Australia's volatile market and currency could be in for a bumpy week as a tranche of central bank meetings and minutes are released, including the Reserve Bank of Australia's monthly interest rate decision.
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The main domestic event for Australian markets will be the RBA meeting on Tuesday to determine the cash rate, which is currently 2 per cent.
Few economists expect a cut because of the lower Australian dollar, which has fallen 6 per cent in the last quarter to US70¢, but several economists are positioning for a cut in November.
Fears are mounting about slowing global growth, especially in China.
However, Citi economist Josh Williamson said "the labour market is the key thing now".
"The growth employment figures are not as good as they seem at first glance," he said. "We are creating more jobs but underemployment is high, and the new jobs are generally low income jobs and distributed in such a way it won't help solve growth issues or support an improvement in consumption."
Also due out this week is data indicating the health of Australia's booming property market, one of the few sectors picking up slack as the mining boom fades. The number of homes under construction will be announced on Wednesday, followed by a report into the state of housing financing on Friday.
UBS is forecasting Wednesday's ANZ job advertisement numbers to reflect an ongoing 2 per cent rise in job availability and also a spike in August home loans in the Australian Bureau of Statistics data on Friday.
However, it is broader, international movements that are likely to have the largest impact on Australian markets with the strengthening United States economy and the slowing Chinese one continuing to diverge, feeding an increasingly volatile environment.
"The risks to the Chinese economy persist, and no doubt the most recent Chinese PMI data released this week will continue to resonate with the RBA as a reminder of this risk to the Australian economy," NAB economist Tapas Strickland said.
A major financial tremor out of China – such as poor data or volatile sharemarket trading – is less likely this week as much of its financial system will be on hold because of Golden Week holiday festivities.
Instead, the impending rate rise by the US Federal Reserve is likely to dominate speculation and market movements, particularly in currency trading. The hike could take place as early as October 26.
However, analysts remained uncertain just when the first rate hike in almost a decade could occur.
"Also front of mind is the US economy and how close the Federal Reserve is to a lift-off," Mr Strickland said. "That time has clearly not yet arrived, though recent Federal Reserve member statements suggests it will still occur before the end of this year, potentially adding more support to the US dollar and keeping the Australian dollar in check."
