This week in finance: Rising Australian dollar still a worry for RBA

Investors hope the "risk-off" run will continue after last week's 4.5 per cent on the ASX — the strongest weekly gain in six months.

US shares edged down 0.1 per cent on Friday night but were up 1.4 per cent for the week, after a series of bank results showed while profits fell — largely due to the oil price rout — they were not quite as awful as expected.

Better than expected economic news out of China at the end of last week may maintain a degree of positive sentiment on the local market.

After the feast of local and international data over the past couple weeks, it is a bit of a famine this week.

From a local perspective, the most interesting item is likely to be in New York where Reserve Bank (RBA) Governor Glenn Stevens is speaking late on Tuesday night at Credit Suisse Global Macro Conference.

In his regular post rates meeting statement two weeks ago, Mr Stevens noted the RBA's frustration with the continued strength of Australian dollar, noting: "Under present circumstances, an appreciating exchange rate could complicate the adjustment under way in the economy."

Since that attempt at jawboning the dollar down, it has risen a further 2 per cent to around 77 cents against the US dollar.

Will silence be the best policy this time, or will he give the Wall Street traders the idea that it might be a good time to short the little Aussie battler?

The problem for Mr Stevens is that he does not have a terrific narrative to talk the dollar down with, given Australia's AAA-rated economy remains solid and returns here are positively generous in a negative and zero interest rate world.

The minutes from the RBA's April meeting will be released several hours before Mr Stevens hits the stage, although a fortnight is a long time in the market's mind and the commentary may be somewhat stale.

Overseas things are similarly quiet, although the US reporting season — which has been better than expected — rolls on.

IBM, Microsoft, Morgan Stanley, Goldman Sachs, American Express, Coca Cola, General Motors and Caterpillar are some of the bigger names that will trot out quarterly figures.

There will also be a blizzard of housing data released and reading of manufacturing conditions via the "flash" Purchasing Managers' Index on Friday.

The US PMI is expected to edge up further into expansionary territory, as it is in Europe (Friday), although recession mired Japan may see factory activity contracting (Friday).

The European Central Bank's (ECB) rate setting committee also meets (Thursday), but President Mario Draghi is expected to leave his still smoking monetary bazooka alone after pushing rates into negative territory and increasing the ECB's asset buying (aka money printing) program last month.

The minutes released after the March meeting noted the ECB did not rule out another round of interest rates cuts if things soured further. They have not yet.

Australia

Monday 18/4/16 New auto sales Mar: Motoring along
Tuesday 19/4/16

RBA Governor speaks

RBA minutes

Consumer confidence

Glenn Stevens gets a global audience in NYC

Minutes from April meeting

Weekly data trending weaker

Wednesday 20/4/16 Leading index Mar: Westpac series, forward looking
Thursday 21/4/16 Business confidence Q1: The quarterly wrap-up
Friday 22/4/16    

Overseas

Monday 18/4/16 CH: House price index Mar: Up around 4 per cent YOY
Tuesday 19/4/16

US: Housing starts

US: Building permits

Mar: Might dip after strong February

Mar: Also tipped to fall

Wednesday 20/4/16

US: Existing home sales

JP: Balance of trade

Mar: Down 7 per cent in February

Mar: Likely to swing into deficit

Thursday 21/4/16

US: House prices

US: Leading index

EU: ECB decision

Feb: Has been solid

Mar: Forward-looking indicator, slightly positive

Expected to hold

Friday 22/4/16 US, EU, JP: "Flash" manufacturing PMI US and EU expected to be expanding, recession mired Japan contracting

Source: ABC News

 

 

 

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