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15 May 2014
Japan's Q1 GDP, NZ budget eyed - Westpac
FXStreet (Bali) - Sean Callow, FX Strategist at Westpac, walks us through what lies ahead for this Thursday, with Japan’s Q1 GDP, NZ annual budget release and EU CPI the key events.
Key Quotes
"Japan’s Q1 GDP data is the key release (9:50am Syd/7:50am Sing/HK), albeit with USD/JPY not paying much attention to Japanese data at the moment. Consensus is for an acceleration to 1% q/q (4.2% annualized) from just 0.2% in Q4, with consumption to be boosted by spending ahead of the 1 April tax increase. Of course this implies payback in Q2. The BoJ is well aware of such data distortions and overall is comfortable with current settings. Governor Kuroda speaks at 2:25pm Syd/12:25pm Sing/HK."
"Australia’s data week remains low key, today limited to April RBA reserves data, Apr motor vehicle sales and some comments on housing from RBA’s Ellis. Asia ex-Japan’s calendar is likely to have no direct impact: Singapore’s Mar retail sales and Indian Apr wholesale prices."
"New Zealand’s FY14/15 Budget is due at 12pm Syd/10am Sing/HK. Accelerating growth and an election in Sep ensure this will not be an austerity budget though fiscal prudence is the theme. Westpac looks for a deficit of around –NZD2.3bn this year, improving to a tiny surplus in FY14/15. We don’t see this as a negative for AUD/NZD. Those tempted to cite NZ’s fiscal position as one Australia should aspire to should note that NZ’s net debt is around 26% of GDP, compared to 14% in Australia. Indeed Australia’s Commission of Audit’s ‘business as usual scenario’ which it cited as cause for harsh spending cuts only projected net debt to reach 16% of GDP by 2023/24. To be sure, this tells us more about the quality of discussion on debt in Australia than it is cause for concern over NZ’s outlook, which is positive."
"The final reading on Eurozone Apr CPI is due, with consensus for no change at 0.7% y/y but the French inflation reading suggests some risk of a revision to 0.6%, adding pressure on the ECB. The advance reading of Eurozone Q1 GDP is seen at 0.4% q/q, 1.1% y/y. The annual growth pace should be the quickest since Q3 2011 but the ECB describes the growth outlook as “moderate” and of course the unemployment rate of 11.8% is barely below the 2013 highs."
"The US data calendar is very crowded. First up is the May NY Fed Empire State index, seen rising to +6 from the poor 1.3 in Apr. Then it’s Apr CPI, with headline seen at 2.0%, 1.7% ex-food & energy but the Fed’s preferred measure is neither of these. Initial jobless claims are seen holding in strong territory at 320k. Mar capital flows (TIC data) are due, which will be interesting given the large moves in Fed custody holdings of treasuries ahead of the Crimea referendum. April industrial production is next, with the headline seen flat after 0.7% in Mar but manufacturing up 0.3% m/m."
"The May Philly Fed index of manufacturing sentiment is expected to ease slightly to +14. Then finally it’s one of the more important releases, the May NAHB housing index. Consensus is 49 versus 47 in Apr and a cycle high of 58 (% of builders seeing good conditions) in Aug 2013."
Key Quotes
"Japan’s Q1 GDP data is the key release (9:50am Syd/7:50am Sing/HK), albeit with USD/JPY not paying much attention to Japanese data at the moment. Consensus is for an acceleration to 1% q/q (4.2% annualized) from just 0.2% in Q4, with consumption to be boosted by spending ahead of the 1 April tax increase. Of course this implies payback in Q2. The BoJ is well aware of such data distortions and overall is comfortable with current settings. Governor Kuroda speaks at 2:25pm Syd/12:25pm Sing/HK."
"Australia’s data week remains low key, today limited to April RBA reserves data, Apr motor vehicle sales and some comments on housing from RBA’s Ellis. Asia ex-Japan’s calendar is likely to have no direct impact: Singapore’s Mar retail sales and Indian Apr wholesale prices."
"New Zealand’s FY14/15 Budget is due at 12pm Syd/10am Sing/HK. Accelerating growth and an election in Sep ensure this will not be an austerity budget though fiscal prudence is the theme. Westpac looks for a deficit of around –NZD2.3bn this year, improving to a tiny surplus in FY14/15. We don’t see this as a negative for AUD/NZD. Those tempted to cite NZ’s fiscal position as one Australia should aspire to should note that NZ’s net debt is around 26% of GDP, compared to 14% in Australia. Indeed Australia’s Commission of Audit’s ‘business as usual scenario’ which it cited as cause for harsh spending cuts only projected net debt to reach 16% of GDP by 2023/24. To be sure, this tells us more about the quality of discussion on debt in Australia than it is cause for concern over NZ’s outlook, which is positive."
"The final reading on Eurozone Apr CPI is due, with consensus for no change at 0.7% y/y but the French inflation reading suggests some risk of a revision to 0.6%, adding pressure on the ECB. The advance reading of Eurozone Q1 GDP is seen at 0.4% q/q, 1.1% y/y. The annual growth pace should be the quickest since Q3 2011 but the ECB describes the growth outlook as “moderate” and of course the unemployment rate of 11.8% is barely below the 2013 highs."
"The US data calendar is very crowded. First up is the May NY Fed Empire State index, seen rising to +6 from the poor 1.3 in Apr. Then it’s Apr CPI, with headline seen at 2.0%, 1.7% ex-food & energy but the Fed’s preferred measure is neither of these. Initial jobless claims are seen holding in strong territory at 320k. Mar capital flows (TIC data) are due, which will be interesting given the large moves in Fed custody holdings of treasuries ahead of the Crimea referendum. April industrial production is next, with the headline seen flat after 0.7% in Mar but manufacturing up 0.3% m/m."
"The May Philly Fed index of manufacturing sentiment is expected to ease slightly to +14. Then finally it’s one of the more important releases, the May NAHB housing index. Consensus is 49 versus 47 in Apr and a cycle high of 58 (% of builders seeing good conditions) in Aug 2013."