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Eurozone retail sales rose 0.3% mom in Aug, EU up 0.3% mom

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    ActionForex.com
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    Eurozone retail sales rose 0.3% mom in August, well below expectation of 0.8% mom rise. Volume of retail trade increased by 1.8% for non-food products, while it fell by 0.1% for automotive fuels and by 1.7% for food, drinks and tobacco.

    EU retail sales rose 0.3% mom. Among Member States for which data are available, the highest monthly increases in total retail trade were registered in Malta (+2.7%), Ireland (+2.5%) and Slovakia (+2.0%). The largest decreases were observed in Denmark (-1.4%), Estonia and France (both -1.2%).

    Full release here.

    UK PMI construction dropped to 52.6, severe loss of momentum

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      ActionForex.com
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      UK PMI Construction dropped to 52.6 in September, down from August’s 55.2, missed expectation of 53.9. Markit said output growth eased for the third month running. Sub-contractor charges increased at survey-record pace. Widespread supply shortages led to rapid cost inflation.

      Tim Moore, Director at IHS Markit said: “September data highlighted a severe loss of momentum for the construction sector as labour shortages and the supply chain crisis combined to disrupt activity on site. The volatile price and supply environment has started to hinder new business intakes… Shortages of building materials and a lack of transport capacity led to another rapid increase in purchase prices… Measured overall, prices charged by sub-contractors increased at the fastest rate since the survey began in April 1997.”

      Full release here.

      BoJ Kuroda: No pressing need for firms to raise wages and selling prices

        By
        ActionForex.com
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        BoJ Governor Haruhiko Kuroda said in a speech, Japan’s economy has “picked up”, led by exports and the manufacturing sector. “If Japan can simultaneously protect public health and improve consumption activities through the use of vaccination certificates, for example, the economic recovery trend is very likely to become more pronounced, even in the services sector, also supported by the materialization of pent-up demand,” he added.

        On the contrasting development in CPI compared with the US, Kuroda said demand in Japan “has not recovered as rapidly as that in the U.S”. Also, “many Japanese firms have essentially maintained their labor, supply-side constraints in Japan have not been as severe as in the U.S., and there has been no pressing need for firms to raise wages and selling prices.”

        Full speech here.

        NZD/USD dips mildly after RBNZ hike

          By
          ActionForex.com
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          NZD/USD dips mildly after RBNZ rate hike but is bounded in very tight range. Rebound from 0.6858 is limited by 0.6981 minor resistance so far. Hence, fall from 0.7169 is still mildly in favor to extend lower. Break of 0.6858 will target 0.6804 low first.

          Also, NZD/USD is still staying in the corrective pattern from 0.7463 high. Break of 0.6804 will target 38.2% retracement of 0.5467 to 0.7463 at 0.6701. This will remain the favored case as long as 0.7169 resistance holds, even in case of stronger rebound.

          RBNZ hikes OCR to 0.50%, maintains hawkish bias

            By
            ActionForex.com
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            RBNZ raised the Official Cash Rate by 25bps to 0.50% as widely expected, as “it is appropriate to continue reducing the level of monetary stimulus so as to maintain low inflation and support maximum sustainable employment.” It maintains a hawkish bias and said, “further removal of monetary policy stimulus is expected over time, with future moves contingent on the medium-term outlook for inflation and employment.”

            In the accompany statement, it’s noted that current COVID-19-related restrictions “have not materially changed the medium-term outlook” for inflation and employment. Capacity pressures “remain evident” and economic data highlighted that the economy “has been performing strongly in aggregate”. Headline CPI is expected to rise above 4% in the near term before returning towards 2% target midpoint over the medium term.

            Full statement here.

            US ISM services rose to 61.9 in Sep, corresponds to 4.5% annualized GDP growth

              By
              ActionForex.com
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              US ISM Services PMI rose slightly from 61.7 to 61.9 in September, above expectation of 59.8. Looking at some details, business activity/production rose 2.2 to 62.3. New orders rose 0.3 to 63.5. Employment dropped -0.7 to 53.0. Prices rose 2.1 to 77.5.

              ISM said: “The past relationship between the Services PMI® and the overall economy indicates that the Services PMI® for September (61.9 percent) corresponds to a 4.5-percent increase in real gross domestic product (GDP) on an annualized basis.”

              Full release here.

              US trade deficit widened to USD 73.3B, deficit with China rose

                By
                ActionForex.com
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                US exports rose 0.4% to USD 213.7B in August. Imports rose 1.4% to USD 287.0B. Trade deficit widened to USD -73.3B, versus expectation of USD -70.5B.

                The August figures show surpluses, in billions of dollars, with South and Central America ($5.7), Hong Kong ($2.2), Brazil ($2.1), Singapore ($1.0), and United Kingdom ($0.8). Deficits were recorded, in billions of dollars, with China ($28.1), European Union ($19.3), Mexico ($6.6), Germany ($5.8), Japan ($5.6), Canada ($5.1), Taiwan ($3.6), South Korea ($3.1), Italy ($3.1), India ($3.0), France ($1.4), and Saudi Arabia ($0.6).

                The deficit with China increased $3.1 billion to $28.1 billion in August. Exports decreased $1.8 billion to $11.2 billion and imports increased $1.3 billion to $39.3 billion.

                Full release here.

                Eurozone PPI rose 1.1% mom, 13.4% yoy in Aug

                  By
                  ActionForex.com
                  -

                  Eurozone PPI rose 1.1% mom, 13.4% yoy in August. Industrial producer prices increased by 2.0% mom in the energy sector, by 1.4% mom for intermediate goods, by 0.5% mom for capital goods, by 0.3% mom for durable consumer goods and by 0.2% mom for non-durable consumer goods. Prices in total industry excluding energy increased by 0.7% mom.

                  EU PPI rose 1.1% mom, 13.5% yoy. The highest monthly increases in industrial producer prices were recorded in Bulgaria (+4.2%), Denmark (+3.1%) and Latvia (+2.6%), while decreases were observed only in Ireland (-4.1%) and Malta (-0.1%).

                  Full release here.

                  UK PMI services finalized at 55.4, supply chain crisis put a considerable brake on recovery

                    By
                    ActionForex.com
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                    UK PMI Services was finalized at 55.4 in September, up slightly from August’s 55.0. PMI Composite was finalized at 54.9, up fractionally form August’s 54.8. Markit said charges rose at record pace amid supply constraints and spike in costs. Staff shortages held back output and new orders. Backlogs accumulated for the seventh month running.

                    Tim Moore, Economics Director at IHS Markit: “The supply chain crisis put a considerable brake on recovery in the UK service sector during September. Survey respondents widely noted that shortages of staff, raw materials and transport had resulted in lost business opportunities… Another spike in operating expenses was reported… even though this data is yet to fully reflect the inflationary impact of the UK fuel crisis and surging energy prices…

                    “Tight constraints on business capacity and rampant supply chain uncertainty meant that service providers have become more willing to pass on higher costs to customers. The latest rise in average prices charged by UK service sector firms was the fastest in over 25 years of data collection, with many businesses reporting more frequent reviews of pricing due to escalating cost increases by suppliers.”

                    Full release here.

                    Eurozone PMI composite finalized at 56.2, unwelcome mix of rising price pressures but slower growth

                      By
                      ActionForex.com
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                      Eurozone PMI Services was finalized at 56.4, down from August’s 59.0. PMI Composite was finalized at 56.2, down from August’s 59.0. Looking at some member states, Ireland PMI Composite was finalized at 61.5, Spain at 57.0, Italy at 56.6, Germany at 55.4, France at 55.3.

                      Chris Williamson, Chief Business Economist at IHS Markit said: “The current economic situation in the eurozone is an unwelcome mix of rising price pressures but slower growth. Both are linked to supply shortages, especially in manufacturing, which has seen a steeper fall in output growth than services… Although for now the overall rate of expansion remains relatively solid by historical standards, the economy enters the final quarter of the year on a slowing growth trajectory. A drop in business confidence to the lowest since February adds further downside risks to the outlook.”

                      Full release here.

                      Germany PMI services finalized at 56.2, set for more moderate period of growth

                        By
                        ActionForex.com
                        -

                        Germany PMI Services was finalized at 56.2 in September, down from August’s 60.8., lowest since May. PMI Composite was finalized at 55.5, down from August’s 60.0. Markit said business activity rose at slowest rate for four months. Rates of growth in new business and employment also eased. Average prices charged by services firms rose at near-record rate.

                        Phil Smith, Economics Associate Director at IHS Markit:

                        “Services activity grew strongly in the third quarter, but the pace of recovery is slowing and we’re set for a more moderate period of economic growth in the final months of the year. Our current forecasts are for a 3.0% quarter-on- quarter rise in GDP in Q3, followed by a 1.2% gain in Q4.

                        “The loss of momentum is partly natural as activity gets closer to pre-pandemic levels, but the drag on growth from material shortages is also becoming more noticeable, impacting services firms directly and also via a slowdown in manufacturing.

                        “With cost pressures remaining stubbornly high and demand still picking up, the rate of services output price inflation continues to run at close to the quickest in the series history stretching back almost two decades.

                        “Supply bottlenecks are no longer just a manufacturing problem, and the threat of a continued spillover to other parts of the economy, coupled with inflationary pressures, has dampened service providers’ growth expectations somewhat.”

                        Full release here.

                        France PMI services finalized at 56.2, continued to drive broader recovery

                          By
                          ActionForex.com
                          -

                          France PMI Services was finalized at 56.2 in September, down from August’s 56.3. PMI Composite was finalized at 55.3, down from August’s 55.9. Markit said growth ticked down to five-month low, but remained strong. Employment rose at fastest rate for almost three years. Inflationary pressure intensified amid higher staff and material costs.

                          Joe Hayes, Senior Economist at IHS Markit:

                          “France’s service sector continued to drive the broader economic recovery in September. Although growth peaked earlier in the summer, services activity growth is still holding fairly close to that level.

                          “Reading through our panel member comments, it seems that demand is getting ever closer to reaching pre-pandemic levels, which explains why new order growth slowed in September, although some reports indicated that the “pass sanitaire” – which is used to prove members of the public have a low COVID-19 transmission risk – has had some negative impact on demand.

                          “More positively, however, employment growth accelerated and was close to a three-year high. Firms are shaping up their businesses to be capable of stronger activity growth, which is a clear positive sign as we head into what could potentially be a challenging winter period for Europe, fraught with uncertainty regarding the trajectory of the pandemic and associated challenges, especially in goods supply and price levels.”

                          Full release here.

                          NASDAQ at a technical juncture after selloff

                            By
                            ActionForex.com
                            -

                            NASDAQ is now pressing key support level at 14175.11 after yesterday’s -2.41% decline, and it’s now at a technical juncture. Strong rebound from current level, followed by break of 55 day EMA (now at 14778.46) will maintain medium term bullishness. In this case, a break of 15403.43 record high is more likely before having a larger scale correction.

                            However, sustained break of 14175.11 will suggest that NASDAQ is already in correction to whole up trend from 6631.42. In this case, deeper fall would be seen to 55 week EMA (now at 134174.13), or even further to 38.2% retracement of 6631.42 to 15403.43 at 12052.52 before completing the correction. If happens, bearish sentiment would likely persist throughout Q4.

                            Japan PMI services composite finalized at 47.9, but firms optimist on eventual end to pandemic

                              By
                              ActionForex.com
                              -

                              Japan PMI Services was finalized at 47.8 in September, up from August’s 42.9. PMI Composite was finalized at 47.9, up from August’s 45.5. Markit said contractions in output and new business eased. Employment rose at quickest pace since April. Business optimism also strengthened to three-month high.

                              Usamah Bhatti, Economist at IHS Markit, said: “Overall private sector activity saw a sustained, albeit softer decline in September, led by a slower decline in the larger service sector. At the same time, manufacturing output and new orders were both in decline for the first time since late-2020.

                              “Businesses in the Japanese private sector also noted the strongest cost pressures for 13 years, as supply chain disruption continued to dampen domestic and global activity. Price rises were notably sharp for raw materials, staff and fuel. Regardless of this, firms were optimistic that an eventual end to the pandemic would occur within the coming 12 months, and provide a broad-based boost to demand and activity. As a result, IHS Markit expects the economy to grow 2.5% in 2021.”

                              Full release here.

                              Australia trade surplus swelled to another record in Aug

                                By
                                ActionForex.com
                                -

                                Australia goods and services exports rose AUD 1923m or 4% mom to AUD 48.52B in August. The surge in exports was led by LNG, hard coking coal and thermal coal, on both higher prices and volumes. Goods and services imports dropped AUD -506m or 1% mom to AUD 33.44B. Trade surplus rose from AUD 12.65B to AUD 15.08B, above expectation of AUD 10.10B, and hit another record high.

                                Also released, retail sales dropped -1.7% mom, -0.7% yoy in August. Ben James, Director of Quarterly Economy Wide Surveys, said: “Retail turnover continues to be negatively impacted by lockdown restrictions, with each of the eastern mainland states experiencing falls in line with their respective level of restrictions. In direct contrast, states with no lockdowns performed well with Western Australia and South Australia enjoying strong rises as physical stores were open for trade.”

                                AiG Performance of Construction Index rose sharply from 38.4 to 53.3 in September. Ai Group Head of Policy, Peter Burn, said: “The bounce in the Australian PCI in September was largely due to many fewer builders and constructors reporting further falls in activity after the clear majority saw activity slump in August… Looking ahead, the further easing of restrictions, and the resumption of work put on hold should see more decisive improvement in the sector in the months ahead”.

                                RBA keeps rate at 0.10%, continue QE until at least Feb 2022

                                  By
                                  ActionForex.com
                                  -

                                  RBA left monetary policy unchanged as widely expected. Cash rate is kept at 0.10%. Target for April 2024 Australian Government bond yield is also held at 0.10%. The asset purchase program will continue at AUD 4B per week until at least mid February 2022. RBA also maintained that the condition for rate hike “will not be met before 2024”.

                                  It maintained that the set back to economy expansion by the Delta outbreak is “expected to be only temporary”. In the central scenario, the economy will be growing again in Q4, and is expected to be “back around its pre-Delta path in the second half of next year”.

                                  On labor market, RBA said it’s business liaison and job vacancies data suggest that “many firms are seeking to hire workers ahead of the expected reopening in October and November.” Wage and price pressures remain “subdued” and disruption to global supply chains on overall inflation “remains limited”.

                                  Full statement here.

                                  ECB de Guindos: Structural impact of current inflation goes beyond expected

                                    By
                                    ActionForex.com
                                    -

                                    ECB Vice-President Luis de Guindos said the current increase in inflation is “not only responding to base effects but is also a component that is going to have a more structural impact.” He added, “this is having an impact that goes beyond what we were expecting only a few months ago.” He expected supply bottlenecks to ease but emphasized the importance to “avoid second-round effects”.

                                    On monetary policy, de Guindos said it will “remain accommodative but the goal is price stability.” “If economic activity normalizes, PEPP will have accomplished its mission.”

                                    Eurozone Sentix investor confidence dropped to 16.9, still a mid-cycle slowdown

                                      By
                                      ActionForex.com
                                      -

                                      Eurozone Sentix Investor Confidence dropped to 16.9 in October, down from 19.6, missed expectation of 19.0. That’s the third decline in a row and the lowest level since April. Current Situation Index dropped from 30.8 to 26.3. Expectations index dropped from 9.0 to 8.0, fifth decline in a row, lowest since May 2020.

                                      Sentix said, “Autumn revival fails to materialize for the time being”. It added, “so far, the criteria for a mere ‘mid-cycle slowdown’ have still been met. It remains crucial that the expectations do not fall below the zero line. For then a stronger slump in economic output would be expected – a trend reversal would then be in the offing.”

                                      Full release here.

                                      Swiss retail sales rose 0.5% yoy in Aug, CPI unchanged at 0.9% yoy in Sep

                                        By
                                        ActionForex.com
                                        -

                                        Swiss real retail sales rose 0.5% yoy in August, below expectation of 0.6% yoy. In nominal terms, sales rose 0.2% yoy. Excluding service stations, nominal turnover dropped -0.4% yoy. Sales of food, drinks and tobacco dropped -2.9% yoy nominal. No-food sector rose 2.1% yoy nominal.

                                        CPI came in at 0.0% mom, 0.9% yoy in September, versus expectation of 0.2% mom, 1.1% yoy. The annual rate was unchanged from August’s reading.

                                        CAD/JPY hesitates ahead of 88.44 resistance

                                          By
                                          ActionForex.com
                                          -

                                          While Hong Kong HSI and Nikkei, to a lesser extent, are trading deeply lower today, there is little reaction in the forex markets so far. But we’d still pay special attention to Yen crosses in case of a turn into risk-off mode in overall markets. In particular, we’d look at 149.03 support in GBP/JPY and 127.91 support in EUR/JPY to see if Yen is going strong.

                                          On the other hand, we’d keep an eye on CAD/JPY to gauge if Yen’s selloff is back. CAD/JPY has lost some momentum ahead of 88.44 resistance so far, failing to confirm completion of the correction from 91.16. But at the same time, it’s still holding on 55 day EMA.

                                          On the upside, decisive break of 88.44 resistance, with either help of WTI’s break of 77 handle or rally in stocks, would confirm near term bullishness in CAD/JPY, as well as be an early sign of rally in Yen crosses elsewhere. The stage would be set for a retest on 91.16 high. However, sustained trading below 55 day EMA (now at 87.28) will revive near term bearishness and bring retest of 84.65 low instead.

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