AUD/NZD to confirm in bullish reversal or not this week

    AUD/NZD is a focus today with RBA and RBNZ featured. It started a rebound since mid September, even though market are expecting RBNZ to hike soon while RBA is still extending it’s QE. The reactions to both central banks this week would determine whether the cross has indeed been reversing the down trend.

    Technically, the conditions for a bullish reversal are there, with 55 day EMA broken. Also, fall from 1.1042, as a corrective move, has met it’s target of 100% projection of 1.1042 to 1.0415 from 1.0944 at 1.0314 already, as well as the medium term channel support. Slight bullish convergence condition is also seen in daily MACD.

    On the upside, sustained break of 1.0538 resistance will firstly indicates that fall from 1.0944 has completed. Also, whole fall from 1.1042 might also have finished with three waves down to 1.0278 too. Near term outlook will be turned bullish for an eventual retest on 1.0944/1042 resistance zone. However, failure to break through 1.0538, followed by break of 1.0390 minor support, will bring retest of 1.0278 low, and retain medium term bearishness instead.

    US ISM manufacturing rose to 61.1, corresponds to 5.1% annualized GDP growth

      US ISM Manufacturing PMI rose from 59.9 to 61.1 in September, above expectation of 59.9. Looking at some details, new orders was unchanged at 66.7. Production dropped from 60.0 to 59.4. Employment rose from 49.0 to 50.2. Supplier deliveries rose from 69.5 to 73.4. Prices rose form 79.4 to 81.2.

      ISM said: “The past relationship between the Manufacturing PMI® and the overall economy indicates that the Manufacturing PMI® for September (61.1 percent) corresponds to a 5.1-percent increase in real gross domestic product (GDP) on an annualized basis.”

      Full release here.

      US PCE price index rose to 4.3% in Aug, core PCE unchanged at 3.6%

        US personal income rose 0.2% mom, or USD 35.5B, in August, matched expectations. Personal spending rose 0.8% mom, or USD 130.5B, above expectation of 0.7% mom.

        Headline PCE price index rose to 4.3% yoy, up from 4.2% yoy, above expectation of 3.9% yoy. Core PCE price index was unchanged at 3.6% yoy, matched expectations.

        Full release here.

        Canada GDP contracted -0.1% mom in Jul, to rise 0.7% mom in Aug

          Canada GDP dropped -0.1% mom in July, better than expectation of -0.2% mom. Total activity remains -2% below pre-pandemic level in February 2020. Overall, 13 of 20 industrial sectors were up. Preliminary information indicates approximate 0.7% rise in real GDP for August.

          Full release here.

          Eurozone CPI jumped to 3.4% yoy in Sep, core CPI rose to 1.9% yoy

            Eurozone CPI accelerated to 3.4% yoy in September, up from 3.0% yoy, above expectation of 3.3% yoy. Core CPI rose to 1.9% yoy, up from 1.6% yoy, above expectation of 1.8% yoy.

            Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in September (17.4%, compared with 15.4% in August), followed by non-energy industrial goods (2.1%, compared with 2.6% in August), food, alcohol & tobacco (2.1%, compared with 2.0% in August) and services (1.7%, compared with 1.1% in August).

            Full release here.

            UK PMI manufacturing finalized at 57.1, descending towards a bout of stagflation

              UK PMI Manufacturing was finalized at 57.1 in September, down from August’s 60.3. Markit said output and new orders rose at slowest rates since February. New export business fell for the first time in eight months.

              Rob Dobson, Director at IHS Markit, said: “The September PMI highlights the risk of the UK descending towards a bout of ‘stagflation’, as growth of manufacturing output and new orders eased sharply while input costs and selling prices continued to surge higher…. With little sign of resolution to these issues, manufacturers, especially smaller firms with lower market power or capacity flexibility, will continue to be buffeted by these headwinds for the foreseeable future, hinting at a tough autumn and winter ahead for many firms.”

              Full release here.

              Eurozone PMI manufacturing finalized at 58.6, growing toll from supply chain headwinds

                Eurozone PMI Manufacturing was finalized at 58.6 in September, down from August’s 61.4. That was the largest drop in the headline index since April 2020 as supply-side constraints impacted goods producers. Acute inflationary pressures persisted as supplier deliver time continued to lengthen considerably.

                Chris Williamson, Chief Business Economist at IHS Markit said: “While Eurozone manufacturing expanded at a robust pace in September, growth has weakened markedly as producers report a growing toll from supply chain headwinds… The supply situation should start to improve now that COVID-19 cases are falling and vaccination rates are improving in many countries, notably in several key Asian economies from which many components are sourced, but it will inevitably be a slow process which could see the theme of supply issues and rising prices run well into 2022.”

                Full release here.

                Germany PMI manufacturing finalized at 58.4, false impression distorted by delivery times

                  Germany PMI Manufacturing was finalized at 58.4 in September, down from August’s 62.6. Markit said output and new orders rose at slowest rate in 15 months. Input shortages continued to push up costs, leading to higher output prices. Pace of job creation slowed as growth expectations dipped to 13-month low.

                  Phil Smith, Associate Economics Director at IHS Markit, said:

                  “At 58.4, the latest headline PMI reading gives a false impression as to the manufacturing sector’s current performance, with the suppliers’ delivery times component continuing to distort the picture. Trends in output and new orders are weaker than the headline number suggests.

                  “The unprecedented supply shortages we’ve seen in recent months have been holding back production levels for some time now, and we’re increasingly seeing this disruption feed back up the supply chain and resulting in reduced demand for intermediate goods as orders are either postponed or cancelled. As a result, overall growth in new orders dropped to a 15-month low in September.

                  “At the same time, supply bottlenecks continue to drive up input costs and, in turn, put pressure on manufacturers to raise prices, which is acting as another headwind to growth. The rate of input price inflation looks like it might have peaked but is still running close to the fastest in the survey’s history, leading to near-record numbers of goods producers raising prices.

                  “Manufacturers’ optimism towards the outlook is steadily ebbing away, down in September to its lowest for 13 months, with many firms concerned that supply shortages will persist into next year.”

                  Full release here.

                  France PMI manufacturing finalized at 55, intense supply-side imbalances even affecting the demand-side

                    France PMI Manufacturing was finalized at 55.0 in September, down from August’s 57.5, lowest since January. Markit said that input lead times deteriorated at unprecedented rate prior to COVID-19. Output growth lost further momentum amid supply-side challenges. New order growth softened further.

                    Joe Hayes, Senior Economist at IHS Markit, said: “September survey data show us that the intense supply-side imbalances are now starting to seriously impede the French manufacturing sector and are even affecting the demand-side of the economy too.

                    “Lead times are rising at extreme rates, and port closures in Asia seen recently have added fuel to the fire…. Surveyed firms mentioned that clients are becoming hesitant and orders are being postponed or not placed at all , so we’re now seeing a negative demand-side impact.

                    Full release here.

                    Australia AiG manufacturing dropped to 51.2, recovery all-but-stalled

                      Australia AiG Performance of Manufacturing Index dropped from 51.6 to 51.2 in September. Looking at some details, production rose 2.9 to 53.1. Employment dropped from -4.3 to 47.1. New orders dropped -5.1 to 52.0. Exports rose 6.8 to 51.9.

                      Ai Group Chief Executive Innes Willox said: “The recovery in the manufacturing sector over the past year all-but-stalled in September as the impacts of lockdowns and border closures constrained activity in the two largest states…. Manufacturers are hoping that the prospect of restrictions being wound back will see a strong lift in performance over coming months.”

                      Full release here.

                      Japan PMI manufacturing finalized at 51.5, enewed reductions in production and incoming business

                        Japan PMI Manufacturing was finalized at 51.5 in September, down from August’s 52.7. Markit noted renewed reductions in production and incoming business. Cost burdens has the sharpest rise in 13 years amid supply chain disruption. Businesses confidence, however, strengthened for the first time in three months.

                        Usamah Bhatti, Economist at IHS Markit, said:

                        “September data indicated a softer improvement in the health of the Japanese manufacturing sector, as the latest Manufacturing PMI signalled that firms began to feel the impacts of the resurgence in COVID-19 cases related to the Delta variant and ongoing supply chain disruption.

                        “Japanese firms recorded renewed declines in both output and new orders, as businesses succumbed to disruption caused by strict pandemic restrictions and raw material shortages. Positively, external markets reversed the decline seen in August to return to expansion territory, although the rate of growth was only mild.

                        “Supply chain disruption continued to dampen activity and demand during September. Firms noted a sharp deterioration in vendor performance as supplier delivery times lengthened to the greatest extent since April 2011.

                        “Yet, Japanese goods producers were confident that these challenges would lift in the near term and noted stronger optimism regarding the year ahead outlook. Confidence was underpinned by hopes that the end of the pandemic would trigger a broad recovery in demand, and encourage a number of new product launches. IHS Markit estimates that industrial production will rise by 8.2% in 2021, though this will not fully recover the output lost to the pandemic last year.”

                        Full release here.

                        Japan Tankan large manufacturing index rose to 18, highest since 2018

                          Japan’s Tankan large manufacturing index rose from 14 to 18 in Q3, above expectation of 13. That’s the highest level since 2018. Large manufacturing outlook rose from 13 to 14, below expectation of 15. Non-manufacturing index rose from 1 to 2, above expectation of 0. Non-manufacturing outlook was unchanged at 3, below expectation of 5.

                          Large companies expected to expand capital investment by 10.1% in the fiscal year started April, risen from prior indication of 9.6%. Inflation is expected to be 0.7% a year from now, slightly higher than 0.6% as expected in prior survey.

                          Full release here.

                          BoJ opinions: No significant change in the situation in Japan

                            In the Summary of Opinions of BoJ’s September 21-22 meeting, it’s noted, “since there is no significant change in the situation in Japan where economic activity, such as of firms, has been supported by accommodative financial conditions, it is appropriate for the Bank to maintain the current monetary policy measures”.

                            One opinion also noted, “although financial markets have been stable on the whole, it is necessary to be vigilant in closely monitoring economic and financial developments, including the impact of developments in the Chinese real estate sector on global financial markets, and be ready to respond promptly if necessary.”

                            Full Summary of Opinions here.

                            US Q2 GDP growth finalized at 6.7% annualized

                              US Q2 GDP growth was finalized at 6.7% annualized, revised up from 6.6%. Upward revisions to personal consumption expenditures (PCE), exports, and private inventory investment were partly offset by an upward revision to imports, which are a subtraction in the calculation of GDP.

                              Full release here.

                              US initial jobless claims rose to 362k, above expectation

                                US initial jobless claims rose 11k to 362k in the week ending September 25, above expectation of 321k. Four-week moving average of initial claims rose 4k to 340k.

                                Continuing claims dropped -18k to 2802 in the week ending September 18. Four-week moving average of continuing claims dropped -750 to 2797k, lowest since March 21, 2020.

                                Full release here.

                                Eurozone unemployment rate dropped to 7.5% in Aug, EU dropped to 6.8%

                                  Eurozone unemployment rate dropped from 7.6% to 7.5% in August, versus expectation of 7.6%. EU unemployment rate dropped from 6.9% to 6.8%.

                                  Eurostat estimates that 14.469 million men and women in the EU, of whom 12.162 million in the euro area, were unemployed in August 2021. Compared with July 2021, the number of persons unemployed decreased by 224 000 in the EU and by 261 000 in the euro area.

                                  Full release here.

                                   

                                  Silver’s down trend continues, targeting 20.92 projection level

                                    Silver’s down trend resumes this week and hits as low as 21.41 so far. The larger down trend from 30.07 is in progress for 61.8% projection of 28.73 to 22.36 from 24.86 at 20.92 next. Also prior rejection both 55 day and 55 week EMA affirmed near term and medium term bearishness. Firm break of 20.92 will target 61.8% retracement of 11.67 to 30.07 at 18.69 before completing the current down trend.

                                    Meanwhile, break of 23.13 resistance is needed to be the first sign of short term bottoming. Otherwise, outlook will stay bearish in case of recovery.

                                    BoJ Kuroda: Timing and pace of recovery in consumption remains highly uncertain

                                      BoJ Governor Haruhiko Kuroda reiterated in a speech that “consumption is expected to pick up if further progress in vaccinations allow society to curb infections, while resuming economic activity.”

                                      “But the timing and pace of recovery in consumption remains highly uncertain and could change depending on how the pandemic unfolds,” he added.

                                      “We will scrutinise the impact of the pandemic on the economy and take additional easing steps without hesitation if needed,” he pledged again.

                                      Swiss KOF dropped to 110.6 in Sep, slowdown likely to continue in coming months

                                        Swiss KOF Economic Barometer dropped from 113.5 to 110.6 in September, slightly above expectation of 110.3. That’s the fourth decline in a row. The index remains above its long-term average, but the slowing in recovery is “likely to continue in the coming months”.

                                        KOF also said: “The recurring decline is primarily attributable to bundles of indicators concerning foreign demand. Indicators of the manufacturing sector send an additional negative signal, followed by indicators of the economic sector other services. By contrast, indicators from the finance and insurance sector are providing slightly positive impulses.”

                                        Full release here.

                                        UK Q2 GDP growth finalized at 5.5% qoq, still -3.3% below pre-pandemic level

                                          UK Q2 GDP growth was finalized at 5.5% qoq, revised up from 4.8% qoq. GDP remained -3.3% below the pre-pandemic level at Q4 2019.

                                          In output terms, the largest contributors to this increase were from wholesale and retail trade, accommodation and food service activities, education and human health, and social work activities.

                                          There were increases in all main components of expenditure, with the largest contribution from household consumption.

                                          Full release here.