Yen opens the week mildly firmer as China stocks led Asian equities lower. Investors are also dissatisfied with the lack of concrete measures by G20 leaders after this year's market turmoil. The joint communique just noted that "all policy tools - monetary, fiscal and structural - individually and collectively". Some analysts even thought that the communique tried to talk down the risks the global economies are facing. In China, Shanghai SSE (L:SSE) composite tumbles in initial trading and is trading -3.3% lower at the time of writing, heading closer to the lowest level since November 2014. There were speculations that the government would announce additional stimulus measures over the weekend and investors were clearly disappointed with the lack of that. Also, the china yuan falls for the seventh straight day as PBoC lowered the reference rate again. Main focus will turn to manufacturing PMIs to be released on Tuesday.
In Eurozone, ECB governing council member Francois Villeroy de Galhau warned that "the danger we face is without any doubt deflation not inflation". He noted that "oil prices and raw material prices are the driving factors for low inflation." And, "if the low energy prices have sustainable long-term effects, we have to act. That seems to be the case, but we will see in March."
On the data front, New Zealand building permits dropped -8.2% mom in January, NBNZ business confidence dropped sharply to 7.1 in February. Japan industrial production rose 3.7% mom in January, retail sales dropped -0.1% yoy in January. Australia MI inflation gauge dropped -0.2% mom in February; company operating profit dropped -2.8% qoq in Q4, private sector credit rose 0.5% mom in January. In the upcoming European session, German retail sales, Swiss KOF, UK mortgage approvals will be released. Focus will be on Eurozone CPI which would add evidence for ECB easing in March. Canada will release current account, IPPI and RMPI while US will release Chicago PMI and pending home sales.
Looking ahead, the economic calendar is very busy this week. Heavy weight US data will be watched including ISM manufacturing and services as well as non-farm payroll. Fed will also release Beige Book economic report. Sterling, which has been the weakest one this month on Brexit worries, will look into PMIs. Aussie will also face tests from RBA rate decision, GDP, trade balance and retail sales. Here are some highlights for the week:
- Tuesday: Australia building approvals, RBA rate decision; China PMIs; Swiss retail sales; Eurozone PMI manufacturing finals, unemployment, German unemployment; UK PMI manufacturing; Canada GDP; US ISM manufacturing, construction spending
- Wednesday: Australia GDP; Swiss GDP; UK Construction PMI; Eurozone PPI; US ADP employment, Fed's Beige Book
- Thursday: Australia trade balance; Eurozone services PMI final, retail sales; UK PMI services; US jobless claims, ISM services, factory orders
- Friday: Australia retail sales; Canada trade balance, Ivey PMI; US non-farm payroll, trade balance