Don't get excited over January data, warns Kent
The RBA's Assistant Governor Kent spoke to the Committee for Economic Development of Australia (CEDA) on Friday.
In the Q&A, Kent said that the market should "not get over excited about January data" in regards to weak jobs data released last week.
Kent also said that unemployment tends to lag activity, a comment that we would agree with. Kent also stated that there are reasonable prospects for non-mining investment to pick up next year.
Equity markets were firm in both the US and Europe on Friday.
Company earnings exceeded expectations and markets were encouraged by comments made by US Fed Chair Yellen regarding the strength of the US economy.
The Dow remained above 16,000, rising 0.8% while the S&P500 rose 0.5%. In Europe, the FTSE 100 was up 0.1% and the Dax rose 0.7%.
Longer term interest rates were steady with little or no change in US two or ten year yields. A similar story played out in Europe and Japan.
In Australia, however, ten year yields fell seven basis points to 4.11% and three year bond yields were down three basis points to 2.95%.
The US dollar index made a fresh two-month low early in the London session and then consolidated. EUR initially rose from 1.3675 to 1.3715 but reversed in New York trade.
The AUD rose from 0.8990 to 0.9044 during the London morning, consolidated and then rose a touch further.
Gold and copper were firmer over the weekend on reasonable economic data but the price of West Texas crude oil remained steady just above US$ 100 per barrel.
Inflation was unchanged in January, at an annual rate of 2.5%. Producer prices fell further in the year to January, down 1.6%. Both results indicate price pressures remain subdued.
Record new credit in China during January boosts the outlook for ongoing economic growth but is raising concerns regarding the viability of some new lending.
Moody's has upgraded the ratings outlook for Italy from negative to stable on the basis of improved financial strength.
Eurozone GDP grew 0.3% in Q4, matching weather-boosted Q2's growth pace. Without any significant one-off factors supporting the latest result, the 0.3% rise represents a genuine acceleration in activity from the snail-paced recovery of earlier in the year.
Indeed, annual growth of 0.5% was the first expansion on that basis since the last quarter of 2011, two years earlier.
Germany's 0.4%, the Netherlands' 0.7% and Portuguese growth of 0.5% all beat expectations as did the 0.3% rise in France.
Cyprus and Finland remain in recession.
As it has in the US, extreme weather conditions in parts of the UK may distort its economic data over the next few months.
US industrial production fell 0.3% in January. A 0.8% contraction in manufacturing output was not fully offset by a 4.1% jump in utility output caused by extremely cold weather.
US consumer sentiment was revised from 80.4 to 81.2 in the final January reading for the University of Michigan index.
That is still down from December's 82.5, but stronger than the previous three months in the 73-78 range.
US import prices rose 0.1% in January as a 1.2% fall in petrol prices was offset by a sizeable 0.4% rise in ex-oil prices, led by food and consumer goods in a month when the USD was strengthening.