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Eurozone PPI down -1.0% mom, -5.7% yoy in Apr

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    ActionForex.com
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    Eurozone PPI fell -1.0% mom in April, below expectation of -0.5% mom. Over the 12-month period, PPI fell -5.7% yoy, below expectation -5.1% yoy. For the month, industrial producer prices increased by 0.3% for intermediate goods, 0.2% for capital goods, 0.2% for durable consumer goods, 0.1% for non-durable consumer goods. PPI decreased by -3.6% for energy.

    EU PPI fell -0.1% mom, -5.5% yoy. The largest monthly decreases in industrial producer prices were recorded in France (-3.6%), Croatia (-1.9%) and Greece (-1.8%). The highest increases were observed in Denmark (+2.8%), Ireland (+0.8%) and Finland (+0.3%).

    Full Eurozone PPI release here.

    UK PMI services finalized at 52.9, expansion slows, price pressures ease

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      ActionForex.com
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      The latest PMI data from the UK indicates a deceleration in the service sector for May, with the Services PMI dropping to 52.9 from April’s 55.0, marking the slowest growth rate since November. The Composite PMI, which aggregates both services and manufacturing, also experienced a downturn, finishing at 53.0 compared to 54.1 the previous month.

      Joe Hayes, Principal Economist at S&P Global Market Intelligence, provided insights into the broader implications of these figures, stating that the PMI survey reflected a “reasonable rate of expansion” in the UK service sector. Coupled with data from the manufacturing sector, the PMIs collectively suggest an approximate GDP growth of around 0.3% for the second quarter.

      A significant development from the PMI surveys is the moderation in price increases for UK services, which have risen at the slowest pace in over three years. This marks the third consecutive month of diminishing selling price inflation in the service sector, a trend that will likely be welcomed by BoE. According to Hayes, this trend suggests that “the trajectory of services prices is moving in the right direction,” potentially easing concerns about persistent inflationary pressures.

      Full UK PMI Service final release here.

      Eurozone PMI composite finalized at 52.2, a 12-month high

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        ActionForex.com
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        Eurozone PMI Services was finalized at 53.2 in May, slightly down from April’s 53.3. PMI Composite was finalized at 52.2, up from prior month’s 51.7, a 12-month high. Also, business confidence surged to 27-month high. Inflation rates cooled but remained above pre-pandemic averages.

        A closer look at individual countries reveals varying levels of economic activity. Spain leads with a robust Composite PMI of 56.6, marking a 14-month high. Germany follows with a Composite PMI of 52.4 and hitting a 12-month peak. Conversely, Italy’s PMI dipped to a three-month low of 52.3, and France lagged with a Composite PMI of 48.9 and marking a two-month low.

        Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, commented on the broader implications of these figures: “The spectre of recession is off the table.” He highlighted the crucial role of the service sector in driving this positive shift, noting, “In Germany, we can now talk of an upward trend, Italy’s business activity remains solid, and Spain has improved from an already strong position.” However, he also acknowledged the challenges facing France, which has seen a recent dip in economic performance.

        Full Eurozone PMI services final release here.

        BoC in spotlight, USD/CAD ready for breakout?

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          ActionForex.com
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          BoC rate decision is under the spotlight today. There is palpable readiness within the central bank to commence monetary policy easing especially following unexpectedly weak Q1 GDP data. The primary question being is whether it will take action today or defer until the next meeting in July.

          Currently,most economists anticipate that conditions are now conducive for a 25bps rate cut to 4.75% at this meeting. Even if Governor Tiff Macklem opts to hold rates steady today, it is expected that he will signal an imminent rate cut.

          Meanwhile, opting to wait until July would enable BoC to present a more comprehensive outline of its easing strategy, coinciding with the release of a new monetary policy report containing updated economic and inflation forecasts. This would provide a clearer framework for understanding the central bank’s expectations and strategic intentions moving forward.

          Canadian Dollar is trading as the worst performer of the week at this point, partly dragged down by the extended fall in oil prices. As for USD/CAD, near term outlook stays bullish with 1.3589 cluster support intact (38.2% retracement of 1.3176 to 1.3845 at 1.3589). Break of 1.3742 resistance will be an early sign that rise from 1.3176 is ready to resume through 1.3845.

          More importantly, that would put 1.3976 key resistance into focus. Firm break there will resume long term up trend from (1.2005). Next medium term target is 61.8% projection of 1.2401 to 1.3976 from 1.3176 at 1.4149.

          China’s Caixin PMI services rises to 54, highest level since July 2023

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            ActionForex.com
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            China’s Caixin PMI Services index jumped from 52.5 to 54.0 in May, exceeding expectations of 52.6. This marks the 17th consecutive month of expansion and the highest reading since July 2023. Similarly, PMI Composite rose from 52.8 to 54.1, indicating expansion for the 7th straight month and at the fastest pace in a year.

            Wang Zhe, Senior Economist at Caixin Insight Group, noted that growth in supply and demand in both the manufacturing and services sectors picked up pace, with a particularly strong increase in services demand. He mentioned that exports in both sectors improved amid market optimism. Additionally, employment in the services industry shifted from a decline to an increase, driving the composite index into expansion for the first time in nine months.

            Full China Caixin PMI services release here.

            RBA’s Bullock discusses plan A and two backups amid inflation concerns

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              ActionForex.com
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              RBA Governor Michele Bullock addressed a senate panel today, emphasizing the importance of controlling inflation despite balanced risks. She underscored the necessity of bringing inflation back down to the target band, warning that if inflation doesn’t appear to be heading in the right direction, “we’ll have to take action.”

              In her elaboration on the RBA’s rate-setting approach, Bullock described a “Plan A,” which involves a data-driven methodology, keeping all options open without committing to a specific course of action prematurely. That is, RBA does “not rule anything in or out.”

              She also outlined two contingency “Plan Bs” depending on economic developments: one for persistently high inflation, and another for a significant economic downturn.

              “If it turns out that inflation is starting to head higher again or it’s much stickier then we won’t hesitate to move and raise interest rates again,” Bullock declared. Conversely, she noted that a weaker-than-expected economy would prompt considerations for easing rates to mitigate deflationary pressures.

              Australia’s Q1 GDP rises 0.1% qoq, lowest annual growth since late 2020

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                ActionForex.com
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                Australia’s GDP grew by 0.1% qoq in Q1, below the anticipated 0.2% growth. On a year-over-year basis, GDP increased by 1.1%.

                Katherine Keenan, head of national accounts at ABS, remarked that GDP growth was weak in March, marking the lowest annual growth rate since December 2020. She also highlighted that GDP per capita fell for the fifth consecutive quarter, declining by -0.4% in March and -1.3% over the past year.

                Full Australia GDP release here.

                Japan’s PMI composite hits highest since August 2023

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                  ActionForex.com
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                  Japan’s PMI Services index was finalized at 53.8 in May, slightly lower than April’s 54.3. Meanwhile, PMI Composite index rose to 52.6 from 52.3 in April, marking its highest level since August 2023 and staying above 50 neutral mark for the fifth consecutive month.

                  Trevor Balchin, Economics Director at S&P Global Market Intelligence, noted that the Japanese service sector’s “strong upturn was sustained,” with only slight easing in growth rates for activity and new work. New export business expanded the most since this metric was introduced in September 2014. Both the future activity and employment indices increased since April and were among the highest on record.

                  Balchin also highlighted that while costs continued to rise sharply, the strong demand for services led firms to be confident in raising prices. In May, average prices charged for services increased at the third-fastest rate on record, following only April 2014 and April 2024.

                  Full Japan PMI composite final release here.

                  Japan’s nominal labor earnings rise 2.1% yoy, real wages still declining

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                    ActionForex.com
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                    Japan’s nominal labor cash earnings increased by 2.1% yoy in April, surpassing the expected 1.7% and marking the 28th consecutive month of growth. Excluding bonuses and nonscheduled payments, average wages climbed by 2.3% yoy. However, overtime and other allowances were down by -0.6% yoy.

                    Despite the rise in nominal wages, real wages fell by -0.7% yoy, continuing a 25-month streak of declines, the longest on record. Nonetheless, the rate of decline was smaller than the revised -2.1% yoy drop in March, as many major companies implemented salary increases during the latest spring annual wage negotiations.

                    Swiss CPI unchanged at 1.4% yoy in May, core CPI at 1.2% yoy

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                      ActionForex.com
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                      Swiss CPI was steady at 1.4% yoy in May. Core CPI was also unchanged at 1.2% yoy. Domestic product inflation was unchanged at 2.0% yoy. Imported products inflation fell from -0.4% yoy to -0.6% yoy.

                      Comparing with the prior month, CPI rose 0.3% mom in. Core CPI rose 0.2% mom. Domestic product rose 0.5% mom while imported products rises was flat for the month.

                      Full Swiss CPI release here.

                      BoJ’s Ueda: Monetary policy adjustments possible if inflation rises

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                        ActionForex.com
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                        BoJ Governor Kazuo Ueda addressed the parliament today, indicating that the central bank is prepared to adjust its level of monetary support if underlying inflation accelerates as forecasted. Ueda added, “If our economic and price outlook, or risks, change, that will also be reason to change the level of interest rates.”

                        Discussing long-term interest rates, Ueda mentioned that the central bank’s fundamental approach is to allow market forces to determine these rates. However, he also emphasized that BoJ would conduct “nimble” market operations if long-term interest rates were to spike, highlighting the bank’s readiness to increase bond buying when necessary.

                         

                        US 10-year yield plunges as Fed cut expectations heighten slightly

                          By
                          ActionForex.com
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                          US 10-year Treasury yield dropped significantly overnight, marking its most substantial one-day decline since last December. This sharp fall was triggered by disappointing economic data, revealing contraction in manufacturing activity for the second consecutive month. This indication of a cooling economy lifted optimism among investors slightly, as Fed would still be on track for monetary policy easing this year.

                          Currently, the probability of an initial rate cut in September has climbed to nearly 60%, according to Fed fund futures. Furthermore, expectations for a total of two rate cuts by year-end have also increased, now standing at 52.8%. However, these speculations could see dramatic shifts depending on the outcomes of upcoming economic reports, including ISM services data and non-farm payroll figures later this week.

                          Technically, as long as 4.318 support holds, 10-year yield’s rebound from 3.780 is still in favor to extend through 4.730 at a later stage. However, as this rise is seen as the second leg of the corrective pattern from 4.997, strong resistance should be seen below there to limit upside. Sustained break of 4.318 will indicate near term reversal, and turn outlook bearish.

                           

                          Japan’s Suzuki confirms impact of market intervention to support yen

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                            ActionForex.com
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                            Japan’s Finance Minister Shunichi Suzuki confirmed today that recent interventions in the currency market had a notable impact on stabilizing Yen. During a press conference following a regular cabinet meeting, Suzuki explained that the interventions at the end of April and early May were specifically targeted to counteract excessive currency market movements.

                            According to data released by the Ministry of Finance last Friday, Japan spent JPY 9.79T over the past month to bolster Yen. This data confirmed traders’ and analysts’ suspicions that Tokyo conducted significant dollar-selling interventions.

                            These interventions occurred shortly after Yen plummeted to a 34-year low of 160.245 per dollar on April 29 and again in the early hours of May 2 in Tokyo.

                            US ISM manufacturing falls to 48.7, corresponds to 1.7% annualized GDP Growth

                              By
                              ActionForex.com
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                              US ISM Manufacturing PMI fell from 49.2 to 48.7 in May, below expectation of 49.8. Looking at some details, new orders fell from 49.1 to 45.4. Production fell from 51.3 to 50.2. Employment rose from 48.6 to 51.1. Prices fell from 60.9 to 57.0.

                              ISM said: “The past relationship between the Manufacturing PMI and the overall economy indicates that the May reading (48.7 percent) corresponds to a change of plus-1.7 percent in real gross domestic product (GDP) on an annualized basis.”

                              Full US ISM manufacturing release here.

                              UK PMI manufacturing finalized at 51.2, a solid revival

                                By
                                ActionForex.com
                                -

                                UK PMI Manufacturing index was finalized at 51.2 in May, up from April’s 49.1, marking the highest reading since July 2022. S&P Global noted that output increased across all main sub-sectors and size categories, and business optimism soared to a 27-month high.

                                Rob Dobson, Director at S&P Global Market Intelligence, described May’s performance as a “solid revival” of activity in the UK manufacturing sector. Production and new business levels both rose at their fastest rates since early 2022. The recovery’s breadth was notable, with concurrent output and new order growth across all main sub-industries—consumer, intermediate, and investment goods—and all company size categories for the first time in over two years.

                                However, the latest PMI survey data presented a mixed picture for price pressures. Output charge inflation at the factory gate strengthened for the fifth consecutive month, reaching its highest level in a year. Despite this, there was a solid easing in the rate of increase in input costs, which should help prevent price pressures from becoming entrenched.

                                Full UK PMI manufacturing final release here.

                                Eurozone PMI manufacturing finalized at 47.3, a turning point?

                                  By
                                  ActionForex.com
                                  -

                                  Eurozone PMI Manufacturing index was finalized at 47.3 in May, up from April’s 45.7 and reaching a 14-month high. This improvement suggests a potential turning point for the manufacturing sector, which has been declining since April 2023.

                                  Country-specific data reveals that Greece led with a PMI of 54.9, although this marked a 4-month low. Spain followed with 54.0, hitting a 26-month high, while the Netherlands posted a 21-month high of 52.5. France recorded a 3-month high at 46.4, and Austria saw a 15-month high at 46.3. Italy and Germany, however, showed lower figures with PMIs of 45.6 and 45.4, respectively, though both countries achieved multi-month highs.

                                  Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, highlighted this as a potential “turning point” for the sector, noting that the industry is nearing the end of its production decline. He pointed out that business confidence regarding future production is at its highest level since early 2022.

                                  Germany, despite having the lowest PMI among the four major Eurozone economies, is close to overtaking Italy, which has recently seen its performance deteriorate. France’s industrial sector has improved but still lags behind, while Spain remains the only Euro-4 country with a growing industrial sector.

                                  Full Eurozone PMI manufacturing final release here.

                                  China’s Caixin PMI manufacturing rises to 51.7, production picks up

                                    By
                                    ActionForex.com
                                    -

                                    China’s Caixin PMI Manufacturing index edged up from 51.4 to 51.7 in May, surpassing expectations of 51.5. Caixin reported that production expanded at its most pronounced pace since June 2022, with the fastest growth in purchasing activity in three years. Meanwhile, input price inflation reached a seven-month high.

                                    Wang Zhe, Senior Economist at Caixin Insight Group, highlighted that the manufacturing sector continued to improve, with gains in supply, domestic demand, and exports. Logistics and transportation remained efficient, and businesses increased their purchase quantities and inventories, reflecting a positive outlook.

                                    Despite these positive developments, Wang noted persistent challenges, particularly low price levels on the sales side. Additionally, employment continued to shrink as businesses remained cautious about hiring.

                                    Full China Caixin PMI manufacturing release here.

                                    Japan’s PMI manufacturing, finalized at 50.4, above neutral mark for first time in a year

                                      By
                                      ActionForex.com
                                      -

                                      Japan’s PMI Manufacturing index was finalized at 50.4 in May, up from 49.6 in April, crossing the 50 neutral mark for the first time in a year. S&P Global noted that both output and new orders remained broadly stable, while employment and input stocks saw expansion.

                                      Pollyanna De Lima at S&P Global Market Intelligence highlighted the “encouraging trends” in the manufacturing industry, noting that new orders and output were stable, and businesses were optimistic about the year ahead. She mentioned that input stocks increased as materials ordered in recent months arrived, which bodes well for production and suggests a gradual near-term recovery.

                                      Factory employment also rose but continued to be affected by retirements and difficulties in finding suitable replacements. Another challenge faced by manufacturers was the intensification of cost pressures due to yen depreciation, which strained the prices of imported items. This, along with rising wage costs, led to the sharpest increase in output charges in a year. De Lima pointed out that this is concerning given the subdued domestic and external demand.

                                      Full Japan PMI Manufacturing final release here.

                                      Canada’s GDP flat in Mar, up 0.4% qoq in Q1

                                        By
                                        ActionForex.com
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                                        Canada’s GDP was essentially unchanged in March, matched expectations. Both goods-producing and services-producing industries were essentially unchanged. Overall, 11 of 20 sectors increased in the month.

                                        Advance estimate suggests that GDP rose 0.3% mom in April. Increases in manufacturing, mining, quarrying, and oil and gas extraction and wholesale trade were partially offset by decreases in utilities.

                                        In Q1, GDP increased 0.4% qoq, Higher household spending on services was the top contributor to the increase in GDP, while slower inventory accumulations moderated overall growth.

                                        Full Canada GDP release here.

                                        US PCE unchanged at 2.7% yoy in Apr, core PCE steady at 2.8% yoy

                                          By
                                          ActionForex.com
                                          -

                                          US PCE price index rose 0.3% mom in April, matched expectations. Core PCE price index (excluding food and energy) rose 0.2% mom, below expectation of 0.3% mom. Prices for goods increased 0.2% mom, and prices for services increased 0.3% mom. Food prices decreased -0.2 mom and energy prices increased 1.2% mom.

                                          Annually, PCE price index was unchanged at 2.7% yoy. Core PCE price index was unchanged at 2.8% yoy. Both matched expectations. Prices for goods increased 0.1% yoy and prices for services increased 3.9% yoy. Food prices increased 1.3% yoy and energy prices increased 3.0% yoy.

                                          Personal income rose 0.3% mom or USD 65.3B, matched expectations. Personal spending rose 0.2% mom or USD 39.1B, below expectation of 0.3% mom.

                                          Full US Personal Income and Outlays release here.

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