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27 Nov 2014
Australia's capex key for the Aussie - Westpac
FXStreet (Bali) - Sean Callow, FX Strategist at Westpac, breaks down the key data releases on Thursday, highlighting the Australian CAPEX as the main event to keep an eye in Asia.
Key Quotes
"Probably the most important of the various inputs to next week’s Australian Q3 GDP report is private capital expenditure, due at 11:30am Syd/8:30am Sing/HK. The initial reaction on AUD will be to the Q3 actual capex, which could produce revisions to GDP estimates (we are on a preliminary 0.8% q/q, 3.0% y/y). We look for spending on building & structures to slip -2% q/q but plant & equipment to be up 1%, something of a dead cat bounce after steep falls in mining & manufacturing investment in Q2. The split by investment category is important: P&E fits fairly well into the GDP survey; building & structures does not."
"The RBA is likely to be a lot more interested in the update on business investment plans for 2014/15. This is the 4th estimate. The 3rd estimate was A$145bn, about -10% y/y. A fall in total investment is a given as mining contracts from historical extremes. But the extent of the fall and its composition are very important in determining when Australia returns to trend growth. Our Economics team regards a headline around A$150bn as about neutral, with mining -21% y/y, manufacturing -13% y/y but the much larger services investment total +13% y/y. This would probably be a relief to the RBA, fitting a steady hand into 2015. A softer outcome could be around $143bn whereas an upside surprise might be near $156bn."
"In Europe we see Germany’s Nov unemployment data, expected to be about flat on jobless total, the unemployment rate steady at 6.7%. Germany’s preliminary Nov CPI is also worth watching, expected to slip to 0.6% y/y from 0.8% y/y. This comes ahead of the important Eurozone CPI Friday. The OPEC meeting takes place in Vienna (press conference 4pm local time), with crude oil price action suggesting diminishing expectations for a supply cut. US markets are closed for Thanksgiving and trade shortened hours on Friday."
Key Quotes
"Probably the most important of the various inputs to next week’s Australian Q3 GDP report is private capital expenditure, due at 11:30am Syd/8:30am Sing/HK. The initial reaction on AUD will be to the Q3 actual capex, which could produce revisions to GDP estimates (we are on a preliminary 0.8% q/q, 3.0% y/y). We look for spending on building & structures to slip -2% q/q but plant & equipment to be up 1%, something of a dead cat bounce after steep falls in mining & manufacturing investment in Q2. The split by investment category is important: P&E fits fairly well into the GDP survey; building & structures does not."
"The RBA is likely to be a lot more interested in the update on business investment plans for 2014/15. This is the 4th estimate. The 3rd estimate was A$145bn, about -10% y/y. A fall in total investment is a given as mining contracts from historical extremes. But the extent of the fall and its composition are very important in determining when Australia returns to trend growth. Our Economics team regards a headline around A$150bn as about neutral, with mining -21% y/y, manufacturing -13% y/y but the much larger services investment total +13% y/y. This would probably be a relief to the RBA, fitting a steady hand into 2015. A softer outcome could be around $143bn whereas an upside surprise might be near $156bn."
"In Europe we see Germany’s Nov unemployment data, expected to be about flat on jobless total, the unemployment rate steady at 6.7%. Germany’s preliminary Nov CPI is also worth watching, expected to slip to 0.6% y/y from 0.8% y/y. This comes ahead of the important Eurozone CPI Friday. The OPEC meeting takes place in Vienna (press conference 4pm local time), with crude oil price action suggesting diminishing expectations for a supply cut. US markets are closed for Thanksgiving and trade shortened hours on Friday."