Economic Data Release (EDR) Risk Events of the week
(1) US Core Durable Goods
(2) CAD _ BOC Governor Poloz speaking
(1) AUD quarterly CPI – 3 months once.
RBA entire monetary policy bias hinges on this data release.
RBA wishes to leave option open for further easing.
If inflation moves lower –> RBA will cut rate later on this year.
If CPI down big –> RBA will cut sooner. If CPI Down a little –> RBA will cut later on this year.
Trimmed Mean CPI y/y is the key figure estimate = 2.0%. Previous = 2.3%.
1.8%-1.9% = Miss –> RBA will cut rate in next 2-3 meetings. AUD will gradually move down.
<1.7% = Big Miss –> RBA may cut rate in next meeting. AUD will go down big immediately.
2.0%-2.2% –> RBA do not need to cut rate now. AUD will not be affected.
>2.2% –> RBA will not cut rate. AUD will go up.
All 4 scenario depends on this week trend of AUD prior to the CPI data release, to see how much data sentiment has been priced into the chart.
(2) FOMC Statement – No expectation to change rate at this meeting. Only 1 hike in june meeting is now priced into the chart. If Yellen is hawkish the hike will be sooner in May meeting, USD will up. If dovish hike will be later –> USD will down.Inflation expectation has moved lower.
(3) GBP GDP q/q – Overshadowed by Brexit polls. GDP release will need to be read in the context of the polls.
(4) RBNZ statement – 30% chance RBNZ will cut rate. Plenty room to cut rate. Inflation is now 0.7%, thus inflation is not on target. But Auckland property market is now heating up, thus rate cut will stimulate property bubble. Thus RBNZ is reluctant to cut rate, unless the inflation data is bad. RBNZ dovish statement will have short term move of NZD to upside.
(1) BOJ Core CPI – BOJ has own measure of core CPI, they have wanted inflation to move higher. Yen has appreciated a lot.
CPI y/y estimate = 1.2%. Previous = 1.1%.
CPI >= 1.2% –> No easing –> JPY will go up slightly or stay constant.
CPI > 1.1% – 1.2% –> BOJ may ease later –> JPY will down slightly
CPI < 1.0% –> BOJ may ease sooner –> JPY will down big
(1)EUR core CPI Flash Estimate y/y –> 0.9% estimate. 1.0% previous.
(2) CAD GDP m/m
(3) USD Core PCE Price Index m/m –> estimate = 0.1%. Previous 1.0%.