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Australia NAB business confidence dropped to 12, come back to earth

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    Australia NAB business confidence dropped from 20 to 12 in November. Business conditions improved from 10 to 12. Looking at some details, trading conditions rose from 15 to 16. Profitability conditions rose were unchanged at 8. Employment conditions rose from 6 to 11.

    “Confidence remains high across states and industries, albeit it has come back to earth a little after the optimism associated with the end of lockdowns,” said NAB Chief Economist Alan Oster.

    “Forward indicators are also very strong with a rise in capital expenditure a welcome sign that businesses are beginning to look towards a period of expansion. These results align with the strong rebound in activity that we believe is now underway, as well as a positive outlook for the coming months with vaccination rates now very high.”

    Full release here.

    BoC Macklem: Medium and longer-run inflation expectations well anchored on target

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      The Bank of Canada agreed with the federal government to keep the flexible inflation targeting framework the next five years. Also, monetary should continue to support maximum sustainable employment.

      Governor Tiff Macklem said, “even as the complications of reopening the global economy have caused inflation in Canada and many other countries to rise, medium and longer-run inflation expectations in Canada have remained well anchored on the 2 percent target.”

      “Keeping inflation expectations well anchored is key to completing the recovery and getting inflation back to target,” he noted.

      OPEC: Impact of Omicron to be mild and short-lived

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        In the December Monthly Oil Market Report, OPEC said the impact of Omicron is projected to be “mild and short-lived, as the world becomes better equipped to manage COVID-19 and its related challenges.”

        “Some of the recovery previously expected in the fourth quarter of 2021 has been shifted to the first quarter of 2022, followed by a more steady recovery throughout the second half of 2022,” OPEC said.

        OPEC expects oil demand to average 99.13m bpd in Q2 of 2022, up 1.11m bpd from its forecast last month.

        Germany wholesale price rose at record 16.6% yoy in Nov

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          ActionForex.com
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          Germany wholesale price index rose 1.3% mom, 16.6% yoy in November. The annual rate was the highest since record began back in 1962.

          Destatis said: “The high rates of change for wholesale prices in annual comparison derive from increased prices for raw materials and intermediate products. The largest impact on the year-on-year price rate in wholesale trade had the increased prices for mineral oil products (+62.4%).”

          Full release here.

          NZIER: NZ inflation to stay above RBNZ target mid-point through to 2025

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            NZIER lowered near-term economic outlook of New Zealand, reflecting the impact of pandemic restrictions, “which turned out to persist for longer than initially expected”. For the year to March 2022, GDP growth was revised down from 4.5% to 4.3%. But growth for 2023 was revised up from 4.5% to 4.6%.

            Growing capacity pressures are contributing to a sharp rise in inflation. CPI is expected to 5.1% in 2022 (up from prior estimate of 3.0%), and remain elevated above RBNZ’s inflation target mid-point of 2% “through to 2025”.

            NZD trade-weighted index forecast was revised lower “partly reflecting market disappointment at smaller than expected interest rate increased from the Reserve Bank in its November meeting.” NZD TWI is expected to peak at 74.5 for the year to March 2023 (revised down from 74.8), then ease to 72.7 in 2025.

            Full release here.

            Japan Tankan large manufacturing index unchanged a 18, outlook ticked down

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              According to the BoJ’s Tankan survey in Q4, large manufacturing index was unchanged at 18, below expectation of 19. Large manufacturing outlook dropped from 14 to 13, below expectation of 19.

              Non-manufacturing index rose sharply from 2 to 9, well above expectation of 6. That’s the highest reading since December 2019. Non-manufacturing outlook also rose from 3 to 8, but missed expectation of 10.

              Output price index for large enterprises jumped from 10 to 16, highest since the 1980s. Input prices index also rose from .37 to 49, highest since 2008.

              Large firms are expecting to increased capital spending by 9.3% in the year ending in March 2022, lower than expectation of 9.8%.

              Also released, machine orders rose 3.8% mom in October, above expectation of 2.1% mom. That’s the first rise in three months.

              NIESR forecast UK GDP to grow 0.6% mom in Nov, 1.0% qoq in Q4

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                ActionForex.com
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                NIESR forecast UK GDP growth to reach 0.6% mom in November, before significant concerns about transmission of Covid-19 began to return, falling to 0.3% in December. Overall for Q3, GDP growth is projected to be 1.0% qoq, following the 1.3% qoq in Q3.

                NIESR added that “Omicron is expected to restrain growth in the coming months but not to cause economic disruption anywhere near the scale of 2020, with households and businesses having adapted economic behavior more with each wave.”

                Full release here.

                US CPI rose to 6.8% yoy, highest since 1982

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                  ActionForex.com
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                  US CPI rose 0.8% mom in November, above expectation of 0.7 % mom. For the 12-month period, CPI accelerated to 6.8% yoy, up from 6.2% yoy, matched expectations. That’s the highest rate since June 1982.

                  CPI core rose 0.5% mom, matched expectations. CPI core accelerated to 4.9% yoy, up from 4.6% yoy, matched expectations. Energy index rose 33.3% yoy. Both are highest level in at least 13 years.

                  Full release here.

                  UK GDP grew 0.1% mom in Oct, Services back at pre-pandemic level

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                    UK GDP grew 0.1% mom in October, below expectation of 0.3% mom. GDP remained -0.5% below pre-pandemic level in February 2020.

                    Services grew 0.4% mom, back at pre-pandemic level. Production dropped -0.6% mom, at -2.1% below pre-pandemic level. Manufacturing rose 0.0% mom, at -2.5% below pre-pandemic level. Construction dropped -1.8% mom, at -2.8% below pre-pandemic level.

                    Full release here.

                    New Zealand BusinessNZ manufacturing dropped to 50.6, soft growth and rising inflation

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                      ActionForex.com
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                      New Zealand BusinessNZ Performance of Manufacturing index dropped from 54.3 to 50.6 in November. Looking at some details, production dropped from 53.2 to 52.2. Employment dropped from 51.7 to 48.2. New orders rose from 54.2 to 54.7. Finished stocks dropped from 54.6 to 48.3. Deliveries dropped from 59.9 to 42.9.

                      BNZ Senior Economist, Doug Steel stated that “the PMI implications for economic (and employment) growth seem clear – soft.  But with obvious difficulties remaining on the supply side, we’d suggest that inflation is still rising.”

                      Full release here.

                      BoC Gravelle: Supply chain disruptions remains an important upside risk

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                        ActionForex.com
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                        BoC Deputy Governor Toni Gravelle said in a speech that in the near term, Omicron triggered a sharp drop in oil prices. But further out, “given its potential to restrain the transition to more balanced consumption patterns between goods and services, it could exacerbate upward price pressure on the goods that are experiencing supply constraints.”

                        “Supply chain disruptions and related cost pressures continue to be an important upside risk,” he added. BoC will “conduct a full assessment of this risk in January when we update our projection for the economy and inflation.”

                        Full speech here.

                        US initial jobless claims dropped to 184k, lowest since 1969

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                          ActionForex.com
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                          US initial jobless claims dropped -43k to 184k in the week ending December 4, much better than expectation of 225k. That’s also the lowest level since September 6, 1969. Four-week moving average of initial claims dropped -21k to 219k, lowest since March 7, 2020.

                          Continuing claims rose 38k to 1992k in the week ending November 27. Four-week moving average of continuing claims dropped -54k to 2028k, lowest since March 14, 2020.

                          Full release here.

                          Swiss SECO expects significant slowdown in winter period, lowers 2022 GDP growth forecast

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                            ActionForex.com
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                            SECO lowered Swiss GDP growth forecast for 2022 from 3.4% to 3.0%. GDP growth is projected to slow further to 2.0% in 2023, as the economy normalizes. 2021 GDP growth forecast is revised up slightly from 3.2% to 3.3%.

                            It said that “international supply and capacity bottlenecks are putting pressure on the industrial sector and causing sharp price increases globally”. Also, “uncertainty surrounding the pandemic has recently become strongly accentuated and several countries have stepped up their containment measures.”

                            SECO expects a “significant slowdown in economic growth globally and in Switzerland in the 2021/22 winter period”. But economy recovery is “not, however, expected to come to standstill in the medium term”.

                            Full release here.

                            Germany export rose 4.1% mom in Oct, imports rose 5.0% mom

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                              ActionForex.com
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                              In calendar and seasonally adjusted term, Germany export rose 4.1% mom to EUR 121.3B in October. Imports rose 5.0% mom to EUR 108.5B. Trade surplus narrowed to EUR 12.5B, down from EUR 13.2B, below expectation of EUR 12.9B. Over the year, exports rose 8.1% yoy, while imports rose 17.3% yoy.

                              In calendar and seasonally adjusted term, exports were 3.8% higher than pre-pandemic level in February 2020. Imports were 13.5% higher.

                              Full release here.

                              China CPI rose to 2.3% yoy in Nov, PPI slowed from 26-yr high to 12.6% yoy

                                By
                                ActionForex.com
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                                China CPI accelerated to 2.3% yoy in November, up from 1.5% yoy, but below expectation of 2.5% yoy. That’s nonethless the highest level since August 2020. PPI slowed to 12.9% yoy, down from October’s 26-year high of 13.5% yoy, above expectation of 12.6%.

                                “As policies to stabilise prices and ensure supply have stepped up, the rapid surge in coal, metal and other energy and raw material prices has been initially contained, leading to a slowdown in PPI,” NBS senior statistician Dong Lijuan said in a statement accompanying the release.

                                Japan business conditions improved sharply as led by non-manufacturers

                                  By
                                  ActionForex.com
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                                  According to the Japanese government’s Business Outlook Survey, conditions for all large corporations improved notably from 3.3 to 9.6 in Q4. That’s the second quarter of positive reading. Conditions for large non-manufacturing jumped sharply from 1.5 to 10.4. Meanwhile, conditions for large manufacturers improved slightly from 7.0 to 7.9.

                                  Conditions for mid-sized companies also rose sharply from 0.2 to 10.7. Conditions for small companies rose from -18.0 to -3.0, but stayed negative for the 31st successive quarter.

                                  “With the severe situation caused by the impact of virus infections gradually easing, the survey results showed that (the economy) has been picking up, although some fields remain weak,” a government official told reporters.

                                  Full release here.

                                  New Zealand manufacturing sales dropped -2.2% qoq in Q3

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                                    ActionForex.com
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                                    New Zealand Manufacturing sales dropped -2.2% qoq, or NZD 674m in Q3. When adjusted for seasonal effects, 10 of the 13 manufacturing industries had lower volumes of sales in the quarter.

                                    The largest industry movements were: metal products (-17%), petroleum and coal products (-13%), transport equipment, machinery, and equipment (-8.8%).

                                    “Despite sales falls in several construction related manufacturing industries, increased prices for meat and dairy cushioned the blow for total manufacturing values,” business statistics manager Evie Rolinson-Purchase said.

                                    Full release here.

                                    BoC keeps interest rate at 0.25%, maintains forward guidance

                                      By
                                      ActionForex.com
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                                      BoC kept overnight rate target unchanged at effective lower bound of 0.25% as widely expected. Bank rate and deposit rate were held at 0.50% and 0.25% respectively.

                                      Also, the forward guidance on interest rate is maintained. BoC is “committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved”. And, “this happens sometime in the middle quarters of 2022”.

                                      BoC said recent data suggested that economy had “considerable momentum” into Q4. But, “the devastating floods in British Columbia and uncertainties arising from the Omicron variant could weigh on growth by compounding supply chain disruptions and reducing demand for some service”. BoC expected CPI inflation to remain elevated in the first half of 2022 and ease back towards 2 percent in the second half of the year.

                                      Full statement here.

                                      ECB Kazaks: Don’t preempt policy decisions because of Omicron uncertainty

                                        By
                                        ActionForex.com
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                                        ECB Governing Council member Martins Kazaks said in an interview that the PEPP emergency asset purchase program would still end as scheduled in March, despite Omicron.

                                        “At the current moment, we don’t know how the omicron variant will develop,” Kazaks said. “Unless it spills over into significant and large negative revisions to the outlook for growth, I don’t see that March — which the market has been expecting for some time and which we’ve been communicating in the past — should be changed.”

                                        “At the moment we simply know too little about omicron,” he said. “I see it important to remain data-driven and make our decisions step by step. So react to the data, rather than preempt decisions when uncertainty is way too high.”

                                        “If in February we see that it’s painful then of course we can change our views and that’s the issue of flexibility,” he said. “In my view, it’s possible both to restart PEPP or increase the envelope if it turns out to be necessary.”

                                        On inflation, Kazaks said, “to exactly what level will it land in 2023-24, of course, there’s lots of uncertainty.” Nevertheless, “my baseline remains that it slides to below 2%.”

                                        CAD/JPY in strong rebound as BoC in focus

                                          By
                                          ActionForex.com
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                                          With a light economic calendar, main focus will be on BoC monetary policy decision today. No change is expected as the central has just stopped asset purchases back in October. Also, at that statement, BoC had pushed forward the timing for the first rate hike to “sometime in the middle quarters of 2022”, compared with previous estimate of “the second half of 2022”. Given the uncertainty surrounding Omicron, the central bank will more likely keep the rhetoric unchanged than not.

                                          Some previews on BoC:

                                          Canadian Dollar is in strong rebound this week, partly on return of risk-on sentiment, in tandem with rebound in oil prices. CAD/JPY’s pull back from 93.00 could have completed at 87.68, after hitting 61.8% retracement of 84.65 to 93.00 at 87.83.

                                          Sustained trading above 55 day EMA (now at 89.78) will affirm this case and pave the way for retesting 93.00 high next. Also, given that CAD/JPY has defended medium term trend line support and 55 week EMA very well, the whole up trend from 73.80 could be ready to resume through 93.00 in this case.

                                          Nevertheless, another fall and sustained trading below 87.83 will turn focus back to 84.65 key medium term structural support.

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