THIS IS going to be a big week for markets to absorb and will help determine the direction of interest rates in Australia and the US.
By the time this issue hits the streets we will have seen the CPI figure for the September quarter.
This is the most anticipated figure in recent times as it will include the GST impact on prices in Australia.
Economists are expecting a figure of around 4.2 per cent for the quarter or a year-on-year figure of around 6.6 per cent. This is slightly below the figure Treasurer Peter Costello suggested in his Budget speech of 6.75 per cent year-on-year.
This will give some heart to a market concerned about the inflationary impact of the GST and the likely Reserve Bank reaction.
On Thursday, the Average Weekly Earnings figures for the quarter are due. Economists are predicting a rise of less than one per cent for the quarter or less than five per cent for the year. A figure above that could cause the Reserve Bank to consider interest rate movements to keep a lid on inflation.
On Friday, the market will examine the Motor Vehicle registration figures. This figure has been distorted by the GST, as has almost every other sector of the economy. Overall, economists expect a fall of around 12 per cent in the Motor Vehicle registration figure for the year.
Also on Thursday and Friday, the US data on the employment cost index and the September Quarter GDP figures will be released. If the US growth figure comes in around four per cent, it will remove the pressure to raise interest rates to slow the economy down.
This will be good news to the RBA, which has been caught in a bind of playing a catch-up game with the US Federal Reserve in terms of interest rates.
