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IMF cut Asia growth forecasts to 4% in 2022, 4.3% in 2023

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    ActionForex.com
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    IMF lowered Asia’s growth forecast in to 4.0% in 2022, 4.3% in 2023, and 4.6% in 2024. Japan’s growth forecast was held unchanged at 1.7% in 2022, downgraded slightly to 1.6% in 2023, and raised to 1.3% in 2024. For China, growth forecasts was downgraded to 3.2% in 2022, 4.4% in 2023, and 4.5% in 2024.

    “As the effects of the pandemic wane, the region faces new headwinds from global financial tightening and an expected slowdown of external demand,” the report said.

    As for China, “with a growing number of property developers defaulting on their debt over the past year, the sector’s access to market financing has become increasingly challenging,” the report noted.”Risks to the banking system from the real estate sector are rising because of substantial exposure.”

    Full report here.

     

    BoJ stands pat, maintains yield cap at 0.25%

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      BoJ left monetary policy unchanged as widely expected. Under the yield curve control framework, short-term policy interest rate is held at -0.10%. 10-year JGB yield is kept at around 0%, with bond purchases without upper limit. 0.25% fixed rate purchase operation will continue to be held to cap 10-year JGB yield. The decision was unanimous.

      In the new economic projections:

      • Fiscal 2022 GDP growth forecast was downgraded from 2.4% to 2.0%.
      • Fiscal 2023 GDP growth forecast was downgraded from 2.0% to 1.9%.
      • Fiscal 2024 GDP growth forecast was upgraded from 1.3% to 1.5%.
      • Fiscal 2022 CPI core forecast was upgraded from 2.3% to 2.9%.
      • Fiscal 2023 CPI core forecast was upgraded from 1.4% to 1.6%.
      • Fiscal 2024 CPI core forecast was upgraded from 1.3% to 1.6%.
      • Fiscal 2022 CPI core-core forecast was upgraded from 1.3% to 1.8%.
      • Fiscal 2023 CPI core-core forecast was upgraded from 1.4% to 1.6%.
      • Fiscal 2024 CPI core-core forecast was upgraded from 1.5% to 1.6%.

      Full statement here.

      Full Outlook for Economic Activity and Prices here.

      ECB press conference live stream

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        US GDP grew 2.6% annualized in Q3, slightly above expectations

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          US GDP grew at annualized rate of 2.6% in Q3, above expectation of 2.4%. PCE price index growth slowed from 9.0% to 4.1%, below expectation of 5.4%.

          BEA noted that the increase in real GDP reflected increases in exports, consumer spending, nonresidential fixed investment, federal government spending, and state and local government spending, that were partly offset by decreases in residential fixed investment and private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased.

          Full release here.

          ECB hikes 75bps, recalibrates TLTRO III

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            ActionForex.com
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            ECB raises interest rates by 75bps as widely expected. The main refinancing, marginal lending, and deposit rates are 2.00%, 2.25%, and 1.50% respectively, with effect from November 2. The central bank also maintains tightening bias, and said, it “expects to raise interest rates further, to ensure the timely return of inflation to its 2% medium-term inflation target.”

            Future policy rate path will be based on the “evolving outlook for inflation and the economy”, and follow its “meeting-by-meeting approach.

            Also, the terms and conditions of the TLTRO III refinancing operations are changed, and “recalibrated” to ensure consistency with broader monetary policy normalization process.

            Full statement here.

            Germany Gfk consumer sentiment rose to -41.9, too early to speck of a trend shift

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              ActionForex.com
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              Germany Gfk Consumer Sentiment for November improved from -42.8 to -41.9, slightly below expectation of -41.8. In October, economic expectations dropped from -21.9 to -22.2. Income expectations rose from -67.7 to -60.5. Propensity to buy also rose from -19.5 to -17.5.

              “It is certainly too early to speak of a trend shift at this time. The situation remains very tense for consumer sentiment,” explains Rolf Bürkl, GfK consumer expert. “Inflation has recently risen to ten percent in Germany, and concerns about the security of energy supplies continue to rise. Therefore, it remains to be seen whether the current stabilization will last or whether, considering the upcoming winter, there is reason to fear a further worsening of the situation.”

              Full release here.

              ECB to hike 75bps, EUR/CHF eyes parity

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                ActionForex.com
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                ECB is widely expected to raise interest rates by 75bps today. After that, the main refinancing rate will be at 2.00%, and the once negative deposit rate will be at 1.50%. President Christine Lagarde would signal that more tightening lies ahead, but the decision will stick to a meeting-by-meeting approach, and be data dependent.

                There might be discussions on quantitative tightening, but it’s still too soon to make a decision. The markets are expecting that concrete steps on shrinking the balance will only happen early next year.

                Here are some previews on ECB:

                Regarding reaction to ECB decision, EUR/CHF is an interesting one to watch, as it’s now eyeing parity. The cross was in persistent decline from June to September, after SNB surprisingly acted on interest rate earlier than ECB. Back then, ECB was still adjusting their forward guidance that rate hike would come weeks after stopping asset purchases. Now that ECB is catching up with global tightening pace, there is more upside prospect in the crosses.

                While upside momentum in EUR/CHF is not too convincing for the moment, further rise is expected as long as 0.9871 minor support holds. Next target is 100% projection of 0.9407 to 0.9798 from 0.9641 at 1.0032. It’s still too soon to judge whether rise from 0.9407 is a corrective bounce, or the start of an up trend. But in either case, stronger rally would be seen to 38.2% retracement of 1.1149 to 0.9407 at 1.0072. Reaction from there, as well as 55 week EMA (now at 1.0120) will reveal whether the trend is reversing.

                RBNZ Orr: Employment prospects will be increasingly compromised by monetary tightening

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                  ActionForex.com
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                  RBNZ Governor Adrian Orr said in a speech that New Zealand’s financial systems remains “well placed to support the economy”, but there will be “stresses in business and amongst households as interest rates and asset prices adjust”.

                  Regarding monetary policy objective, he emphasized, “we have our eyes firmly focused on meeting our inflation target”. He also mentioned that inflation is still too high in an absolute sense.”

                  “Central banks globally — the Reserve Bank of New Zealand included — are working to actively slow domestic spending by raising interest rates so as to constrain inflation,” said Orr. “This means employment prospects will be increasingly compromised.”

                  Full speech here.

                  EUR/CAD rises after BoC, heading to 1.4?

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                    ActionForex.com
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                    EUR/CAD’s rise from 1.2867 accelerates upwards after smaller than expected rate hike by BoC. For now, further rally is expected as long as 1.3405 support holds even in case of retreat. Next target is 55 week EMA (now at 1.3753). Sustained break there will argue that stronger rise is underway, even as a corrective move. EUR/CAD would then target 38.2% retracement of 1.5991 to 1.2867 at 1.4060.

                     

                    BoC hikes only 50bps, downgrades growth and inflation forecasts

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                      ActionForex.com
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                      BoC hikes overnight by only 50bps to 3.75%, disappointing those expecting a 75bps hike. Bank Rate and deposit rate are at 4.00% and 3.75% respectively. The central bank maintains tightening bias, and noted that “the Governing Council expects that the policy interest rate will need to rise further”.

                      In the new economic projections, GDP growth was downgraded from 3.5% to 3.3% in 2022, from 1.8% to 0.9% in 2023, and from 2.4% to 2.0% in 2024. CPI inflation forecasts was also downgraded from 7.2% to 6.9% in 2022, from 4.6% to 4.1% in 2023, and from 2.3% to 2.2% in 2024.

                      Full statement here.

                      US goods trade deficit widened to USD 92.2B in Sep

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                        ActionForex.com
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                        US goods exports dropped USD -2.8B to USD 177.6B in September. Goods imports rose USD 2.2B to USD 269.8B. Trade deficit came in at USD -92.2B, larger than expectation of USD -87.8B.

                        Wholesale inventories rose 0.8% mom to USD 921.7B, below expectation of 1.3% mom. Retail inventories rose 0.4% mom to USD 744.0B.

                        Full release here.

                        IMF Georgieva urges patience as benefit of rates hikes not instantaneous

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                          ActionForex.com
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                          IMF Managing Director Kristalina Georgieva said that central banks should keep raising interest rates until they reach “neutral level”. “At this point we look for getting to a neutral mode, and in most places we are not quite yet there,” she added.

                          She explained that rates has to go up since “when inflation runs high, that undermines growth, it hits the poorest parts of the population the hardest.”

                          Georgieva also said “the benefits (of rate hikes) would come but they are not instantaneous, this requires some patience in society.” IMF projected that tightening will continue until 2024 when central banks are “seeing the impact of their actions”.

                          Bitcoin rises with Dollar selloff, heading to 22-23k?

                            By
                            ActionForex.com
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                            Bitcoin rises notably today, following intensified selloff in Dollar in general. The break of 55 day EMA is a positive development for the near term. For now further rise expected as long as 19678 resistance turned support holds. Next target is 22764 resistance.

                            As for the larger outlook, current rise from 18144 could either be the third leg of the consolidation pattern from 17575, or the start of an up trend. It’s too early to tell. Yet, a take on 25198 resistance is possible on break of 22764. The key resistance level is in 38.2% retracement of 48226 to 17575 at 29283. As long as this fibonacci level holds, medium term outlook will be neutral at best.

                            BoC to hike 75bps, may signal slower tightening ahead

                              By
                              ActionForex.com
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                              BoC is widely expected to deliver another rate hike today. The markets seem to have now reached a consensus expectation of a 75bps increase in overnight rate to 4.00%. That would be the highest level since 2008. The tightening cycle shouldn’t stop there, but BoC may indicate that the pace would slow ahead. Some analysts are expecting another 50bps hike in December, followed by a 25bps hike early next year. But the decisions beyond together will very depend on upcoming economic data.

                              Here are some previews on BoC:

                              USD/CAD’s up trend was capped at 1.3976 earlier this month, on overbought condition. For now, further rise is expected as long as 1.3501 support holds. Up trend from 1.2005 would target 200% projection of 1.2005 to 1.2947 from 1.2401 at 1.4285 on break of 1.3976. Nevertheless, break of 1.3501 support will bring deeper fall to 55 day EMA (now at 1.3430) and below.

                              NZ ANZ business confidence fell to -42.7, murky outlook but resilient

                                By
                                ActionForex.com
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                                New Zealand ANZ Business Confidence fell from -36.7 to -42.7 in October. Looking at some details, Own Activity Outlook dropped from -1.8 to -2.5. Cost expectations dropped from 89.8 to 88.6. Employment intentions dropped from 5.9 to 5.0. Price intentions dropped from 68.0 to 64.5. Inflation expectations rebounded from 5.98 to 6.13.

                                ANZ said: “The economic outlook is certainly murky, but the New Zealand economy has a lot going for it. Debt is higher, but nowhere near the worrying levels other economies are struggling under. We’re relatively insulated from the energy cost implications of Russia’s invasion of Ukraine. Our primary export base is food, and when it comes down to it, people gotta eat. Housing affordability has improved in a meaningful but so far remarkably painless fashion. Indeed, overall the economy is still surprising economists with its resilience. It’s a rougher path ahead, but the country is still moving forward.”

                                Full release here.

                                Australia CPI jumped to 7.3% yoy in Q3, highest since 1990

                                  By
                                  ActionForex.com
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                                  Australia CPI rose 1.8% qoq in Q3, above expectation of 1.5% qoq. Annual rate accelerated from 6.1% yoy to 7.3% yoy, above expectation of 6.9% yoy. That’s the highest annual rise since 1990. Trimmed mean CPI, which excludes large price rises and falls, accelerated from 4.9% yoy to 6.1% yoy, highest since the data first published in 2003.

                                  For the quarter, the most significant contributors to the rise were new dwellings (+3.7%), gas (+10.9%) and furniture (+6.6%). Annually, new dwellings (+20.7%) and automotive fuel (+18.0%) were the most significant contributors.

                                  Full release here.

                                  US consumer confidence dropped to 102.5, concerns about inflation picked up again

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                                    ActionForex.com
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                                    US Conference Board Consumer Confidence dropped from 107.8 to 102.5 in October, below expectation of 105.6. Present Situation index declined sharply from 150.2 to 138.9. Expectations index fell slightly from 79.5 to 78.1.

                                    “Consumer confidence retreated in October, after advancing in August and September,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index fell sharply, suggesting economic growth slowed to start Q4. Consumers’ expectations regarding the short-term outlook remained dismal. The Expectations Index is still lingering below a reading of 80—a level associated with recession—suggesting recession risks appear to be rising.”

                                    “Notably, concerns about inflation—which had been receding since July—picked up again, with both gas and food prices serving as main drivers. Vacation intentions cooled; however, intentions to purchase homes, automobiles, and big-ticket appliances all rose. Looking ahead, inflationary pressures will continue to pose strong headwinds to consumer confidence and spending, which could result in a challenging holiday season for retailers. And, given inventories are already in place, if demand falls short, it may result in steep discounting which would reduce retailers’ profit margins.”

                                    Full release here.

                                    Germany Ifo business climate fell slightly to 84.3, facing a difficult winter

                                      By
                                      ActionForex.com
                                      -

                                      Germany Ifo Business Climate ticked down from 84.4 to 84.3 in October, above expectation of 84.0. Current Assessment index dropped from 94.5 to 94.1, above expectation of 92.5. Expectations index rose from 75.3 to 75.6, above expectation of 74.9.

                                      By sector, manufacturing fell from -14.3 to -15.9. Services rose slightly from -8.9 to -8.6. Trade rose from -32.3 to -31.9. Construction dropped from -21.9 to -24.9.

                                      Ifo said: “Companies were less satisfied with their current business. Their expectations improved, but they are still worried about the coming months. The German economy is facing a difficult winter.”

                                      Full release here.

                                      Offshore Chinese Yuan hits new record low

                                        By
                                        ActionForex.com
                                        -

                                        Offshore Chinese Yuan hit a new record low against Dollar today, recent depreciation continued. That’s second straight session of decline after President Xi Jinping secured a tradition-breaking third consecutive leadership term on Sunday, unveiled a new cabinet stacked with his loyalists.

                                        In response to the decline in exchange rate, PBOC raises the cross-border macro prudential adjustment ratio for corporates and financial institutions to 1.25 from 1. The central bank said, it will “increase the sources of cross-border funds for enterprises and financial institutions, and guide them to optimize the asset-liability structure.”

                                        Purely technically, near term outlook in USD/CNH will stay bullish as long as 7.2189 support holds. Current up trend should target 161.8% projection of 6.3057 to 3.8372 from 6.7159 at 7.5759. But of course, the government could intervene any time.

                                        RBNZ Conway hopeful that inflation has peaked

                                          By
                                          ActionForex.com
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                                          RBNZ Chief Economist Paul Conway said annual inflation rate of 7.2% was “obviously too high”. But, he added, “we expect to see inflationary pressures easing going forward” and “are hopeful that it has peaked.”

                                          The “very rapid tightening in monetary policy” is starting to have an effect and “there are early signs that the economy is starting to cool,” he said.

                                          NZD/USD is currently still bounded inside the consolidation pattern from 0.5511. While a breach of 0.5812 resistance cannot be ruled out, upside could be capped by 55 day EMA (now at 0.5876). That is, an eventual downside breakout is expected, sooner or later, through 0.5511 to resume larger down trend.

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