12 May 2015
Australia: Govt to announce deficit circa - A$43bn - Westpac
FXStreet (Bali) - Sean Callow, FX Strategist at Westpac, breaks down the key events for Tuesday, with Australia’s 2015/16 federal budget attracting the main interest. Westpac looks for the government to announce a 2014/15 deficit around –A$43bn, improving only to -$41bn in 2015/16 (-2.7% to -2.5%/GDP).
Key Quotes
"At 11:30am Syd/9:30am Sing/HK we see Australian Mar housing finance approvals. This report usually has no impact on AUD, partly as it doesn’t surprise greatly: industry data gives a handy guide to the total. Westpac agrees with the 1% m/m consensus (number of loans), after 1.2% in Feb. However there will be some interest in the investor segment, after Feb saw the value of investor loans slip -3.4%."
"Australia’s 2015/16 federal budget is due at 7:30pm Syd/5:30pm Sing/HK. The usual weeks of trial balloons and leaks point firmly to this year’s budget being a lot less ambitious and controversial than last year’s, which appeared to damage consumer confidence for some months. The budget position has deteriorated both over the year and since the mid-year update in Dec, with most of this driven by the fall in iron ore prices and slower GDP growth."
"Westpac looks for the government to announce a 2014/15 deficit around –A$43bn, improving only to -$41bn in 2015/16 (-2.7% to -2.5%/GDP). However local media suggest 2014/15 could be announced as narrower than -$40bn (a year ago the forecast was -$29.8bn). The budget should be projected to remain in deficit through 2017/18 (-$22bn/-1.2%/GDP). Net Commonwealth debt should rise to $350bn, 19%/GDP by 2017/18, up from 17% in the mid-year review, still very low by OECD standards. The budget is a huge domestic political focus and important for the bond market but does not usually impact AUD."
Data in Asia is limited to India Mar industrial production, which is expected to slow back to 3.0%y/y, and Apr CPI. UK Mar industrial production is expected to print flat m/m and at remain at 0.1% y/y. The US calendar is low key, with only Apr NFIB small business optimism to be released. We also hear from San Francisco Fed president Williams and New York Fed’s Dudley.
Key Quotes
"At 11:30am Syd/9:30am Sing/HK we see Australian Mar housing finance approvals. This report usually has no impact on AUD, partly as it doesn’t surprise greatly: industry data gives a handy guide to the total. Westpac agrees with the 1% m/m consensus (number of loans), after 1.2% in Feb. However there will be some interest in the investor segment, after Feb saw the value of investor loans slip -3.4%."
"Australia’s 2015/16 federal budget is due at 7:30pm Syd/5:30pm Sing/HK. The usual weeks of trial balloons and leaks point firmly to this year’s budget being a lot less ambitious and controversial than last year’s, which appeared to damage consumer confidence for some months. The budget position has deteriorated both over the year and since the mid-year update in Dec, with most of this driven by the fall in iron ore prices and slower GDP growth."
"Westpac looks for the government to announce a 2014/15 deficit around –A$43bn, improving only to -$41bn in 2015/16 (-2.7% to -2.5%/GDP). However local media suggest 2014/15 could be announced as narrower than -$40bn (a year ago the forecast was -$29.8bn). The budget should be projected to remain in deficit through 2017/18 (-$22bn/-1.2%/GDP). Net Commonwealth debt should rise to $350bn, 19%/GDP by 2017/18, up from 17% in the mid-year review, still very low by OECD standards. The budget is a huge domestic political focus and important for the bond market but does not usually impact AUD."
Data in Asia is limited to India Mar industrial production, which is expected to slow back to 3.0%y/y, and Apr CPI. UK Mar industrial production is expected to print flat m/m and at remain at 0.1% y/y. The US calendar is low key, with only Apr NFIB small business optimism to be released. We also hear from San Francisco Fed president Williams and New York Fed’s Dudley.