Australia

  • The IMF has downgraded its growth forecasts for the Australian economy. It now expects Australian GDP to hit 2.2% down from 3.0%. Cyclone Debbie is partly to blame because of its effect on lowering coal exports. GDP is however tipped to rise to 2.9% next year.
  • Consumer sentiment rose in October, hitting a one-year high. The Westpac and the Melbourne Institute survey rose 3.6% this month to 101.4 points. This is the first time optimists have outnumbered pessimists since November last year.

US

  • US jobs data released on Friday disappointed but it wasn’t enough to bring down expectations of another rate hike. In-fact it actually increased the chances of a rate hike. Non-Farm payrolls fell by 33k for September well below an expected gain of 85k. It was the first fall in over seven years but the reason for the significant decline was due to hurricanes Harvey and Irma. The significant impact from both hurricanes caused the dip in employment due to storm damage. For that reason traders believe it’s a once off anomaly and the focus was shifted to the household survey which showed rising confidence.
  • Wages grew and unemployment fell to 4.2% from 4.4% in August.
  • The participation rate held steady at 63.1% and has shown little movement over the year.
  • Overall the downbeat jobs report is being overlooked because of the impact of the hurricanes.
  • Goldman Sachs upped its US rate rise expectations to 80% from 75% following the jobs report.
  • The New York Federal Reserve upped its estimate of 4Q GDP above 2% due to upbeat factory and services data in September. It expects the economy to have expanded by an annualised rate of 2.45% in the 4Q. 

Europe

  • The Germany Industrial production reading of 2.6% was the largest rise in output in six years and exceeded expectations for a 1.0% rise.
  • The German government will increase its 2017 growth forecast for to 2% from 1.5%. It also plans to increase its 2018 GDP forecast to 1.9% from 1.6%.
  • Manufacturing production in the UK beat expectations in August.

China

  • It looks China has successfully turned the tap off from money leaving the country. The PBOC showed that its FX reserves rose for the eighth straight month. The value of China’s FX reserves came in at $US3.109 trillion at the end of September which is up US$17bn from the previous month. It’s hard to tell whether the rise is due to PBOC’s intervention. Either way the PBOC is spending less to help support the currency. This in turn will bring about a stronger Yuan and will offset any US Fed rate rise.
  • China’s services sector grew at its slowest pace in 21 months in September. New orders were softer.