Forex Flash: Headline 0.6% q/q growth rate expected in Australia - Westpac
FXstreet.com (Barcelona) - Australia's Q3 GDP report is likely to be unimpressive, writes Westpac FX strategist Sean Callow.
"While the headline 0.6% q/q growth rate we expect would be the same as in Q2, we see risks of a surprise tilted to the downside. The y/y growth pace should ease to 3.1% y/y from 3.7% in Q2 and obviously if it keeps up the 0.6% pace (also our forecast for Q4) then the growth pulse is around a sub-trend 2.5%" the analyst notes.
"Yesterday's sharper than expected contraction in government spending raised the downside risks to our 0.6% forecast (also consensus, range 0.1% to 0.8%). Business investment should remain the key growth driver with help from inventories and modest consumption growth while dwelling construction detracts from growth once again. Markets are pricing about a 55% chance of another -25bp off the cash rate in Feb" Sean adds.
"While the headline 0.6% q/q growth rate we expect would be the same as in Q2, we see risks of a surprise tilted to the downside. The y/y growth pace should ease to 3.1% y/y from 3.7% in Q2 and obviously if it keeps up the 0.6% pace (also our forecast for Q4) then the growth pulse is around a sub-trend 2.5%" the analyst notes.
"Yesterday's sharper than expected contraction in government spending raised the downside risks to our 0.6% forecast (also consensus, range 0.1% to 0.8%). Business investment should remain the key growth driver with help from inventories and modest consumption growth while dwelling construction detracts from growth once again. Markets are pricing about a 55% chance of another -25bp off the cash rate in Feb" Sean adds.
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