European share trading ended on a sour note on Friday night. Further USD weakening sent the Euro to two year highs, weighing on continental exchanges. US shares started badly but rallied back to flat, despite staff churning at the White House. Negative leads from futures markets may weigh on early trading in the Asia Pacific region today, but the prospect of game changing numbers this week could moderate selling.
Japan and the US releases could dominate market thinking. National account components, housing, inflation and consumer related data all drop this week. These releases will occur alongside the busiest week of the US corporate reporting season so far and an interest rate decision from the US Federal Reserve’s Open Market Committee. This snapshot of two major economies leads into PMI data from China the following week. The outlook for markets may change considerably, especially if recent US economic weakness persists.
Major local indices are set to open down according to futures pricing. Australian shares may underperform today after renewed falls in oil and iron ore prices. Inflation numbers on Wednesday will speak directly to potential RBA action, and may prove a circuit breaker for AUD strength if core readings fall below estimates around 1.7-1.8%.