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Australia employment rose 33.5k in Aug, unemployment rate ticked up to 3.5%

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    Australia employment rose 33.5k in August, slightly smaller than expectation of 35.5k. Full-time jobs rose 58.8k while part-time jobs decreased -25.3k.

    Unemployment rate ticked up from 3.4% to 3.5%, above expectation of 3.4%. Participation rate rose 0.2% from 66.4% to 66.6%. Monthly hours worked rose 0.8% mom.

    Full release here.

    New Zealand GDP grew 1.7% qoq in Q2, driven by services

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      New Zealand GDP grew 1.7% qoq in Q2, above expectation of 1.0% qoq, following a -0.2% qoq decline in Q1. Service industries rose 2.7% but goods producing industries dropped -3.8%. Primary industries rose 0.2%.

      “The reopening of borders, easing of both domestic and international travel restrictions, and fewer domestic restrictions under the Orange traffic light setting supported growth in industries that had been most affected by the COVID-19 response measures,” national accounts – industry and production senior manager Ruvani Ratnayake said.

      “In the June 2022 quarter, households and international visitors spent more on transport, accommodation, eating out, and sports and recreational activities.”

      Full release here.

      ECB Lane: Larger increment of interest rates appropriate

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        ECB Chief Economist Philip Lane said in a speech that risks to the inflation outlook are “primarily on the upside”. Major short term risk is a “further disruption of energy supplies”. Over the medium term, inflation may turn out to be higher than expected because of a “persistent worsening of the production capacity”, further increases in “energy and food prices”, and rise in “inflation expectations above our target” or higher “anticipated wage rises.

        “In the context of a long projected period with inflation far above target, the net upside risks to inflation and taking into account that the current setting of the key policy rates is still highly accommodative, it was appropriate to take a major step that frontloads the transition from the prevailing highly-accommodative level of policy rates towards levels that will support a timely return of inflation to our target,” he said, about last week’s 75bps rate hike”.

        “In calibrating a multi-step transition path, the appropriate size of an individual increment will be larger, the wider the gap to the terminal rate and the more skewed the risks to the inflation target, he added.

        Full speech here.

        US PPI down -0.1% mom, up 8.9% yoy in Aug

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          US PPI for final demand dropped -0.1% mom in August, matched expectations. The decreased is attributable to a -1.2% mom decline in prices for goods, while prices for services rose 0.4% mom. For the 12 months ended in August, PPI slowed from 9.8% yoy to 8.7% yoy, below expectation of 8.9% yoy.

          PPI for final demand less foods, energy and trade services rose 0.2% mom, 5.6% yoy.

          Full release here.

          Eurozone industrial production dropped -2.3% mom in Jul, EU down -1.6% mom

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            Eurozone industrial production dropped -2.3% mom in July, much worse than expectation of -0.8% mom. Production of capital goods fell by -4.2%, durable consumer goods by -1.6% and intermediate goods by -0.8%, while production of energy rose by 0.4% and non-durable consumer goods by 1.2%.

            EU industrial production declined -1.6% mom. Among Member States for which data are available, the largest monthly decreases were registered in Ireland (-18.9%), Estonia (-7.4%) and Austria (-3.2%). The highest increases were observed in Lithuania (+6.5%), Sweden (+5.8%) and Malta (+4.2%).

            Full release here.

            UK CPI slowed to 9.9% yoy in Aug, core CPI ticked up to 6.3% yoy

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              UK CPI slowed from 10.1% yoy to 9.9% yoy in August, below expectation of 10.2% yoy. CPI core rose from 6.2% yoy to 6.3% yoy, matched expectations. The largest contributions to the annual rate in August are from housing and household services, transport, and food and non-alcoholic beverages. July’s figure was the highest since 1982 based on indicative model.

              On monthly basis, CPI rose 0.5% mom, slowed from prior 0.6% mom. Food and non-alcoholic beverages made the largest upward contribution to the monthly rates, while falling prices for motor fuels resulted in a large offsetting downward contribution.

              Also released, RPI came in at 0.6% mom, 12.3% yoy, below expectation of 0.7% mom, 12.4% yoy. PPI input was at -1.2% mom, 20.5% yoy, versus expectation of 1.2% mom, 21.0% yoy. PPI output was at -0.1% mom, 116.1% yoy, versus expectation of 1.6% mom, 17.8% yoy. PPI core output was at 0.3% mom, 13.7% yoy, versus expectation of 1.5% yoy.

              Full release here.

              Markets pricing in 35% chance of 100bps Fed hike next week

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                US stock tumbled sharply overnight as traders added bets on another aggressive rate hike by Fed on September 21, next Wednesday. The moves came after stronger than expected consumer inflation data. DOW ended down -1276 pts, or -3.94% while S&P 500 fell -4.32%. NASDAQ suffered most by closing -5.16% lower.

                Fed fund futures are now fully pricing a 75bps hike, comparing to 91% a day ago, and 73% a month ago. Indeed, there is even 35% chance of a 100bps hike.

                10-year yield surged to as high as 3.458 before closing at 3.422. It’s still more likely than not for 3.483 high to exert strong resistance to limit upside. Break of 3.176 support will suggest that TNX is extending the corrective pattern from 3.483 with another falling leg. However, strong break of 3.483 will resume medium term up trend. And that could take USD/JPY through 144.98 towards 1998 high at 147.68.

                Japan officials toughen up talks on Yen

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                  Top Japanese officials toughened up the talks on Yen, as it tumbled notably again overnight following US CPI data. Finance Minister Shunichi Suzuki said Japan wouldn’t rule out any response if current trends in the foreign exchange market continued, with intervention as an option.

                  The comment was echoed by top current diplomat Masato Kanda, who reiterated, “we are monitoring yen moves with a sense of urgency. We will respond appropriately to currency moves without ruling out any options.”

                  Chief Cabinet Secretary Hirokazu Matsuno also said at a briefing that the government would take necessary action should excessive yen moves continue. He added that rapid currency moves were undesirable.

                  US CPI slowed to 8.3% yoy, core CPI rose to 6.3% yoy

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                    ActionForex.com
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                    US CPI rose 0.1% mom in August, after being flat in July, above expectation of -0.1% mom decline. Core CPI rose 0.6% mom, larger than prior month’s 0.3% mom, and higher than expectation of 0.3% mom. Energy declined -5.0% mom while food index rose 0.8% mom.

                    For the 12 months ending August, CPI slowed from 8.5% yoy to 8.3% yoy, above expectation of 8.1% yoy. CPI core accelerated from 5.9% yoy to 6.3% yoy, above expectation of 6.0% yoy. Energy rose 23.8% yoy, slowed from 32.9% yoy. Food rose 11.4% yoy, largest 12-month increase since May 1979.

                    Full release here.

                    Germany ZEW dropped to -61.9, outlook worsened significantly

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                      Germany ZEW Economist Sentiment dropped further from -55.3 to -61.9 in September, worse than expectation of -60. Current Situation index dropped from -47.6 to -60.5, below expectation of -50.5.

                      Eurozone ZEW Economic Sentiment dropped from -54.9 to -60.7, below expectation of -58.3. Current Situation index dropped -16.9 pts to -58.9.

                      “The ZEW Indicator of Economic Sentiment decreased again in September. Together with the more negative assessment of the current situation, the outlook for the next six months has deteriorated further. The prospect of energy shortages in winter has made expectations even more negative for large parts of the German industry. In addition, growth in China is assessed less favourably. The latest statistical figures already show a decline in incoming orders, production, and exports,” comments ZEW President Professor Achim Wambach on current expectations.

                      Full release here.

                      UK payrolled employment rose 71k in Aug, unemployment rate down to 3.6% in Jul

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                        UK payrolled employment rose 71k or 0.2% mom in August. Comparing with the same month a year ago, payrolled employees rose 803k to 2.8% yoy. Monthly pay rose 6.5% yoy. Claimant count rose 6.3k, versus expectation of -9.2k decline.

                        Unemployment rate dropped from 3.8% to 3.6% in the three months to July. Employment rate was estimated at 75.4% while economic inactivity rate was estimated at 21.7%. Average earnings including bonus rose 5.5% 3moy, versus expectation of 5.2%. Average earnings excluding bonus rose 5.2% 3moy, versus expectation of 5.0% 3moy.

                        Full release here.

                        US 10-year yield extending rally ahead of CPI

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                          ActionForex.com
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                          US consumer inflation data will catch all attention today. Headline CPI is expected to decline -0.1% mom in August, with annual rate slowed from 8.5% yoy to 8.1% yoy. On the other hand, core CPI is expected rise 0.3% mom, with annual rate accelerated from 5.9% yoy to 6.0% yoy.

                          Today’s data is unlikely to alter Fed’s decision on on September 21, where markets are pricing in 88% chance of another 75bps hike. While inflation is starting to slow, the decline in energy prices could free up some money for consumer to spend, which supports the economy. Fed’s tightening will continue and there is a consensus that interest rate would reach 4% level by early next year.

                          Regarding market reaction to the data, some attention will be on 10-year yield, which rose 0.041 to 3.362 overnight. Current rise form 2.525 is expected to continue as long as 3.176 support holds, to retest 3.483 high. Such development should give Yen crosses a lift in general. But the next big move would depend more on whether 3.483 could be taken out decisively, at a later stage.

                          Australia NAB business confidence rose to 10, conditions rose to 20

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                            ActionForex.com
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                            Australia NAB business confidence improved from 8 to 10 in August. Business conditions rose from 19 to 20. Trading conditions rose from 26 to 30. Profitability conditions dropped from 18 to 16. Employment conditions also dropped from 18 to 16.

                            “The recent strength in business conditions carried into August,” said NAB Group Chief Economist Alan Oster. “Official data for retail sales in July confirmed spending remained robust, as suggested by the previous survey, and today’s release shows little sign that August was much different. Conditions are strong across most industries other than construction, where profitability remains a challenge.”

                            “Confidence rose again in August, as did other forward indicators in the survey,” said Oster. “Confidence took a hit around June as interest rates first began to rise but it seems that firms’ initial concerns about the impact have eased and a more positive outlook is prevailing, at least for the time being.”

                            Full release here.

                            NIESR: UK GDP to contract -0.1% in Q3, remains in recession

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                              NIESR projects UK GDP to contract -0.1% in Q3, with growth slowing as inflation maintains its drag on consumer demand and confidence.

                              “GDP grew by 0.2 per cent in July following the large fall of 0.6 per cent in June. This was stronger than we had expected and was driven by a rise in services, particularly consumer-facing services, with production and construction continuing to fall. That said, GDP in the three months to July was flat relative to the previous three months and we think the UK economy remains in recession.” Stephen Millard Deputy Director for Macroeconomic Modelling and Forecasting, NIESR.

                              Full release here.

                              UK GDP grew 0.2% mom in July, services up but production and construction down

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                                ActionForex.com
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                                UK GDP grew 0.2% mom in July, below expectation of 0.3% mom. Services grew 0.4% mom. Production dropped -0.3% mom. Construction also contracted -0.8% mom. For the three months to July, GDP was flat compared with the previous three months.

                                Also released, industrial production came in at -0.3% mom, 1.1% yoy, versus expectation of 0.4% mom, 2.0% yoy. Manufacturing production was at 0.1% mom, 1.1% yoy, versus expectation of 0.6% yoy. Goods trade deficit narrowed from GBP -22.8B to GBP -19.4B, versus expectation of GBP -23.2B.

                                ECB Elderson: Very important that inflation expectations not become unanchored

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                                  ECB Executive Board member Frank Elderson told Dutch television, “it’s very important that the expectations that the people have on how the inflation will develop in the medium to long term will not become unanchored.”

                                  “It is vital that people and companies or actors in the economy in general maintain their trust that we as the ECB will reach our of target of 2 per cent inflation,” Elderson said.

                                  Bundesbank Nagel: Further clear steps must follow if inflation stays the same

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                                    Bundesbank President Joachim Nagel said in a radio interview on Sunday that last week’s 75bps hike was a “clear sign and if the inflation picture stays the same, further clear steps must follow.”

                                    He added that inflation may peak at more than 10% in December. “In the course of 2023, the inflation picture is likely to weaken somewhat,” he said. Still, the rate “is likely to be at a far-too-high level of over 6%.”

                                    While there “currently are some indications that the economy could stagnate or even contract in the second half of 2022 and that this trend could continue into next year, any recession may be shallow,” Nagel added.

                                    “In the end, stable prices are much more important for medium-term, long-term growth, for a good outlook for the euro area,” he said. “We may need to overcome a dry spell, but for now at least it looks like this dry spell and the decline in economic output will not be severe.”

                                    Canada employment dropped -39.7k in Aug, unemployment rate jumped to 5.4%

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                                      ActionForex.com
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                                      Canada employment dropped -39.7k in August, much worse than expectation of 15.0k growth. Unemployment rate jumped from 4.9% to 5.4%, above expectation of 5.0%. That’s the first rise in unemployment rate in seven months. Participation rate ticked up 0.1% to 64.8%. Average hourly wages of employees rose 5.4% yoy.

                                      Full release here.

                                      ECB Knot: we only have one problem on our plate – inflation

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                                        ECB governing council member Klaas Knot told Dutch radio BNR today, “We expect inflation to keep rising in the coming months, so that means we only have one problem on our plate: inflation. And that will mean that we will have to slow economic growth at least a bit to reduce inflation”.

                                        Another Governing Council member Peter Kazimir said , “Inflation remains unacceptably high. The priority now is to vigorously continue the normalization of monetary policy.” While not commenting on the terminal rate of the current cycle, he said that ECB was still “quite far” from neutral rate.

                                        Francois Villeroy de Galhau said, the central bank must be “orderly and determined” with rate hike. He expects inflation to stay high next year and come back to 2% target by 2024.

                                        BoJ Kuroda: We will watch exchange rate moves carefully

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                                          ActionForex.com
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                                          BoJ Governor Haruhiko Kuroda said, “When the yen is moving 2 to 3 yen per day, that’s a rapid move. We will watch exchange rate moves carefully.” The comment came after Kuroda met Prime Minister Fumio Kishida, where currency matters were discussed.

                                          Separately, Finance Minister Shunichi Suzuki said the the government would not rule out any options on foreign exchange moves.

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