By Craig James

The Reserve Bank Board meeting and the handing down of the Federal Budget dominate proceedings in Australia over the week. The Reserve Bank’s economic forecasts are released on Friday.

The week kicks off on Monday with the release of the State of the States report, the Melbourne Institute inflation gauge, the CoreLogic RP Data measure of home prices as well as the Performance of Manufacturing. Inflation is well contained; home prices have softened from highs; and manufacturing is currently in good shape.

On Tuesday data on consumer confidence is issued at 9.30am AEST. Meanwhile building approvals data is released by the Bureau of Statistics (ABS) at 11.30am AEST. Then the Reserve Bank hands down the rates decision at 2.30pm. And finally the Federal Budget is released to the public at 7.30pm.

After the surprise weakness of inflation, a rate cut will be discussed by Reserve Bank Board members. However with the economy in reasonable shape, the question is whether Board members believe there is a real need to cut rates and whether lower rates will actually be effective in lifting growth.

The Federal Budget is widely expected to focus on infrastructure spending while the Government may also unveil changes to address “bracket creep” and flag potential changes to the generosity of the tax treatment of superannuation.

On Wednesday the Federal Chamber of Automotive Industries releases industry data on new vehicle sales while the Performance of Services index is also expected.

On Thursday the ABS releases retail trade figures together with international trade (exports and imports). In addition the Housing Industry Association releases data on new home sales.

The retail trade data will attract most attention, especially as the real (inflation-adjusted) data for the December quarter is also issued. The key question is whether the early timing of Easter markedly affected analysis of the March figures. There are also signs that new construction has peaked and home sales data may shed more light on the speculation.

And on Friday, the Reserve Bank releases the quarterly Statement on Monetary Policy which includes the latest economic forecasts. In addition the ABS releases the “Overseas Arrivals and Departures” publication (mainly focuses on tourist arrivals and departures).

US jobs data hogs the limelight

The US jobs data is considered the most important of the monthly statistics. The data is released on Friday.

The week begins on Sunday when the National Bureau of Statistics releases the results of purchasing manager surveys for manufacturing and services. Australia and New Zealand will be the first markets to react to the data on Monday.

On Monday the US version of the purchasing managers manufacturing survey is released. In China the private sector Caixin manufacturing survey is released with the equivalent services gauge on Wednesday.

On Tuesday the April data on new vehicle and truck sales is released together with the usual weekly figures on chain store sales. New vehicle sales are expected to have lifted by 3.5 per cent to a 17.15 million annual rate.

On Wednesday, there is rash of US indicators for release. The usual weekly data on mortgage applications is released together with factory orders, purchasing manager surveys for services, international trade and the ADP national employment index.

On Thursday, the usual weekly data on claims for unemployment insurance is issued together with the Challenger job layoffs series.

On Friday, the US jobs report – non-farm payrolls – is released. And the focus will be on all the key measures – job growth, unemployment and wages. If jobs rise by 203,000 in April as expected with hourly earnings up 0.3 per cent, then the Federal Reserve should remain on track to lift interest rates in June. Consumer credit data is also released on Friday.

There will also be six speeches by US Federal Reserve officials to watch over the week.

Sharemarket, interest rates, currencies & commodities

The US earnings season hits its peak in the coming week. A total of 1,432 companies will issue earnings results according to Zacks Research, up from 957 companies the previous week. However there are fewer of the ‘household’ names to report. Earnings of S&P 500 companies are expected to have fallen by 7.1 per cent in the first quarter (March quarter) compared with a year earlier. However earnings in the second quarter are expected to be down only 2.3 per cent according to Thomson Reuters I/B/E/S data.

In Australia, three of the Big Four banks are scheduled to report earnings in the coming week. Westpac is expected to issue results on Monday with ANZ to follow on Tuesday while National Australia Bank earnings are slated for Thursday.

According to current pricing in financial markets, there is now a 58 per cent chance of a rate cut on Tuesday. Looking further out, a rate cut is fully factored by August. In fact financial markets believe there is a real chance of a second rate cut by the end of the year.