The Australian consumer price index inflation result this morning will be the highlight of the week across the Tasman and could have implications for the Reserve Bank of Australia.
As is the case everywhere in the world, inflation is likely to remain subdued both at the headline and underlying level.
Craigs Investment Partners broker Chris Timms said yesterday the market was expecting 0.7% for the quarter and 1.8% for the year - below the RBA's 2% to 3% annual target range.
For the RBA, the global backdrop had clearly worsened and a commodity price recovery did not look likely.
There were signs the Australian housing cycle was slowing and house price growth had peaked, he said.
''The Australian dollar has rebounded during recent weeks, tightening financial conditions, and we have seen three of the four major banks increase interest rates, tightening financial conditions further.''
Markets were forecasting a 46% chance of an official interest cut within the next three months and a weak inflation result today would give the RBA more reason to act, Mr Timms said.
The United States Federal Reserve concludes a two-day meeting with a statement tomorrow morning, New Zealand time, two hours ahead of the Reserve Bank of New Zealand statement on the official cash rate at 9am.
The market was ascribing only a very low chance of a Fed rate hike at this week's meeting, and the odds for a December move had dropped substantially, he said.
The focus would be on the language the Fed used to describe the economic outlook and the international situation.
The advance US third-quarter gross domestic product (GDP) economic growth figures would be released the day after the Fed statement.
Growth was expected to reflect a sharp slow down from the 3.9% growth rate in the June quarter to somewhere close to 1.7% in September, Mr Timms said.
There was another big global reporting week from offshore with 160 S&P500 companies due to report.
This week, markets would hear from Apple, the big oil majors and some of the pharmaceutical stocks.
So far, 173 companies had reported, with 75% beating earnings estimates but just 42% exceeding revenue forecasts.
Seven of the 10 sectors were expected to exhibit earnings growth, led by telecommunications (14.5%), consumer discretionary (14.1%) and healthcare (8.1%).
Energy (down 66.3%), materials (down 17%) and consumer staples (down 2.3%) were forecast to be the weakest, Mr Timms said.
''The earnings headlines looked pretty good last week although with high-profile oil companies due to report this week, that could change drastically.''
