SINGAPORE, SINGAPORE -- (Marketwire) -- 03/05/13 -- In his Market Brief of The Week for 4 March, leading global foreign exchange trader, educator and author Mario Sant Singh - whose views are widely sought after in the Forex industry - focuses on messaging from the Central Banks and on China economic announcements:
Key Events to Focus On This Week
-- RBA OCR decision-- Australian retail sales-- Australian Gross Domestic Product (GDP)-- Australian trade balance-- European Central Bank (ECB) Rate Decision and Press conference-- China's February data
Key Events Last Week
-- Italian election deadlock-- HSBC and China's official manufacturing Purchasing Managers' Index (PMI) slows to 50.4 and 50.1-- U.S. home sales pushed equities higher-- Italian bond action showed better demand, however yield higher-- U.S. 4Q GDP revised slightly higher to 0.1% QoQ, lower than the expectation at 0.5%-- Federal Reserve (Fed) Ben Bernanke defended current Quantitative Easing (QE) in testimony
To view Figure 1, please visit the following link: http://media3.marketwire.com/docs/fxp0305fig1.pdf.
Reserve Bank of Australia (RBA) will unlikely lower Official Cash Rate (OCR) this round
I recognized in recent RBA messages that future rate cuts will be on standby. However, I prefer the view that the central bank should hold the OCR unchanged at 3% this week. My bias is supported by needing more time to review improving global economic signs, especially for China.
It will be a heavy week for Australia. After the RBA's OCR decision, top-tier data such as 4Q Gross Domestic Product (GDP) and Trade balance will be released; Retail sales will be released before the OCR decision. There could be some upside surprise from the GDP figure, since the non-retail portion might spur growth from an increase in 4Q iron ore exports activities due to Chinese infrastructure projects.
To view Figure 2, please visit the following link: http://media3.marketwire.com/docs/fxp0305fig2.pdf.
In the last RBA testimony, Governor Glenn Stevens turned slightly positive on global recovery in 2013, which can be considered a forward-looking indicator for the upcoming rate decision. Compared to the few speeches last year, the governor shifted the economic outlook assessment to the Euro Zone and China, as he showed less concern on the Euro Zone's contagion and worries on China's economic hard landing. Thus, the country's 4Q growth may be faster than its previous quarter on the YoY basis. The same goes for China, since the Australian economy started a downtrend from its peak at 4.5% YoY in Q1, then fell to 3.8% and 3.1% YoY in Q2 and Q3. In my estimate, the economy's growth in 4Q could achieve the 3.3-3.5% range, though the general market forecasts a 3% YoY growth.
China's data watch
China will release its federal data this week, including more key data on the weekend. The imports and exports data will be released on Friday. Consumer Price Index (CPI), Producer Price Index (PPI), Industrial Production (IP) and Retail Sales (RS) will be released on Saturday. In general, the figure is set to have a discounted factor due to the lunar year effect (2012's lunar year was in January).