November Market Outlook: Australian Edition

Robert Francis, Managing Director APAC, easyMarkets

Australia’s economy has shown surprising resilience this year, as consumer spending and exports continued to support economic growth. The Australian dollar, while moving off yearly highs, has gained more than 4% against its US counterpart this year. However, Aussie stocks have fallen on hard times, with the S&P/ASX Index rising just 2% this year. For currency, commodity and index traders with exposure to Australia, November will be a critical month. Below are key market moving events to look for as we head into November.

November 1: Reserve Bank of Australia (RBA) Interest Rate Decision

The RBA will issue its next rate decision on November 1. By that time, policymakers will have dissected the latest inflation and employment data, giving them a clearer picture of the economy. The RBA has slashed interest rates twice this year in response to tumbling inflation, which has emerged as a unique challenge for the Australian economy. The consumer price index (CPI) fell to 17-year lows in the second quarter.[1] The overnight cash rate currently stands at 1.5%, a record low.

November 2: Building Permits (September)

Building permits are a forward-looking indicator of housing construction that reveal important information about housing demand. The monthly report will be released by the Australian Bureau of Statistics on November 2.

November 3: Trade (September)

On November 3, the Australian government will report on the country’s trade balance for September. Australia’s trade deficit stood at $2.01 billion in August, as both imports and exports flat-lined.

November 4: Retail Sales (September), RBA Monetary Policy Statement

The first week of November closes with two high profile reports. The statistics bureau will kick off the day with a report on retail sales, a key proxy for consumer spending in the economy. One hour later, the RBA will release its Monetary Policy Statement, which provides an in-depth review of economic and financial conditions impacting the Australian economy.

November 6: AiG Performance of Construction Index (October)

Construction plays a major role in the Australian economy. It’s also a proxy for housing demand, making the monthly report on construction critical for traders looking to extract meaningful data about the Australian economy. This monthly report is released by the Australian Industry Group (AiG).

November 7: Westpac Consumer Confidence (November)

Consumer spending is a major contributor to the Australian economy. The Westpac consumer confidence index provides a monthly snapshot of consumer confidence, which has direct implications on consumers’ outlook and willingness to spend.

November 10: Consumer Inflation Expectations (November), Home Loans (September)

Inflation targeting is a critical part of the RBA’s mandate. For that reason, investors closely follow trends in consumer inflation expectations to get a sense of inflationary pressures in the economy. The Melbourne Institute’s monthly report provides a snapshot of consumers’ 12-month inflation expectations. Twelve-month inflation expectations improved to 3.7% in October, a sign that highly accommodative policies were beginning to bear fruit.[2]

Separately, the national statistics bureau will release data on home loans and investment lending for home loans, two leading indicators of housing demand.

[1] Gareth Hutchens (July 27, 2016). “Inflation at Australia’s lowest level in 17 years but economists split on interest rate cut.” The Guardian.

[2] Sam Bourgi (October 13, 2016). “Australia Consumer Inflation Expectations Improve in October.” Economic Calendar.

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Source:: November Market Outlook: Australian Edition

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