurred quite late in Q3. Economists are also expecting the removal of the Carbon Tax to take out some of the inflationary sting by lowering the cost of power and utilities. Traders should be on alert for the figure, as it is only released every three months it can have a strong impact on the AUD.

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