- Industrial Production data will be announced at 14:15
- JOLTs Job Openings data will be released at 15:00
- Former Federal Reserve Chairman Yellen once again expressed support for the interest rate hike, saying that there is no need to worry about the yield curve, because the current situation is different, the Fed needs to adjust the interest rate to a neutral level to stabilize the labour market. She also said that it is unwise for the president to criticize the Fed policy.
- Due to the surge in government spending, the US federal budget deficit rose to $779 billion in fiscal year 2018, which is the highest level since 2012, and the budget deficit rose to 3.9% of US GDP.
- THE European Union’s Brexit proposals are “completely unacceptable” and Britain should walk away from Brexit talks and be given the opportunity to take back its money, Brexiteer MP John Redwood has said. The Tory MP called for a no deal Brexit and said from March onwards Britain should not pay into the European Union. Mr Redwood told BBC News: “I wanted to say that the deal on offer from the European Union is completely unacceptable. It doesn’t take back control of our laws, our money and our borders. “It delays our exit and charges us a huge bill for that privilege. So I wanted to tell the EU it is unacceptable and we will be leaving without signing their one-sided withdrawal agreement.
- Cable picked up extra pace on Tuesday after UKs Average Earnings inc. Bonus rose at an annualized 2.7%, surpassing initial estimates. In addition, the jobless rate stayed put at 4.0% in August.
- Further data saw Claimant Count Change ticking higher by 18.5K, more than forecasted while the Employment Change dropped by 5.0K 3M/3M.
- In the meantime, Brexit headlines remains poised to dominate the sentiment around the British Pound, with the Cabinet expected to meet today ahead of the EU’s Brexit working dinner tomorrow.
- The main event for AUD in the week ahead is either the release of the RBA’s meeting minutes on today at 1.30 B.S.T, or employment data out at the same time on Thursday. The RBA’s neutral stance is limiting upside potential for the Aussie and the minutes will be scrutinised for signs of a bias. Consensus expectations are still slanted towards expecting higher rates due to strong domestic data. Higher rates would be beneficial for the Aussie as they attract capital inflows as well as reducing outflows.
- Another key release is employment data, which is traditionally one of Australia’s strong points and generally, the reason rate hikes have been kept alive. The unemployment rate is forecast to remain at 5.3% and total jobs to have increased by 15.3k in September, from 44k in August. The type not just the number of new jobs will be key, with full-time jobs preferred as they are a stronger sign of economic health.
- NZD rose this morning after official data revealed a stronger than anticipated pickup in third-quarter inflation, which left the consumer price index close to the midpoint of the RBNZ target. Inflation rose by 0.9% during the third-quarter, up from 0.7% for the three months to the end of June, which took the annual change in the consumer price index up to 1.9%.
- This was the result of a pickup in so called tradeables inflation, which refers to commodity items. Prices of commodities traded on global markets, such oil, have risen sharply in 2018. “Today’s outturn was significantly stronger than the RBNZ’s August MPS forecast for a 0.4% q/q rise (1.4% y/y). However, less so on the non-tradables side, which tends to be more persistent,” says Miles Workman, an economist at Australia & New Zealand Banking Group (ANZ).
- The Reserve Bank of New Zealand has said in no uncertain terms that it will not be compelled into action by any pickup in inflation that is driven only by an increase in commodity prices. It wants to see domestically generated inflation pressures pick up further before it considers changing its interest rate policy. However, non-tradeables inflation remains lacklustre in New Zealand.
- Oil prices closed higher Monday on the back of mounting threats between the U.S. and Saudi Arabia over the suspected killing of a dissident Saudi journalist. Light, sweet crude for November delivery rose 44 cents, or 0.6%, to $71.78 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 35 cents, or 0.4%, to $80.78 a barrel. Prices have recently been pulled lower by negative market data, including climbing crude supplies in the U.S. and downward revisions to demand growth by the Organization of the Petroleum Exporting Countries and the International Energy Agency. However, growing tension between the U.S. and Saudi Arabia are providing some support to the market as another perceived risk to global supply.