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US durable goods orders down -2.1% mom in Nov, ex-transport orders up 0.2% mom

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    ActionForex.com
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    US durable goods orders decreased -2.1% mom to USD 270.6B in November, worse than expectation of -0.7% mom. Ex-transport orders increased 0.2% mom to USD 179.3B, above expectation of 0.1% mom. Ex-defense orders declined -2.6% mom to USD 252.8B. Transportation equipment decreased -6.3% mom to USD 91.3B.

    Full release here.

    US PCE prices slowed to 5.5% yoy, core CPI down to 4.7% yoy

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      ActionForex.com
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      US personal income rose 0.4% mom or USD 80.1B in November, above expectation of 0.2% mom. Spending rose 0.1% mom or USD 19.8B, below expectation of 0.2% mom.

      For the month, PCE price index rose 0.1% mom while core PCE price (excluding food and energy) rose 0.2% mom. Prices for goods decreased -0.4% mom while prices for services increased 0.4% mom. Food prices rose 0.3% mom and energy prices dropped -1.5% mom.

      From the same month a year ago, PCE price index slowed from 6.1% yoy to 5.5% yoy, above expectation of 5.3% yoy. Core PCE price index slowed form 5.0% yoy to 4.7% yoy, matched expectations. Prices for goods rose 6.1% yoy and prices for services increased 5.2% yoy. Food prices increased 11.2% yoy and energy prices increased 13.6% yoy.

      Full release here.

      Canada GDP grew 0.1% mom in Oct, essentially unchanged in Nov

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        ActionForex.com
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        Canada GDP rose 0.1% mom in October, matched expectations. Services-producing industries expanded 0.3% while goods-producing industries contracted -0.7%. 11 of 20 industrial sectors grew.

        Advance information indicates that real GDP was essentially unchanged in November. Increases in accommodation and food services and wholesale trade were offset by declines in construction as well as mining, quarrying and oil and gas extraction.

        Full release here.

        Japan CPI core rose to 3.7% yoy, highest in 40 yrs

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          ActionForex.com
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          Japan CPI core (all item ex fresh food) accelerate further from 3.6% yoy to 3.7% yoy in November, matched expectations. That’s also the highest level in more than 40 years since 1981.

          CPI core-core (all time ex fresh food and energy), also rose from 2.5% yoy to 2.8% yoy, above expectation of 2.7% yoy. Headline all item CPI ticked up from 3.7% yoy to 3.8% yoy, above expectation of 3.7% yoy.

          US initial jobless claims rose to 216k, below expectation

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            ActionForex.com
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            US initial jobless claims rose 2k to 216k in the week ending December 17, below expectation of 220k. Four-week moving average of initial claims dropped -6k to 222k.

            Continuing claims dropped -6k to 1672k in the week ending December 10. Four-week moving average of continuing claims rose 30k to 1657k.

            Full release here.

            ECB de Guindos: 50bps is the new norm for a period of time

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              ActionForex.com
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              ECB Vice President Luis de Guindos said in an interview with Le Monde, “increases of 50 basis points may become the new norm in the near term”. He added, “we should expect to raise interest rates at this pace for a period of time” and “enter into restrictive territory.”

              He expects inflation will be “somewhere around its current level” at 10% “over the course of the next two or three months”. Inflation will then drop to “hover around 7% by middle of the year. As it’s “still clearly above” ECB’s target of 2%, “We have no choice but to act.”

              Regarding the economy, he said, “our projections therefore expect the euro area to fall into a mild recession in the last quarter of this year and in the first quarter of 2023, when GDP is expected to contract by 0.1%.”

              Full interview here.

              AUD/NZD extending corrective rebound

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                ActionForex.com
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                As risk-on sentiment carried forward to Asian sessions, Aussie is benefiting much more than Kiwi for now. AUD/NZD is extending the rebound from 1.0469 and hit as high as 1.0640 so far.

                A short term bottom should be confirmed at 1.0469 with break of the near term channel resistance, on bullish convergence condition in hour MACD. Yet, the rebound should be more of a result of deeply oversold condition, as seen in daily RSI. It’s too early to call for a trend reversal.

                While further rise is now mildly in favor, upside should be capped by 55 day EMA (now at 1.0826). Indeed, break of 1.0564 minor support will suggest that the decline from 1.1498 is ready to resume through 1.0469.

                WTI oil extends rebound, but down trend still intact

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                  ActionForex.com
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                  Oil prices extended the near term rebound this week as winter storm hit the US. Heating demand would be boosted by the arctic blast, offsetting the curbed travel plans. Also, as reported yesterday, US oil inventories unexpected dropped -5.9m barrels in the week ending December 16.

                  WTI is extending the rebound from 70.34 short term bottom and hit as high as 78.95 so far. While further rise cannot be ruled out, it’s too early to confirm the end of the medium term down trend, not to mention a reversal. There level layers of resistance ahead at 55 day EMA (now at 82.03), 83.82 resistance and then trend line resistance at 85.07.

                  Another decline will remain in favor for now, at a later stage. Break of 73.52 minor support will likely send WTI through 70.34 low.

                  US consumer confidence rose to 108.3, reversing consecutive declines

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                    ActionForex.com
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                    US Conference Board Consumer Confidence rose from 101.4 to 108.3 in December. Present Situation Index rose from 138.3 to 147.2. Expectations Index rose from 76.7 to 82.4.

                    “Consumer confidence bounced back in December, reversing consecutive declines in October and November to reach its highest level since April 2022,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.

                    “The Present Situation and Expectations Indexes improved due to consumers’ more favorable view regarding the economy and jobs. Inflation expectations retreated in December to their lowest level since September 2021, with recent declines in gas prices a major impetus. Vacation intentions improved but plans to purchase homes and big-ticket appliances cooled further. This shift in consumers’ preference from big-ticket items to services will continue in 2023, as will headwinds from inflation and interest rate hikes.”

                    Full release here.

                    Canada CPI slowed to 6.8% yoy, but accelerated excluding food and energy

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                      ActionForex.com
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                      Canada CPI slowed from 6.9% yoy to 6.8% yoy in November. Excluding food and energy, CPI accelerated from 5.3% yoy to 5.4% yoy. On a monthly basis, CPI rose 0.1% mom, much slower than October’s 0.7% mom.

                      CPI median accelerated from 4.9% yoy to 5.0% yoy. CPI trimmed was unchanged at 5.3% yoy. CPI common, accelerated sharply from 6.3% yoy to 6.7% yoy.

                      Full release here.

                      Germany Gfk consumer sentiment rose to -37.8, slowly working its way out of depression

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                        ActionForex.com
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                        Germany Gfk Consumer Sentiment for January improved from -40.1 to -37.8. In December, economic expectations rose from 17.9 to -10.3. Income expectations rose from -54.3 to -43.4. Propensity to buy rose form -18.6 to -16.3.

                        “The third increase in a row indicates that consumer sentiment is slowly working its way out of the depression. The light at the end of the tunnel is getting a little brighter”, explains GfK consumer expert Rolf Bürkl.

                        “The measures taken by the federal government to mitigate skyrocketing energy costs are apparently having an effect. However, it is still too soon to give the all-clear. The recovery of the consumer sentiment, as we are currently experiencing, is still on shaky ground. For example, if the geopolitical situation were to worsen again, leading to significantly higher energy prices, the light at the end of the tunnel would very quickly become dimmer again or even go out altogether.”

                        Full release here.

                        Australia leading index consistent with below trend growth well into 2023

                          By
                          ActionForex.com
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                          Australia Westpac-MI leading index dropped from -0.84% to -0.92% in November. Growth rate was, thus, in negative territory for the fourth consecutive month. The data is consistent with below trend growth well into 2023. Drivers of weakness are the RBA interest rate and commodity prices.

                          Westpac expects another 25bps rate hike by RBA in February, “give the outlook for wages; inflation and economic growth”. It expects wages and inflation challenges to persist through early months of 2023, requiring “further increase of 25bps in both March and May.

                          Full release here.

                          IMF: BoJ YCC adjustment a sensible step

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                            ActionForex.com
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                            Ranil Salgado, the IMF’s mission chief to Japan, said that “with uncertainty around the inflation outlook, the Bank of Japan’s adjustment of yield curve control settings is a sensible step including given concerns about bond market functioning.”

                            “Providing clearer communications on the conditions for adjusting the monetary policy framework would help anchor market expectations and strengthen the credibility of the Bank of Japan’s commitment to achieve its inflation target,” he said.

                            BoJ announced to raise the cap on 10-year JGB yield from 0.25% to 0.50% yesterday, to ” correct distortions in the yield curve”.

                            Canada retail sales rose 1.4% mom in Oct, but volume was unchanged

                              By
                              ActionForex.com
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                              Canada retail sales rose 1.4% mom to CAD 62.0B in October, below expectation of 1.5% mom, and the largest in crease in five month. Sales were up in 6 out of 11 subsectors, representing 84.4% of retail trade. Growth was led by higher sales at gasoline stations (+6.8%) and food and beverage stores (+2.2%). Excluding gasoline stations and motor vehicle and parts, sales rose 0.9%.

                              In volume terms, retail sales were unchanged for the month.

                              Based on advance estimate, sales decreased -0.5% mom in November.

                              Full release here.

                              BoJ Kuroda: Yield cap raised to correction distortions in yield curve

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                                ActionForex.com
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                                BoJ Governor Haruhiko Kuroda said in the post meeting press conference, “Overseas market volatility has heightened from around spring … While we have kept the 10-year bond yield from exceeding the 0.25% cap, this has caused some distortions in the shape of the yield curve. We, therefore, decided that now was the appropriate timing to correct such distortions and enhance market functions.” That’s led to the decision today to raise the cap from 0.25% to 0.50%.

                                “Consumer inflation has hit 3.6% mainly through rising import costs from a weak yen. Furthermore, inflation expectations are heightening. This is pushing down real interest rates and enhancing the stimulus effect on the economy. As such, while we’ve (widened the band) to correct distortions in the yield curve, the move won’t diminish the effect of YCC,” he added.

                                But Kuroda also indicated, “I don’t think we need to review YCC or quantitative easing for the time being.” “It’s premature to debate specifics on changing the monetary policy framework or an exit from easy policy. When achievement of our target comes into sight, the BOJ’s policy board will hold discussions on an exit strategy and offer communication to markets,” he said.

                                NZ ANZ business confidence fell to fresh record low

                                  By
                                  ActionForex.com
                                  -

                                  New Zealand ANZ business confidence declined from -57.1 to -70.2 in December, a new record low. Looking at some details, own activity outlook fell from -13.7 to -25.6. Export intentions dropped form -5.4 to -10.0. Investment intentions dropped form -8.1 to -20.5. Employment intentions dropped from -4.0 to -16.3. Pricing intentions rose from 58.5 to 59.1. Cost expectations declined form 88.7 to 84.4. Inflation expectations dropped from 6.39 to 6.23.

                                  ANZ said: “The fall in business confidence is certainly dramatic, but while it’s at a fresh record low, it would be incorrect to read this as an indication that any recession is likely to be unusually severe. Rather, it’s unusually widely anticipated. It’s a situation unprecedented in recent decades for a central bank to admit it is deliberately engineering a recession.”

                                  Full release here.

                                  RBA considered 50bps, 25bps, and no change at Dec meeting

                                    By
                                    ActionForex.com
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                                    Minutes of RBA’s December 6 meeting indicates that the board has considered three interest rate options of a 50bps hike, a 25bps hike, and no change.

                                    The argument for a 50bps increase stemmed from inflation remains “too high”, and there were factors support a “more pre-emptive action”. For a 25bps increase, the board acknowledged there had bee already a “significant cumulative increase” in interest rates and they would “begin to have more of an effect through the course of 2023″. The arguments for now chance placed”further emphasis of the lagged effect” of prior rate increases.

                                    Board members eventually decided that the case for 25bps increase was the”strongest one”, as further hike was “likely to be necessary”. Members also noted the “importance of acting consistently”.

                                    The minutes also reiterated that “the Board expects to increase interest rates further over the period ahead, but it is not on a pre-set path. Members noted that the size and timing of future interest rate increases would continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.”

                                    Full minutes here.

                                    AUD/JPY and CAD/JPY downside breakout after BoJ surprise

                                      By
                                      ActionForex.com
                                      -

                                      Yen surges broadly today after BoJ surprisingly raise 10-year yield cap from 0.25% to 0.50%. AUD/JPY finally breaks through 90.81 support decisively to resume the decline from 99.32. The strong break of a near term channel also indicates downside acceleration. Next near term target is 100% projection of 99.32 to 90.81 from 95.73 at 87.22

                                      From a longer term point of view, the break of 55 week EMA and the channel support also affirms the case that AUD/JPY is corrective whole up trend from 2020 low at 59.85. Such decline from 99.32 would target 38.2% retracement of 59.85 to 99.32 at 84.24 before forming a bottom.

                                      CAD/JPY also broke out of a near term expanding triangle to resume the whole fall from 110.87. Near term target of 200% projection of 110.87 to 104.55 from 110.33 at 97.69 is already met. Such decline is seen the correcting the up trend from 2020 low at 73.80. The question now is whether support from 38.2% retracement of 73.80 to 110.87 at 96.70 is strong enough to contain downside. If now, CAD/JPY accelerate further to 261.8% projection at 93.78.

                                      BoJ tweaks YCC to allow 10-yr yield to rise to 0.50%

                                        By
                                        ActionForex.com
                                        -

                                        BoJ surprises the markets today by widening the band of 10-year JGB yield from 0.25% to 0.50% today. At the same time, short term policy rate is kept unchanged at -0.10% as expected.

                                        Under the yield curve control framework, the central bank will still continue to purchases JGBs without an upper limit to keep 10-year yield at around 0%. But now, the bank will offer to purchase 10-year JGB yields at 0.50% every business day through fixed-rate operations, effectively allowing 10-year yield to rise towards 0.50% level.

                                        Full statement here.

                                        ECB de Guindos: I absolutely honest don’t know rate hikes will continue until when

                                          By
                                          ActionForex.com
                                          -

                                          ECB Vice-President Luis de Guindos said today, “there will be more interest rate hikes, until when, I don’t know. I am absolutely honest, I don’t know.” He added that the central bank was committed to bring inflation down to its 2% target.

                                          Separately, Governing Council member Gediminas Simkus said, “there will undoubtedly be a 50 bps increase in February.”

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