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BoJ stands pat, maintains dovish bias

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    ActionForex.com
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    BoJ left monetary policy unchanged as widely expected, by 8-1 vote, with dove Goushi Kataoka dissented again. Under the yield curve control framework, short-term policy interest rate is held at -0.10%. 10-year JGB yield target is kept at around 0%, without upper limit on JGB purchases. BoJ also clarified that it will offer to purchase 10-year JGBs at 0.25% every business day through fixed-rate purchase operations.

    The central bank also reiterated that it will “expanding the monetary base until the year-on-year rate of increase in the observed consumer price index (CPI, all items less fresh food) exceeds 2 percent and stays above the target in a stable manner.”

    It also pledged that it “will not hesitate to take additional easing measures if necessary; it also expects short- and long-term policy interest rates to remain at their present or lower levels.”

    In the new economic projections, GDP is forecast to grow:

    • 2.9% in fiscal 2022 (revised down from 3.8%)
    • 1.9% in fiscal 2023 (revised up from 1.1%)
    • 1.1% in fiscal 2024 (new).

    CPI (all items less fresh food) is expected to be at:

    • 1.9% in fiscal 2022 (revised up from 1.1%).
    • 1.1% in fiscal 2023 (unchanged).
    • 1.1% in fiscal 2024 (new).

    Full statement here.

    Full Outlook for Economic Activity and Prices here.

    New Zealand ANZ business confidence ticked down to -42 in Apr

      By
      ActionForex.com
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      New Zealand ANZ business confidence dropped slightly from -41.9 to -42.0 in April. Own activity outlook rose from 3.3 to 8.0. Export intentions rose from 7.9 to 9.5. Investment intentions dropped from 5.2 to 3.1. Employment intentions dropped from 12.3 to 9.4. Cost expectations dropped from 95.9 to 95.5. Inflation expectations rose further from 5.51 to 5.92.

      ANZ said: “With plenty of wage and other cost inflation in the pipeline, it’ll be some time before the RBNZ can conclude that they’re getting ahead of the inflation game. We continue to expect another 50bp hike in May, and steady 25bp increases thereafter taking the OCR to a peak of 3.5%.”

      Full release here.

      NZ goods exports rose 17% yoy in Mar, imports rose 25% yoy

        By
        ActionForex.com
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        New Zealand goods exports rose 17% yoy to NZD 6.7B in March. Goods imports rose 25% yoy to NZD 7.1B. Trade balance was a deficit of NZD -392m, versus expectation of NZD -648m.

        As a result of the monthly deficit in March 2022, the annual goods trade deficit has further widened to reach NZD -9.1B for the March 2022 year.

        Full release here.

        Germany economy ministry cut 2022 GDP growth forecast sharply to 2.2%

          By
          ActionForex.com
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          Germany’s economy ministry cuts 2022 GDP growth forecast to 2.2%, down from January’s projection of 3.6%. Nevertheless, 2023 GDP growth forecast is upgraded slightly from 2.3% to 2.5%. It expects Russia’s invasion of Ukraine, resulted sanctions and higher energy prices will weigh on output.

          Inflation is forecast to be at 6.1% in 2022 and 2.8% in 2023, on rising energy prices and consumer prices.

          US trade deficit widened to USD 125.3B in Mar

            By
            ActionForex.com
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            US goods exports rose USD 11.4B over the month to USD 169.3B in March. Goods imports rose USD 30.3B to USD 294.6B. Trade deficit came in at USD -125.3B, versus expectation of USD -105.0B.

            Wholesale inventories rose2.3% mom to USD 837.7B. Retail inventories rose 2.0% mom to USD 684.3B.

            Full release here.

            GBP/CAD extending down trend towards 2016 low

              By
              ActionForex.com
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              GBP/CAD’s down trend continues this week on broad based selloff in Sterling, while Canadian Dollar has been relatively resilient. Current decline should target 161.8% projection of 1.7623 to 1.6636 from 1.7375 at 1.5778. This lies inside key long term support zone between 1.5746 (2016 low) and 1.5875 (2019 low).

              The question is whether such 1.5746/5875 support zone would hold. If not, that would firstly mark the resume of the down trend from 2.0971 (2015 high). More importantly, that would also raise the chance of resumption of down trend from 2.5471 (2002 high) through 1.4831 (2010 low).

              Germany Gfk consumer sentiment plunged to -26.5, new historic low

                By
                ActionForex.com
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                Germany Gfk consumer sentiment for May dropped significantly from -15.7 to -26.5, well below expectation of -15.7. That’s the second month of decline, as well as a new historic low.

                Looking at some details for April, economic expectations plunged from -8.9 to -16.4. Income expectations dropped from -22.1 to -31.3. Propensity to buy dropped from -2.1 to -10.6.

                “The war in Ukraine and rates of high inflation have dealt a severe blow to consumer sentiment. This means that hopes of a recovery from the easing of pandemic-related restrictions have finally been dashed,” explains Rolf Bürkl, GfK consumer expert.

                Full release here.

                NASDAQ hits new low as medium term correction resumes

                  By
                  ActionForex.com
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                  NASDAQ lost -3.95%% overnight and closed at a new 2022 low. The development suggests that whole corrective fall from 16212.22 is resuming. More importantly, a key medium term fibonacci support at 38.2% retracement of 6631.41 to 16212.22 at 12552.35 is taken out. If this fibonacci support cannot be reclaimed soon, the decline ahead could be rather deep.

                  Tentatively, NASDAQ should target 100% projection of 16212.22 to 12587.88 from 14646.90 at 11022.56 next. There should be strong support around this level, and above 61.8% retracement of 6631.42 to 16212.22 at 10291.28 to contain downside to finish the correction.

                  Australia CPI accelerated to 2.1% qoq, 5.1% yoy, highest since 2000

                    By
                    ActionForex.com
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                    Australia CPI rose 2.1% qoq in Q1, accelerated from Q3’s 1.3% qoq, above expectation of 1.7% qoq. For the 12-month period, CPI accelerated to 5.1% yoy, up from 3.5% yoy, above expectation of 4.6% yoy. RBA trimmed mean CPI also accelerated from 2.6% yoy to 3.7% yoy, above expectation of 3.4% yoy.

                    Head of Prices Statistics at the ABS, Michelle Marquardt, said “The CPI recorded its largest quarterly and annual rises since the introduction of the goods and services tax (GST) (in 2000)”

                    “Strong demand combined with material and labour supply disruptions throughout the year resulted in the highest annual inflation for new dwellings since the introduction of the GST. Annual price inflation for automotive fuel was the highest since the 1990 Iraqi invasion of Kuwait.”

                    Marquardt said: “Annual trimmed mean inflation was the highest since 2009. This reflected the broad-based nature of price rises, as the impacts of supply disruptions, rising shipping costs and other global and domestic inflationary factors flowed through the economy.”

                    Full release here.

                    US consumer confidence dropped slightly to 107.3, inflation and war to pose downside risks

                      By
                      ActionForex.com
                      -

                      US Conference Board Consumer Confidence Index dropped slightly from 107.6 to 107.3 in April, below expectation of 108.5. Present Situation Index dropped from 153.8 to 152.6. Expectations Index rose from 76.7 to 77.2.

                      “Consumer confidence fell slightly in April, after a modest increase in March,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index declined, but remains quite high, suggesting the economy continued to expand in early Q2. Expectations, while still weak, did not deteriorate further amid high prices, especially at the gas pump, and the war in Ukraine. Vacation intentions cooled but intentions to buy big-ticket items like automobiles and many appliances rose somewhat.”

                      “Still, purchasing intentions are down overall from recent levels as interest rates have begun rising. Meanwhile, concerns about inflation retreated from an all-time high in March but remained elevated. Looking ahead, inflation and the war in Ukraine will continue to pose downside risks to confidence and may further curb consumer spending this year.”

                      Full release here.

                      US durable goods orders rose 0.8% mom in Mar, ex-transport orders up 1.1% mom

                        By
                        ActionForex.com
                        -

                        US durable goods orders rose 0.8% mom to USD 275.0B in March, below expectation of 1.0% mom. Ex-transport orders rose 1.1% mom, above expectation of 0.5% mom. Ex-defense orders rose 1.2% mom. Computers and electronic products, up two of the last three months, led the increase, USD0.7B or 2.6% to USD 26.3B.

                        Full release here.

                        ECB Kazaks: Rate hike in July is possible and reasonable

                          By
                          ActionForex.com
                          -

                          ECB Governing Council member Martins Kazaks said “a rate rise in July is possible and reasonable” and “ending the Asset Purchases Programme in early July is appropriate,”

                          “Markets are pricing two or three 25 basis point steps by the end of the year. I have no reason to object to this, it’s quite a reasonable view to take,” he said. “Whether it happens in July or September is not dramatically different, but I think July would be a better option.”

                          Japan unemployment rate dropped to 2.6% in Mar, lowest in 2 years

                            By
                            ActionForex.com
                            -

                            Japan unemployment rate dropped from 2.7% to 2.6% in March, better than expectation of 2.7%. That;s also the lowest rate since April 2020. Number of workers rose 180k while unemployed dropped -90k. Job-to-applicant ratio rose 0.01 pts to 1.22.

                            “The drop in unemployment rate indicates signs of recovery” in the labour market, a government official told a media briefing. “But the impact of the pandemic appears to be lingering and requires close attention.”

                            IMF slashes Asia Pacific growth forecast to 4.9%, warns of stagflationary outlook

                              By
                              ActionForex.com
                              -

                              IMF lowered growth forecast for Asia Pacific by -0.5% to 4.9% in 2022. Inflation forecast, on the other hand, was raised by 1% to 3.4%.  Anne-Marie Gulde-Wolf, acting director of the IMF’s Asia and Pacific Department, warned, “the region faces a stagflationary outlook, with growth being lower than previously expected, and inflation being higher.”

                              In a blog post, she also warned of three main headwinds to the outlook. An escalation of the war in Ukraine would further increase food and energy prices. A tightening of US monetary policy that is materially faster or larger than currently expected by markets—or both—would have large spillovers to Asia. Also, a greater slowdown in China’s economy due to broader virus lockdowns or other risk factors such as the continued weakness in the real estate sector, would also have large implications for the region

                              “More broadly, a potential fragmentation of supply chains and added geopolitical tensions will remain risks for the longer term for a region that has flourished in recent decades from rising wealth and other economic gains from globalization,” she added.

                              Full blog post here.

                              BoC Macklem: Strong economy, high inflation, higher interest rates needed

                                By
                                ActionForex.com
                                -

                                BoC Governor Tiff Macklem delivered three main messages to a House of Commons Committee. First, the Canadian economy is strong… Second, inflation is too high…. Third, we need higher interest rates.”

                                “The economy needs higher rates and can handle them….,” he said, “We also need higher interest rates to keep Canadians’ expectations of inflation anchored on the target. We can’t control or even influence the prices of most internationally traded goods. But if Canadians’ expectations of inflation stay anchored on the 2% target, inflation in Canada will come back down when global inflationary pressures from higher oil prices and clogged supply chains abate.”

                                “Canadians should expect interest rates to continue to rise toward more normal settings. By more normal we mean within the range we consider for a neutral rate of interest that neither stimulates nor weighs on the economy. We estimate this rate to be between 2% and 3%,” he added.

                                Full remarks here.

                                AUD/JPY and NZD/JPY in deep correction to recent up trend

                                  By
                                  ActionForex.com
                                  -

                                  AUD/JPY is under some heavy selling today. The development should confirm that a short term top was formed at 95.73, on bearish divergence condition in 4 hour MACD. It’s now correcting the whole rally from 80.34. Deeper fall should be seen to 38.2% retracement of 80.34 to 95.73 at 89.85. Break of 93.27 minor resistance is needed to indicate completion of the pull back, or risk will stay on the downside.

                                  Similarly, NZD/JPY is also in correction to rise from 75.22 to 87.33. Deeper decline could be seen to 38.2% retracement of 75.22 to 87.33 at 82.70. Break of 85.85 minor resistance is needed to indicate completion of the pull back, or risk will stay on the downside too.

                                  China cuts FX reserve ratio by 100bps to stabilize Yuan

                                    By
                                    ActionForex.com
                                    -

                                    China’s PBOC announce to cut foreign exchange reserve ratio of financial institutions by 100 basis point, from 9.00% to 8.00%. The move is to improve the ability of financial institutions to use foreign exchange funds, and thus help stabilize Yuan from recent free fall.

                                    USD/CNH retreats mildly after the release. But after all, break of 6.5214 support is needed to be the first sign of short term topping. Otherwise, USD/CNH’s recent rally is still expected to continue. That is, Yuan’s decline is not finished yet.

                                    Chinese stocks and Yuan dive on fear of lockdown spread

                                      By
                                      ActionForex.com
                                      -

                                      The markets in China were in free fall today on fears on the impact of the spread of coronavirus, and more importantly, imposition of strict covid zero policy and lockdowns. Beijing is the believed to be evolving into the next Shanghai, after the government ordered residents not to leave the Chaoyang district.

                                      The Shanghai SSE dropped -5.13% to 2928.51, the first close below 3000 handle since 2020. In any case, near term outlook will remain bearish as long as 3140.89 resistance holds. Deeper decline lies ahead.

                                      More importantly, based on current momentum, long term fibonacci support at 61.8% retracement of 2440.90 to 3731.68 at 2933.97 is unlikely to be defended. That is, the whole down trend from 3731.68 could extend in to 2440.90/2646.80 support zone before bottoming

                                      The decline in Chinese Yuan also looks unstoppable, even after the worst week since 2015 last week. USD/CNH (offshore Yuan) surged through 6.6 handle today, breaking through another important medium term resistance at 6.5872 (2021 high).

                                      The next hurdle is long term fibonacci resistance at 38.2% retracement of 7.1961 (2020 high) to 6.3057 (2022 low) at 6.6458. Strong resistance is expected there to cap upside on first attempt. But overall, break of 6.5214 support is needed to indicate short term topping. Otherwise, outlook will stay bullish in case of retreat. That is, there would be more downside in Yuan then not.

                                      Germany Ifo business climate rose to 91.8, shows resilience after initial shock of Russian attack

                                        By
                                        ActionForex.com
                                        -

                                        Germany Ifo business climate rose from 90.8 to 91.8 in April, above expectation of 88.1. Current assessment index rose from 97.0 to 97.2, above expectation of 95.0. Expectations index rose from 85.1 to 86.7, above expectation of 82.3.

                                        By sector, manufacturing rose from -3.6 to -1.0. Services rose from 0.8 to 5.4. Trade dropped from -12.0 to -13.3. Construction dropped sharply from -12.3 to -20.0.

                                        Ifo said, the improvement was “due primarily to less pessimism in companies’ expectations. Their assessments of the current situation are minimally better. After the initial shock of the Russian attack, the German economy has shown its resilience.”

                                        Full release here.

                                        Ethereum breaking down, bitcoin to follow

                                          By
                                          ActionForex.com
                                          -

                                          Ethereum follows broad based risk-off sentiment lower today and dips to as low as 2838.30 so far. The development is in-line with the view that corrective pattern from 2157.05 has completed with three waves up to 3577.70. Further decline is now expected as long as 3177.25 resistance holds.

                                          Sustained break of near term channel support, and then 2490.05 support, should sent the stage for resumption of whole down trend form 4863.75. Next target is 61.8% projection of 4863.75 to 2157.04 from 3577.70 at 1804.95.

                                          Similarly, bitcoin should follow and break through 38539 support soon, to resume the decline from 48226. Further break of 37550 support should set the stage for resumption of down trend from 68986. Next target is 61.8% projection of 68986 to 33000 from 48226 at 25986.

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