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US building permits dropped to 1.598m in June, housing starts rose to 1.643m

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    ActionForex.com
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    US building permits dropped -5.1% mom to 1.598m annualized rate in June, below expectation of 1.690m. It’s nonetheless 23.3% above June 2020 rate of 1.296m.

    Housing starts rose 6.3% mom to 1.643m annualized rate, above expectation of 1.590m. It’s also 29.1% above June 2020 level of 1.273m.

    Full release here.

    NZD/USD downside breakout, heading to 0.68 handle

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      ActionForex.com
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      NZD/USD finally follows other commodity currencies and breaks out to the downside today. Overall risk-off sentiments overwhelm speculations of RBNZ rate hike. Technically, fall from 0.7463 is seen as a correction to whole up trend from 0.5467. Outlook will stay bearish as long as 0.7104 resistance holds. Next target is 100% projection of 0.7463 to 0.6942 from 0.7315 at 0.6794.

      For now, we’d look for strong support around 38.2% retracement of 0.5467 to 0.7463 at 0.6701 to complete the correction. But we’ll keep monitoring downside momentum, as well as development in the risk markets closely, to reassess the outlook.

      Eurozone current account surplus at EUR 12B in May

        By
        ActionForex.com
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        Eurozone current account recorded EUR 12B surplus in May, down from April’s EUR 22B. In the 12 months to May, current account surplus amounted to EUR 310B (2.7% of Eurozone GDP), up from EUR 228B (2.0%) one year earlier.

        In the financial account, Eurozone residents’ net acquisition of non-euro area portfolio investment securities totalled EUR 950B, in the 12 months to May. Non-residents’ net acquisitions of Eurozone area portfolio investment securities totalled EUR 187B.

        Full release here.

        US 10-year yield dropped to 1.18 on delta variant worries

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          ActionForex.com
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          As worries over the impact of delta variant grew, US stocks and treasury yields tumbled sharply overnight. Markets appeared to be pricing out some of the more optimistic growth scenarios for the quarters ahead. Instead, investors turned cautious as restrictions could still come back, which is happening in some countries like Australia already, even though the economy is more adapted to it after more than a year of “drills”.

          10-year yield closed down -0.119 at 1.181, breaking 1.2 handle for the first time since February. The strong break of 38.2% retracement of 0.504 to 1.765 at 1.28 was a surprise to us, which indicates rather pessimistic developments too. The fall from 1.765 would now be targeting 61.8% retracement at 0.9857, which is close to 1% handle. We’d expect strong support from there to finish the correction, as we’re just back to reality.

          RBA Minutes: Conditions for rate hike won’t be met until 2024

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            ActionForex.com
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            In the minutes of July 5 meeting, RBA reiterated that the “central scenario implied that the conditions for an increase in the cash rate would not be met until 2024”. However, “fast-than expected” recovery over the course of 2021 had “widened the range of alternative plausible scenarios for the economic outlook”, and thus, “the cash rate over the period to November 2024”. Hence, it decided to retain April 2024 bond as the target bond, rather than extending the horizon to November 2024 bonds.

            On the decision on the size of weekly bond purchases, it noted that “the economic outcomes had been materially better than earlier expected and the outlook had improved”. And, “in light of these improvements and the agreed decision-making framework, members decided to adjust the weekly purchases from $5 billion to $4 billion and agreed to review the rate of purchases at the November 2021 meeting.”

            Full minutes here.

            DOW breaks 55 day EMA, heading back to 33271 support

              By
              ActionForex.com
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              DOW’s sharp fall in early trading pushed through 55 day EMA, as well as medium term channel support. The development firstly confirms rejection by 35091.56 high. Secondly, it suggests that corrective pattern from 35091 has started the third leg. Deeper decline would now be seen back to 33271.93 support. Reaction from there would be crucial in determining the medium term outlook.

              Sustained break of 33271.93 would complete a double top reversal pattern. DOW would then be corrective the up trend from 26143.77 at least. Deeper fall would then be seen to 38.2% retracement of 26143.77 to 35091.56 at 31673.50. We’ll see how DOW respond to 33271.93 support next.

              BoE Haskel: Risk management considerations lean against pre emptive tightening

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                ActionForex.com
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                BoE policymaker Jonathan Haskel said in a speech, “in the immediate term, the risk of a pre emptive monetary tightening curtailing the recovery continues to outweigh the risk of a temporary period of above target inflation. For the foreseeable future, in my view, tight policy isn’t the right policy.”

                He also noted “two headwinds” over the coming months, the “highly transmissible Delta variant” and a “tightening of the fiscal stance”. “Against this backdrop, risk management considerations lean against a pre emptive tightening of monetary policy until we can be more sure the economy is recovering in a manner consistent with the sustained achievement of the inflation target,” he said.

                Full speech here.

                Bundesbank: German economic rose strongly in Q2, to be even stronger in Q3

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                  ActionForex.com
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                  Bundesbank said in the latest monthly report, “the German economic output increased strongly again in the second quarter of 2021.”

                  “Provided that there are no significant setbacks with a view to the pandemic and the supply bottlenecks in the industry at least gradually decrease, the overall economic expansion rate is likely to be even stronger in the summer quarter,” it added.

                  Real GDP could finally reach pre-pandemic level again in Q3.

                  Full release here.

                  A look at EUR/CAD and AUD/CAD as Canadian Dollar dives

                    By
                    ActionForex.com
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                    Canadian Dollar tumbles broadly today as dragged by risk off sentiments, as well as the fall in oil price. WTI is pressing 70 handle after OPEC+ agreed over the weekend to boost production by 400k barrels a day, reversing some of the pandemic production cuts.

                    EUR/CAD surges to as high as 1.5041 today as rebound from 1.4580 resumes and accelerates. Current development now suggest that whole pattern from 1.5991 has completed at 1.4580 already, on bullish convergence condition in daily MACD. Next focus is 38.2% retracement of 1.5991 to 1.4580 at 1.5119. Sustained break there will pave the way to 61.8% retracement at 1.5452 and above.

                    As for AUD/CAD, focus is now on 0.9394 resistance. Firm break there and sustained trading above 55 day EMA confirm short term bottoming at 0.9245. That would also argue that correction form 0.9991 has completed after drawing support from 0.9247 key support level. Stronger rise should then be seen to 38.2% retracement of 0.9991 to 0.9245 at 0.9530, and then 61.8% retracement at 0.9706.

                    AUD/JPY and CAD/JPY downside breakouts on risk aversion

                      By
                      ActionForex.com
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                      AUD/JPY and CAD/JPY break out to the downside on risk aversion in Asian markets. AUD/JPY’s fall from 85.78 resumed and hits as low as as 80.98 so far. Rejection by 4 hour 55 EMA is a near term bearish sign and outlook will stay bearish as long as 82.80 resistance.

                      Immediate focus is now on 38.2% retracement of 73.12 to 85.78 at 80.94, which is close to medium term channel support. Sustained break there will argue that the fall from 85.78 is indeed corrective whole up trend from 59.85. Deeper fall could then be seen back to 73.12/78.44 support next next.

                      CAD/JPY also breaks through 87.08 support to resume the whole decline from 91.16. Outlook will stay bearish as long as 88.69 resistance holds. Current fall would target 38.2% retracement of 77.91 to 91.16 at 86.09. Reaction from there would unveil whether it’s correcting the rise from 77.91, or the whole up trend from 73.80.

                      Hong Kong HSI gaps down after US warned of business risks

                        By
                        ActionForex.com
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                        Asian markets are trading broadly lower as led by Hong Kong HSI, which is down nearly -1.6% at the time of writing. In a late move last week, the US administration published a nine-page Hong Kong Business Advisory, jointly by the departments of State, Treasury, Commerce and Homeland Security. The document warned US firms of encountering a number of risks posed by China’s national security law in the city.

                        Today’s gap down in HSI suggests that corrective rebound from 26861.87 could have completed at 28218.52 already. The failure to even touch 55 day EMA is a near term bearish sign. The index could at least have another test on 26782.61 key medium term resistance turned support. Such development to cap gains in other Asian markets, and give Yen additional support.

                        US retail sales rose 0.6% in Jun, ex-auto sales rose 1.3%

                          By
                          ActionForex.com
                          -

                          US retail sales rose 0.6% mom to USD 621.3B in June, much better than expectation of -0.6% mom decline. Ex-auto sales rose 1.3% mom, above expectation of 0.4% mom. Ex-gasoline sales rose 0.4% mom. Ex-auto, ex-gasoline sales rose 1.1% mom.

                          Full release here.

                          Eurozone exports rose 31.9% yoy in May, imports rose 35.2% yoy

                            By
                            ActionForex.com
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                            In May, Eurozone exports rose 31.9% yoy to EUR 188.2B. Imports rose 35.2% yoy to EUR 180.7B. As a result Eurozone recorded a EUR 7.5B surplus in trade in goods. Intra-Eurozone trade rose 45.4% yoy to EUR 181.5B.

                            In seasonally adjusted terms Eurozone exports dropped -1.5% mom to EUR 195.1B. imports rose 07% mom to EUR 185.8B. Trade surplus narrowed to EUR 9.4B. Intra-Eurozone trade rose to EUR 183.7B.

                            Full release here.

                            Eurozone CPI finalized at 1.9% yoy in Jun, EU at 2.2% yoy

                              By
                              ActionForex.com
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                              Eurozone CPI was finalized at 1.9% yoy in June, down from May’s 2.0% yoy. The highest contribution came from energy (+1.16%), followed by non-energy industrial goods (+0.31%), services (+0.28%) and food, alcohol & tobacco (+0.15%).

                              EU CPI was finalized was finalized at 2.2% yoy, down from May’s 2.3% yoy. The lowest annual rates were registered in Portugal (-0.6%), Malta (0.2%) and Greece (0.6%). The highest annual rates were recorded in Hungary (5.3%), Poland (4.1%) and Estonia (3.7%). Compared with May, annual inflation fell in twelve Member States, remained stable in four and rose in eleven.

                              Full release here.

                              New Zealand CPI rose 1.3% qoq, 3.3% yoy in Q2, RBNZ hike speculation intensifies

                                By
                                ActionForex.com
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                                New Zealand CPI rose 1.3% qoq in Q2, well above expectation of 0.7% qoq. For the 12-month. CPI accelerated to 3.3% yoy, up from 1.5% yoy, well above expectation of 2.8% yoy. The annual rate is the highest in nearly a decade. Also, the figures were well above RBNZ’s forecast of 0.6% qoq 2.6% yoy inflation.

                                Full release here.

                                Speculations of an early RBNZ hike intensified further after the release. Westpac now expects a hike in OCR by 0.25% in August, with another hike at both October and November meeting. The developments pushed AUD/NZD through 1.0597 support today to resume the near term fall from 1.0944. Deeper decline could be seen towards lower part of the medium term range at 1.0415.

                                New Zealand BusinessNZ manufacturing rose to 60.7, facing labor shortages and logistics disruptions

                                  By
                                  ActionForex.com
                                  -

                                  New Zealand BusinessNZ Performance of Manufacturing Index rose from 58.6 to 60.7 in June. Looking at some details, production dropped slightly form 64.8 to 64.5. Employment rose from 52.0 to 56.5. New orders rose slightly from 63.5 to 63.6. Finished stocks rose from 53.6 to 57.3. Deliveries rose from 53.4 to 55.0.

                                  BusinessNZ’s executive director for manufacturing Catherine Beard said: “Despite the overall pick-up in activity, the proportion of negative comments (53.1%) remained higher than positive ones (46.8%).  Many of the positive comments outlined increased demand, but this is counterbalanced by significant labour shortages and logistics disruptions many manufacturers are now facing.”

                                  Full release here.

                                  BoJ stands pat, upgrades inflation forecasts

                                    By
                                    ActionForex.com
                                    -

                                    BoJ kept monetary policy unchanged today. Under yield curve control framework, short term interest rate is held at -0.1%. 10-year JGB yield target is kept at around 0%, without upper limit on JGB purchases. The decision was made by 8-1 vote, with Goushi Kataoka dissented again, pushing for further strengthening of monetary easy, by lowering short and long term interest rates. BoJ will will also continue to buy ETFs and J-REITS with upper limit of JPY 12T and JPY 180B respectively.

                                    In the new economic forecasts, BoJ:

                                    • Downgraded fiscal 2021 GDP growth to 3.8% (from April’s 4.0%)
                                    • Upgraded fiscal 2022 GDP growth to 2.7% (from 2.4%).
                                    • Kept fiscal 2023 GDP growth at 1.3% (unchanged).
                                    • Upgraded fiscal 2021 CPI core to 0.6% (from 0.1%).
                                    • Upgraded fiscal 2022 CPI core to 0.9% (from 0.8%).
                                    • Kept fiscal 2023 CPI core at 1.0% (unchanged).

                                    Full statement here.

                                    Full economic projections here.

                                    Fed Chair Powell testifies before Senate, live stream

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                                      ActionForex.com
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                                      Fed Bullard: We’re in a situation where we can taper

                                        By
                                        ActionForex.com
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                                        St. Louis Fed President James Bullard told Bloomberg TV, “I think we are in a situation where we can taper.” He added, “We don’t want to jar markets or anything — but I think it is time to end these emergency measures.”

                                        “On the labor market I think we have made substantial progress,” Bullard said. “The committee is going to debate that in earnest now at the July meeting.”

                                        After tapering begins, “You probably don’t want to be on automatic pilot in this situation,” Bullard said. “We are not quite sure where this inflation process is going to go. We need some optionality on the upside with respect to possible inflation shocks.”

                                        US initial jobless claims dropped to 360k, matched expectations

                                          By
                                          ActionForex.com
                                          -

                                          US initial jobless claims dropped -26k to 360k in the week ending July 10, matched expectations. That’s the lowest level since March 14, 2020. Four-week moving average of initial claims dropped -14.5k to 382.5k, lowest since March 14, 2020.

                                          Continuing claims dropped -126k to 2341k in the week ending July 3, lowest since March 21, 2020. Four-week moving average of continuing claims dropped -72k to 3376k, lowest since March 21, 2020 too.

                                          Full release here.

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