Low interest rates remain a focus around the world but, this week, attention will move away from New Zealand towards decisions being made in Australia and the United States.
The Australian consumers price index measure of inflation tomorrow is likely to confirm subdued inflation, prompting another rate cut by the Reserve Bank of Australia next month.
ASB chief economist Nick Tuffley said yesterday ASB forecasts showed a 1.5% rise in Australian export prices, in line with higher commodity prices in the quarter. Import prices were expected to fall 1.5%, in part due to a higher Australian dollar.
The US Federal Reserve rate announcement on Thursday morning New Zealand time would probably put the prospect of US rate hikes back on the radar for financial markets.
The Fed was likely to be more optimistic about the US economic outlook, he said.
The US economy had accelerated from a weak first quarter, especially consumer spending, and the labour market had stabilised.
While risks to the US economy from Brexit have subsided for now, weak wage growth continues to feed into soft inflation pressures and will keep the Fed very cautious about its tightening cycle.
"US economic data has been upbeat but the Brexit vote scuttled the Fed's plans to hike in July. We expect the Fed will hike rates in December.''
Also tomorrow, the Auckland Unitary Plan would be made public. There was some risk the headlines could affect interest rate markets, he said.
The Bank of Japan was expected to cut its policy interest rate from 0.1% to -0.3%. (negative). Consumer spending was weak in Japan. Inflation expectations among consumers and businesses were low and falling.
The Bank of Japan's favourite measure of inflation - inflation excluding fresh food and energy - peaked at 1.5% in December 2015 compared to a target of 2%.
In New Zealand, a trade surplus of $150 million was expected for June, making it the sixth in a row. Statistics New Zealand would release the latest data tomorrow morning,.
Mr Tuffley said the main driver of recent surpluses had been the strength in export sectors such as fruit, wine and forestry.
Annual growth in export values other than meat, dairy and oil had been about 10% in recent months.
At the same time, import values remained constrained by low global inflation. The annual deficit was likely to narrow to $3.3 billion.
At a glance
Tomorrow: NZ trade balance for June, Australian inflation figures.
Thursday: Federal Reserve interest rate announcement
Friday: NZ residential building consents, ANZ business confidence, credit growth for June
