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Soft Japanese GDP likely enough to announce tax delay - Westpac

FXStreet (Bali) - An expected soft Japan’s Q3 GDP is likely to be enough for Japan PM Abe to announce postponement of the consumption tax rise, notes Sean Callow, FX Strategist at Westpac.

Key Quotes

Japan’s Q3 GDP is expected to recover just 0.5% q/q after the -1.8% slide in Q2 when the consumption tax was raised (2.2% vs -7.1% for those who like to annualize each quarter). This is likely to be soft enough for Japan PM Abe to announce postponement of the consumption tax rise (8% to 10%) from Oct 2015 to some time in 2017. This announcement is likely Tue or Wed, along with an early election plan.

China President Xi is due to address Australian parliament around 3:30pm Sydney/12:30pm Sing/HK. The media is filled with stories on the trade agreement which should see greater access for Australian commodity and services exports, in return for easier access for Chinese investors in Australia plus looser rules on temporary Chinese workers on Australian projects. We are also waiting for official confirmation of Sydney as a renminbi trading hub but there has been little talk of this in the media in recent days.

Asia’s data slate includes Singapore Oct exports, Thai Q3 GDP and perhaps Oct trade data in India. Over the weekend, China’s money aggregates were released. Our Economics team notes that new credit supply increased by CNY663bn in October, which is 23% below the level a year ago. That is a fourth straight contraction, but the extent of the decline has been easing.

The US data calendar features the Nov NY Fed Empire state manufacturing index, seen up to +12 from +6. Oct IP is expected to have risen 0.2% after the 1.0% bounce in Sep.
Sean Callow, Sydney

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