Daily Commentary BY THE CURVE TEAM –

Key Week For Local Outlook

29th of January, 2018

The focus is about to shift this week after international developments have been hogging the spotlight of late. There are a number of key data releases due over the course of the week that could have an impact on the domestic outlook.

The big news will start to flow tomorrow when the NAB business survey for December is finally released. Delayed due to the holidays, the release will contain a timely update on the state of the business sector ahead of next week’s RBA Board meeting.

It will be followed by the Q4 inflation numbers on Wednesday. The market currently expected the headline inflation index to rise 0.7% over the quarter, which would see the annual rate edge up to the bottom end of the RBA’s target band. The more important core reading is only expected to rise by 0.5% which would see the annual rate remain a touch under the target band.

Pricing data will then round out the week with import/export prices due out on Thursday and producer prices due out on Friday.

This run of data would usually prove pivotal for the RBA’s outlook for monetary policy and it may still be the case. However, it is unlikely to be the number one topic when the RBA Board members sit down to discuss monetary policy next Tuesday.

The performance of the AUD will likely be a hot topic next week after the sinking USD over the past few weeks has seen a sharp rise in our currency. The AUD is now trading up above 0.80 and will be of concern for the outlook. It will be interesting to see what the RBA has to say about it come next Tuesday.

David Flanagan

Director - Interest Rate Markets