All eyes shift to China today. After weeks of angst over the rate of the US economy's recovery and the future for economic stimulus, concerns now will shift to the deceleration of the world's second biggest economy.
China will release its June quarter economic growth numbers at noon, with only thin trading expected in the lead-up this morning.
Hugely anticipated and much speculated upon, it is not simply the headline growth but the composition of growth that will have a huge impact on global equity, currency and commodity markets this week.
The magic headline number is 7.5%, a figure that would placate markets and ease fears of a sharp slowdown in the nation that dragged the global economy through the worst of the global financial crisis.
Last week, however, finance minister Lou Jiwei attempted to dampen market expectations, indicating a headline number below 7% was possible, well below even the recently revised International Monetary Fund growth estimates of 7.8%.
Over the weekend the official China news agency recanted the comments, claiming the finance minister was misquoted, which only served to add to the confusion now hanging over global markets.
But his comments appear to back up statements from Premier Xi Jinping and Prime Minister Li Keqiang that performance should be measured in ways other than economic growth.
All this confusion is a break with history. Until now, the Chinese leadership set the targets, and delivered on those targets with pinpoint accuracy, a performance that only served to underline the unreliablity of the statistics in the first place.
The Australian dollar fell sharply over the weekend ahead of the figures and any number significantly lower than 7.5% is likely to see the local currency test the US90c barrier (see Sam Fimis's A minute rise for the dollar).
A sharp drop in economic growth is also likely to impact resource stocks, particularly iron ore miners, which enjoyed some reasonable gains last week.
China’s economy also is in transition with the new regime determined to shift the focus away from investment and capital expenditure and boost consumer spending.
Also out today are industrial output and consumer spending for June, as opposed to the GDP figures which will canvas growth over the June quarter. Should today’s figures reveal lower industrial output but increased consumer spending, that transition would appear to be underway.
After notching up the most impressive gains in the region last week, the Australian market is likely to tentatively advance this morning following modest gains on Wall Street on Friday night and reasonable rises in Europe.
Oil prices and some base metal prices eased, however, which should cap any rises as traders wait on the sidelines for the China’s economic data.