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Fed Evans: Going to take us until the middle of next year to complete tapering

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    ActionForex.com
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    Chicago Fed President Charles Evans said in a virtual conference, “we learned back in 2013 that tapering these asset purchases was preferable for financial market functioning; that if we did a sudden stop on our purchases that wasn’t well received. It’s going to take us until the middle of next year to complete that”.

    “It’s going to take us until the middle of next year to complete that; we are going to be mindful of inflation; we’re going to be looking to see how much additional accommodation is boosting inflation; if indeed that is the case, we’ll be thinking about when the right time to start raising rates will be,” he added.

    US oil inventories dropped -2.1m barrels, WTI extending consolidation

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      ActionForex.com
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      US commercial crude oil inventories dropped -2.1m barrels in the week ending November 12, versus expectation of 1m rise. At 433.0m barrels, oil inventories are about -7% below the five year average for this time of year.

      Gasoline inventories dropped -0.7m barrels. Distillate inventories dropped -0.8m barrels. Propane/propylene dropped -0.2m barrels. Total commercial petroleum inventories dropped -8.9m barrels.

      WTI crude oil has little reaction to the data. It’s still extending the consolidation pattern from 85.92 short term top. For now, we’d continue to expect strong support from 78.54 to contain downside to bring rebound. This level is slightly above 55 day EMA at 78.47.

      Medium term up trend should resume sooner or later and the real test is from 61.8% projection of 33.50 to 77.16 from 61.90 at 88.88. However, firm break of 78.54 will turn near term outlook bearish for deeper pull back into 61.90/77.16 support zone.

      ECB Schnabel: Monetary policymakers need to focus on the entire range of possible outcomes

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        ActionForex.com
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        ECB Executive Board member Isabel Schnabel said in a speech, “inflation will remain higher for longer than previously anticipated”. In will “decline over the course of next year”, but, “uncertainty has increased around the pace and extent of the slowdown”.

        “In such situations of elevated uncertainty, monetary policymakers need to focus on the entire range of possible outcomes to ensure that they will be able to deliver on their mandate,” she added.

        “On the one hand, this means avoiding the mistake of a premature tightening of monetary policy in response to a temporary and possibly short-lived inflation spike. ”

        “On the other hand, it means keeping a watchful eye on the upside risks to inflation that financial markets currently anticipate and retain optionality to be able to act if needed, so as to maintain trust in our determination to defend price stability in a symmetric way and prevent a deanchoring of inflation expectations in both directions.”

        Full speech here.

        Canada CPI accelerated to 4.7% yoy in Oct, highest since 2003

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          ActionForex.com
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          Canada CPI accelerated to 4.7% yoy in October, up from September’s 4.4% yoy, matched expectations. That’s the highest reading since February 2003. Excluding energy, CPI rose 3.3% yoy, unchanged from September’s reading. On a monthly basis CPI rose 0.7% mom, largest gains since June 2020.

          CPI common was unchanged at 1.8% yoy, below expectation of 1.9% yoy. CPI median rose to 2.9% yoy, up from 2.8% yoy, matched expectations. CPI trimmed slowed to 3.3% yoy, down from 3.4% yoy, below expectation of 3.4% yoy.

          Full release here.

          UK CPI surged to 4.2% yoy in Oct, highest since 2011

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            ActionForex.com
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            UK CPI surged to 4.2% yoy in October, up from 3.1% yoy, above expectation of 3.8% yoy. That’s the highest level in nearly 10 years since November 2011. Core CPI also jumped to 3.4% yoy, up from 2.9% yoy, above expectation of 3.0% yoy. RPI also accelerated to 6.0% yoy, up from 4.9% yoy, above expectation of 5.6% yoy.

            PPI input came in at 1.4% mom, 13.0% yoy, versus expectation of 1.1% mom, 11.6% yoy. PPI output was at 1.1% mom, 8.0% yoy, versus expectation of of 0.7% mom, 6.8% yoy. PPI core output was at 0.8% mom, 6.5% yoy, matched expectations.

            Eurozone CPI finalized at 4.1% yoy in Oct, EU at 4.4%

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              ActionForex.com
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              Eurozone CPI was finalized at 4.1% yoy in October, up from September’s 3.4%. The highest contribution came from energy (+2.21%), followed by services (+0.86%), non-energy industrial goods (+0.55%) and food, alcohol & tobacco (+0.43%).

              EU CPI was finalized at 4.4%, up from September’s 3.6% yoy. The lowest annual rates were registered in Malta (1.4%), Portugal (1.8%), Finland and Greece (both 2.8%). The highest annual rates were recorded in Lithuania (8.2%), Estonia (6.8%) and Hungary (6.6%). Compared with September, annual inflation rose in all twenty-seven Member States.

              Full release here.

              Australia wage price index rose 0.6% qoq in Q3, back to pre-pandemic pattern

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                ActionForex.com
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                Australia wage price index rose 0.6% qoq 2.2% yoy in Q3. Private sector rose 0.6% qoq, 2.4% yoy. Public sector rose 0.5% qoq, 1.7% yoy. The three largest states were the main contributors to growth, New South Wales, Victoria, and Queensland. The most significant industries to contribute to growth this quarter were the Professional, scientific and technical services, Health care and social assistance and Construction industries.

                Michelle Marquardt, Head of Prices Statistics at the ABS, said: “This release of WPI shows the return of a more regular September quarter pattern of wage growth, following the labour market disruptions through 2020 and 2021.

                “Wage and salary reviews around the end of the financial year, scheduled enterprise agreements and annual award rises all contributed to growth. Pockets of wage pressure continued to build for skilled construction-related, technical and business services roles, leading to larger ad hoc rises as businesses looked to retain experienced staff and attract new staff.”

                Full release here.

                Japan exports growth slowed to 9.4% yoy on fall in car shipments

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                  ActionForex.com
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                  Japan exports rose 9.4% yoy to JPY 7.18B in October. That was the slowest expansion since a decline in February. By region, exports to China rose 9.5% yoy, slowed from 10.3% yoy in the prior month, on -46.8% yoy fall in car shipments. Exports to US grew just 0.4% yoy, also weighed down by -46.4% yoy fall in car exports. Imports rose 26.7% yoy to JPY 7.25B. Trade balance came at as JPY -0.07B deficit

                  In seasonally adjusted terms exports rose 2.7% mom to JPY 6.93B while imports rose 0.3% mom to JPY 7.38B. Trade deficit came in at JPY -0.44B.

                  Also from Japan, machine orders rose 0.0% mom in September, versus expectation of 1.8% mom.

                  Fed Daly: Ready to act as we get clearer signal

                    By
                    ActionForex.com
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                    San Francisco Fed Bank President Mary Daly urged patience in assess the economic development before acting on interest rates. “Reacting in response to things that aren’t likely to last will move us farther from — not closer to — our goals,” she said.

                    “Over the next several quarters, as tapering occurs, we will watch how the economy does and see whether inflation eases and workers come back.”

                    “As we get a clearer signal, we will be ready to act accordingly, continuing to provide or remove support as needed to ensure the economy settles at a sustainable place.”

                    BoC Schembri: Rate to stay at ELB until excess capacity is absorbed

                      By
                      ActionForex.com
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                      BoC Deputy Governor Lawrence Schembri said yesterday, “Our assessment of labour market conditions and underlying capacity and inflationary pressures is now more difficult. Consequently, more uncertainty exists around the timing of when the output gap will close and inflation will return sustainably to our 2-per-cent target.”

                      “We’ll keep the policy rate at the effective lower bound [0.25%] until excess capacity is absorbed … that excess capacity includes all the groups of employees that aren’t fully employed at this juncture,” Schembri said in response to a question after the speech.

                      “Now of course, one has to take into account that there’s going to be some natural friction in the labour market, people are going to move between jobs, so we’re not saying that there has to be zero unemployment,” he added.

                      Bullard: Fed should tack in a more hawkish direction

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                        ActionForex.com
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                        St. Louis Fed President James Bullard said Fed should “tack in a more hawkish direction” over the next few meetings. He warned, “if inflation happens to go away we are in great shape for that. If inflation doesn’t go away as quickly as many are currently anticipating it is going to be up to (Fed) to keep inflation under control.”

                        He added that if Fed increase the pace of tapering to USD 30B per month, that would open the door for a rate hike at the end of Q1. He has penciled in two hikes for next year and agreed with markets’ assessment. Also, he’s open to the idea of raising interest rate before tapering completes.

                        US retail sales rose 1.7% mom in Oct, ex-auto sales up 1.7% mom

                          By
                          ActionForex.com
                          -

                          US retail sales rose 1.7% mom in to USD 638.2B in October, above expectation of 1.2% mom. Total sales for the August through October period were up 15.4% from the same period a year ago.

                          Ex-auto sales rose 1.7% mom, above expectation of 1.2% mom. Ex-gasoline sales rose 1.5% mom. Ex-auto, ex-gasoline sales rose 1.4% mom.

                          Full release here.

                          Eurozone GDP grew 2.2% qoq in Q3, EU rose 2.1% qoq

                            By
                            ActionForex.com
                            -

                            According to flash estimate, Eurozone GDP grew 2.2% qoq in Q3, 3.7% yoy. Employment grew 0.9% qoq, 2.0% yoy.

                            EU GDP grew 2.1% qoq, 3.9% yoy. Employment grew 0.9% qoq, 2.1% yoy.

                            Full release here.

                            UK unemployment rate dropped to 4.3%, employment rate rose to 75.4%

                              By
                              ActionForex.com
                              -

                              UK unemployment rate dropped to 4.3% in the three months to September, down from 4.5%, better than expectation of 4.5%. Employment rate rose 0.4% to 75.4%, “driven by a record high net flow from unemployment to employment”. Payrolled employment rose 160k.

                              Wage growth disappointed, however, with average earnings excluding bonus up 4.9% 3moy versus expectation of 6.0%. Average earnings including bonus rose 5.8% 3moy, versus expectation of 7.0%. in October, claimant count dropped -14.9k.

                              Full release here.

                              EUR/CAD downside breakout on broad Euro weakness

                                By
                                ActionForex.com
                                -

                                EUR/CAD’s down trend finally resumed this week, following broad based selloff in Euro, and hit as low as 1.4211 so far. Current fall is part of the down trend from 1.5991. Next target is 100% projection of 1.5783 to 1.4580 from 1.5096 at 1.3893. For now, outlook will stay bearish as long as 1.4661 resistance holds, even in case of recovery.

                                Also, it should be noted that 1.4263 key support (2020 low) is now taken out by the cross. Fall from 1.5991 would extend through 1.3782 support before bottoming. Yet, we’re not seeing a strong bearish scenarios for pushing through 1.3019 yet. We’ll see how the downside momentum develops in the medium term.

                                RBA Lowe: Still plausible that rate won’t be raised before 2024

                                  By
                                  ActionForex.com
                                  -

                                  In a speech, RBA Governor Philip Lowe reiterated, “the latest data and forecasts do not warrant an increase in the cash rate in 2022.” Also, it’s “still plausible that the first increase in the cash rate will not be before 2024” even if underlying inflation hits 2.5%.

                                  He said, the central scenario is that underlying inflation will reach “middle of the target by the end of 2023”. That would be the first time in nearly seven years that inflation is at the mid-point. And, “this, by itself, does not warrant an increase in the cash rate.”

                                  For rate hike, RBA would like to see inflation “well within the 2–3 per cent range”, and, ” have a reasonable degree of confidence that it will not fall back again”. The “trajectory” is important, “with a slow drift up in underlying inflation having different policy implications to a sharp rise.”

                                  Another important consideration will be developments in the labor market. wages growth is used as one of the “guideposts” and “it is likely that wages will need to be growing at 3 point something per cent to sustain inflation around the middle of the target band.”

                                  Full speech here.

                                  Fed Barkin: It’s helpful to have a few months to evaluate

                                    By
                                    ActionForex.com
                                    -

                                    Richmond Fed President Tom Barkin said yesterday that it’s helpful to have “a few more months” to evaluate to see “where reality is in this economy, and if the need to act is there”. He added that “we’re not going to hesitate” to accelerate tapering to get ahead of inflation is needed”.

                                    But, “I personally think it’s very helpful for us to have a few more months to evaluate, is inflation going to come back to more normal levels? Is the labor market going to open up as people spend through some of this savings?”

                                    US Empire State manufacturing rose to 30.9, employees and price paid surged

                                      By
                                      ActionForex.com
                                      -

                                      US Empire State Manufacturing Survey general business conditions jumped to 30.9 in November, up from 19.8, above expectation of 20.2. 43% of respondents reported improved conditions while 12% reported worsened conditions.

                                      New orders rose 5 pts to 28.8. Shipment jumped 19 pts to 28.2. Delivery times dropped -5.8 to 38.0. Number of employees jumped 9 pts to 26.0, a record high. Average workweek also jumped 8 pts to 23.1. Price paid rose 4 pts to 83.0. Price paid rose 7 pts to 50.8, a record high.

                                      Full release here.

                                      ECB Lagarde: Conditions for rate hike very unlikely to be satisfied next year

                                        By
                                        ActionForex.com
                                        -

                                        In a European Parliament committee hearing, ECB President Christine Lagarde said, “growth momentum is moderating to some extent owing to supply bottlenecks and the rise in energy prices.” Consumer spending is “solid”, but shortages of materials, equipment and labour are “weighing on manufacturing production, weakening the near-term outlook.” “Although the duration of supply constraints is uncertain, they are likely to persist for several months and gradually ease only during 2022,” she added.

                                        Lagarde also reiterated that the upswing in inflation is driven by three primary forces, energy prices, demand outpacing constrained supply, and reversal effect of German VAT cut. “The latter factor will fall out of the inflation calculation from January 2022 but the other two may last longer.” “As a result, we still see inflation moderating in the next year, but it will take longer to decline than originally expected,” she said.

                                        On monetary policy, she said the conditions for rate hike are “very unlikely to be satisfied next year”. Intentions on further calibration of bond purchases will be announced in December. But “even after the expected end of the pandemic emergency, it will still be important that monetary policy – including the appropriate calibration of asset purchases – supports the recovery throughout the euro area and the sustainable return of inflation to our target of two per cent.”

                                        Full introductory statement here.

                                        Eurozone exports rose 10.0% yoy in Sep, imports rose 21.6% yoy

                                          By
                                          ActionForex.com
                                          -

                                          Eurozone exports of goods to the rest of the world rose 10.0% yoy to EUR 209.3B in September. Imports rose 21.6% yoy to EUR 202.0B. As a result, Eurozone recorded a EUR 7.3B surplus. Intra-Eurozone trade rose 16.4% yoy to EUR 191.5B.

                                          In seasonally adjusted term, Eurozone exports dropped -0.4% mom to EUR 201.4B. Imports rose 1.5% mom to EUR 195.3%. Trade surplus narrowed to EUR 6.1B. Intra-Eurozone trade rose EUR 0.8B to EUR 182.9B.

                                          Full release here.

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