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Fed Brainard: Fed is stepping up reaching and engagement on CBDCs

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    ActionForex.com
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    Fed Governor Lael Brainard said in a speech that “the pandemic accelerated the migration to contactless transactions and highlighted the importance of access to safe, timely, and low-cost payments for all.”

    “With technology platforms introducing digital private money into the U.S. payments system, and foreign authorities exploring the potential for central bank digital currencies (CBDCs) in cross-border payments,” she added, “the Federal Reserve is stepping up its research and public engagement on CBDCs.”

    Full speech here.

    NABE: Survey panelists anticipate inflation easing in H2

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      ActionForex.com
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      According to a survey by the National Association of Business Economists, US GDP is estimated to growth by 8.5% annualized in Q2, much higher than March survey median forecast of 5.2%. The median real GDP growth estimate for the whole 2021 is 6.7%, compared to March forecast of 4.8%. Respondents expected inflation to accelerate strongly in 2021, before cooling in 2022. CPI is forecast to be 2.8% yoy in Q4, 2021. Core PCE inflation is expected to be at 2.2% in Q4 2021.

      “NABE panelists expect near-term inflation pressure, but anticipate it being short-lived,” added Survey Chair Holly Wade, executive director, NFIB Research Center. “Inflation expectations moved up significantly from those in the March survey, but panelists anticipate inflation easing in the second half of 2021, with no resurgence in 2022.

      Full release here.

      BoJ Kuroda: We’re beginning to see the light at the end of the pandemic tunnel

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        ActionForex.com
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        In a speech, BoJ Governor Haruhiko Kuroda said “we are beginning to see the light at the end of this pandemic tunnel, but the light does not clearly reveal the shape of the society and economy we are approaching”.

        “Given the considerable uncertainty we face, it is only natural that we will have different views on the relative importance of the issues involved and the direction our discussions should take.”

        For the time being, we do not have to agree on all the details; the important thing is for participants from central banks, international institutions, and academia to present their views and share their ideas.

        Full speech here.

        NZD/JPY and NZD/USD soften but stay above near term support

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          ActionForex.com
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          New Zealand Dollar weakens mildly today despite much stronger than expected retail sales data. While RBNZ rate decision is a focus this week, it’s unlikely to provide any market moving surprises. Kiwi is currently just following broad market developments.

          NZD/JPY edged higher to 79.40 earlier this month, but quickly retreated. There is no confirmation of bearish reversal yet. But upside momentum was clearly diminishing as seen in both 4 hour and daily MACD. Sustained break of 77.68 support will also have 55 day EMA firmly taken out. That would argue that NZD/JPY is already in correction to, at least, the rise from 68.86. Deeper decline could be seen back to 75.61 support and possibly below. Nevertheless, rebound from current level would retail near term bullishness for another high above 79.40 first.

          NZD/USD weakened after hitting 0.7304. Sustained break of 0.7114 support will also have 55 day EMA firmly taken out. That would suggest that recovery from 0.6942 has completed. Corrective pattern form 0.7463 should have then started the third leg. Deeper fall could then be seen through 0.6942 support to 0.6797 resistance turned support and below, to correct whole up trend from 0.5469. Nevertheless, strong rebound from current level, followed by break of 0.7304, will bring retest of 0.7463 high next.

          New Zealand retail sales rose 2.5% qoq in Q1

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            ActionForex.com
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            New Zealand retail sales rose 2.5% qoq in Q1, much better than expectation of -1.8% qoq. 10 of the 16 regions showed higher sales values. Ex-auto sales rose 3.2% qoq, also well above expectation of -1.0% qoq.

            Electrical and electronic goods had the largest increase, up 8.4 percent followed by recreational goods, up 16 percent in the March 2021 quarter.

            “Higher spending in the electrical industry coincides with falling prices for computers and phones during the first quarter of 2021,” retail business manager Sue Chapman said.

            Full release here.

            Canada retail sales rose 3.6% mom in March, up in 10 of 11 subsectors

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              ActionForex.com
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              Canada retail sales rose 3.6% mom in March, to CAD 57.6B, above expectation of 2.3% mom. Ex-auto sales rose 4.3% mom, above expectation of 4.0% mom too. Sales increased in 10 of 11 subsectors, representing 79.1% of retail trade. For Q1, sales were up 1.8%, the third quarterly increase.

              Advance estimates indciates that retail sales dropped -5.1% mom in April. This unofficial estimate was calculated based on responses received from 46% of companies surveyed.

              Full release here.

              Bundesbank: German services second should increase again significantly

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                ActionForex.com
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                Germany’s Bundesbank said in its monthly report, “as soon as the corona protective measures are gradually loosened, activity in the service areas affected should increase again significantly.”

                Also, “as in the summer quarter of 2020, private consumption should recover quickly as soon as the restrictions are broadly and sustainably withdrawn”.

                “The industry is benefiting from strong demand, even if production is likely to be slowed down by bottlenecks in preliminary products in the near future,” it added.

                Full release here.

                UK PMI composite rose to new record, an unprecedented growth spurt

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                  ActionForex.com
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                  UK PMI Manufacturing jumped to 66.1 in May, up from 60.9, well above expectation of 60.0. That’s another record high since 1992. PMI Services rose to 61.8, up from 61.0, below expectation of 62.0. But that’s still a 91-month high. PMI Composite Rose to 62.0, up from 60.7, record high since 1998.

                  Chris Williamson, Chief Business Economist at IHS Markit, said: “The UK is enjoying an unprecedented growth spurt as the economy reopens. Factory orders are surging at a record pace as global demand for goods continues to revive, and the service sector is reporting near-record growth as the opening up of the economy allows more businesses to trade. Business confidence has meanwhile hit an all-time high as concerns about the impact of the pandemic continue to fade…

                  “A direct consequence of demand running ahead of supply was a steep rise in prices, hinting strongly that consumer price inflation has much further to rise after lifting to 1.5% in April. However, the inflationary spike could prove temporary, as many of the price hikes have reflected surcharges on shipping and other shortage-related issues emanating from the pandemic. As these constraints ease, price pressures should abate, but there remains a great deal of uncertainty as to how long it will take for global business and trade to return to normal functioning, especially if new virus variants appear.”

                  Full release here.

                  Eurozone PMI composite rose to 56.9, a 39-month high

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                    ActionForex.com
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                    Eurozone PMI Manufacturing edged down to 62.8 in May, down from 62.9, above expectation of 62.4. PMI Services surged to 55.1, up from 50.2, above expectation of 52.0, a 35-month high. PMI Composite rose to 56.9, up from 53.8, a 39-month high.

                    Chris Williamson, Chief Business Economist at IHS Markit said: “Demand for goods and services is surging at the sharpest rate for 15 years across the eurozone as the region continues to reopen from covid-related restrictions. Virus containment measures have been eased in May to the lowest since last October, facilitating an especially marked improvement in service sector business activity, which has been accompanied by yet another near-record expansion of manufacturing.

                    “Growth would have been even stronger had it not been for record supply chain delays and difficulties restarting businesses quickly enough to meet demand, especially in terms of re-hiring. The shortfall of business output relative to demand is running at the highest in the survey’s 23-year history.

                    “This imbalance of supply and demand has put further upward pressure on prices. How long these inflationary pressures persist will depend on how quickly supply comes back into line with demand, but for now the imbalance is deteriorating, resulting in the highest-ever price pressures for goods recorded by the survey and rising prices for services.”

                    Full release here.

                    Germany PMI composite rose to 56.2, a welcome pick-up in services activity

                      By
                      ActionForex.com
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                      Germany PMI Manufacturing dropped -64.0 in May, down from 66.2, below expectation of 65.8. PMI Services jumped to 52.8, up from 49.9, above expectation of 52.0. PMI Composite rose to 56.2, up from 55.8.

                      Phil Smith, Associate Director at IHS Markit said: “May saw a welcome pick-up in services activity across Germany, as firms reported a rise in demand across the sector for the first time since the retightening of lockdown measures last October. The improved performance in services comes at a crucial time, making up for a further loss of momentum in manufacturing due to worsening supply issues.

                      “While the demand picture for manufacturing remains positive, we are getting more reports from businesses of supply shortages curbing production levels and weighing on new orders due to forced downtime at customers. On top of this, there is also the issue of an associated surge in costs, with supply shortages pushing up factory input prices in May at a rate that easily surpasses anything seen before in the manufacturing survey’s 25-year history. Inflationary pressures are increasingly spreading to services as well, pushing the overall measures of input costs and output prices both to record highs.

                      “The survey suggests that the surge in operating expenses is having implications for staff recruitment, with some manufacturers reporting efforts to control costs despite growing demand. Nevertheless, with backlogs rising at a near-record rate as demand continues to outstrip supply, and firms still strongly confident about future activity, there remains a positive attitude towards hiring.”

                      Full release here.

                      France PMI composite jumped to 57.0, moved up a gear as restrictions eased

                        By
                        ActionForex.com
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                        France PMI Manufacturing rose to 59.2 in May, up from 58.9, above expectation of 59.2. PMI Services surged to 56.6, up from 50.3, above expectation of 53.0. PMI Composite rose to 57.0, up from 51.6, hitting a 10-month high.

                        Trevor Balchin, Economics Director at IHS Markit said: “The French private sector moved up a gear in May as lockdown restrictions were eased and the economy began to reopen. There was a clear underlying improvement in demand as new work expanded at the fastest rate in over three years, while output expectations were the strongest since the composite series was first available in July 2012.

                        “The service sector drove the overall acceleration in growth during May, both in terms of output and new orders, although manufacturing continued to register comparatively faster rates of expansion. Manufacturers remained hindered, however, by ongoing supply shortages and delays, with average lead times lengthening at one of the most marked rates in the survey history.

                        “The latest survey also suggested that firms were struggling to recruit enough extra staff to keep on top of workloads. Employment rose at the slowest rate in four months, while backlogs increased at the strongest pace in over three years.”

                        Full release here.

                        UK retail sales jumped 9.2% mom in Apr on re-opening

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                          ActionForex.com
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                          UK retail sales grew sharply by 9.2% mom in April, well above expectation of 4.0% mom. Ex-fuel sales jumped 9.0% om, also above expectation of 4.0% mom. The strong growth reflected effect of easing of coronavirus restrictions, including the re-opening of all non-essential retail from 12 April in England and Wales and from 26 April in Scotland.

                          Full release here.

                          Japan CPI core unchanged at -0.1% yoy, CPI core-core turned negative to -0.2% yoy

                            By
                            ActionForex.com
                            -

                            Japan CPI core (all item less fresh food), was unchanged at -0.1% yoy in April, better than expectation of -0.2% yoy. Headline all item CPI dropped to -0.4% yoy, down from -0.2% yoy. CPI core-core (all item ex fresh food and energy), turned negative to -0.2% yoy, down form 0.3% yoy.

                            Nevertheless, analysts saw the drop in inflation as being almost entirely due to the -26.5% plunge in mobile phone charges. That already lowed -0.5% off core CPI.

                            Japan PMI composite back in contraction, but firms not discouraged by virus resurgence

                              By
                              ActionForex.com
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                              Japan PMI manufacturing dropped to 52.5 in May, down from 53.6, below expectation of 53.8. PMI Services dropped notably to 45.7, down from 49.5. PMI Composite dropped to 48.1, down from 51.0, back in contraction again.

                              Usamah Bhatti, Economist at IHS Markit, said: “Flash PMI data indicated that activity at Japanese private sector businesses saw a renewed reduction in May. Output fell at the quickest pace for four months, while the contraction in new business inflows was the fastest since February. Survey members widely attributed the deterioration in business conditions to a resurgence in COVID-19 cases and the reimposition of state of emergency measures.

                              “Positively, private sector firms were not discouraged from further increasing capacity, as employment levels rose for the fourth consecutive month. This was despite another sharp rise in input costs across the Japanese private sector.

                              “Disruption to short-term activity is likely to remain until the latest wave of COVID-19 infections passes and restrictions enacted under state of emergency laws are lifted. However, Japanese private sector companies were optimistic that business conditions would improve in the year ahead, albeit to a lesser extent than that seen in April. Positive sentiment stemmed from the expectation that the currently sluggish vaccine rollout would gather pace and aid in the submission of the pandemic, in turn triggering a recovery in demand in both domestic and external markets.”

                              Full release here.

                              Australia retail sales rose 1.1% in April, led by food retailing

                                By
                                ActionForex.com
                                -

                                Australia retail sales rose 1.1%, or AUD 350.2m, in April, above expectation of 0.5% mom. Annually, sales rose 25.1% yoy.

                                Ben James, Director of Quarterly Economy Wide Surveys, said: “Food retailing led the rises in April, following falls in both February and March 2021. All industries except department stores rose, with similar rises for cafes, restaurants, and takeaway food services, household goods retailing, and other retailing.

                                New South Wales and Victoria led the state rises, with sales continuing to return in Sydney and Melbourne. A lockdown in Western Australia in April saw a 1.5% fall in that state”

                                Full release here.

                                Australia PMI manufacturing hit another record, services edged down

                                  By
                                  ActionForex.com
                                  -

                                  Australia PMI Manufacturing rose to 59.9 in May, up from 59.7, hitting another record high since May 2016. PMI Services dropped to 58.2, down from 58.8. PMI Composite also dropped slightly to 58.1, down from 58.9.

                                  Jingyi Pan, Economics Associate Director at IHS Markit, said: “Australia’s private sector growth eased from April’s survey record. That said, growth remained sharp to affirm the continued improvement in economic conditions following the easing of COVID-19 restrictions.

                                  “Export orders notably continued to improve, reflecting the robust external demand despite concerns of rising COVID-19 cases in the region. In turn, this filtered through to the labour market with employment improving at the fastest pace in the survey’s five-year history.

                                  “The outlook for activity over the coming year remained optimistic, particularly in the service sector in May. Ongoing supply-chain disruptions, however, continued to impact private sector firms, pushing up input cost inflation and thereby output prices.”

                                  Full release here.

                                  US initial jobless claims dropped to 444k, lowest since March 2020

                                    By
                                    ActionForex.com
                                    -

                                    US initial jobless claims dropped -34k to 444k in the week ending May 15, below expectation of 450k. That’s also the lowest level since March 14, 2020. Four-week moving average of initial claims dropped -30.5k to 505k, lowest since March 14, 2020.

                                    Continuing claims rose 111k to 3751k. Four-week moving average of continuing claims rose 25k to 3681k.

                                    Full release here.

                                    Japan exports jumped 38% yoy in Apr, fastest in more than a decade

                                      By
                                      ActionForex.com
                                      -

                                      Japan’s exports rose 38.0% yoy to JPY 7181B in April. That’s the fastest growth in more than a decade since 2010, as led by US bound shipments of cars and parts. Also, Chinese demand for chip-making equipment was also a boost. Exports to China jumped 33.9% yoy while exports to the US rose 45.1% yoy. Imports rose 12.8% yoy to 6925B. Trade surplus came in at JPY 255B.

                                      In seasonally adjusted terms, exports rose 2.5% mom to JPY 6856B. Imports rose 7.5% mom to JPY 6791B. Trade surplus narrowed to JPY 65B.

                                      Also from Japan, machine orders rose 3.7% mom in March, below expectations of 6.4% mom.

                                      Australia employment dropped -30.6k, but not clear JobKeeper impact

                                        By
                                        ActionForex.com
                                        -

                                        Australia employment dropped -30.6k in April worse than expectation of 15k rise. Full-time jobs rose 33.8k while part-time jobs dropped -64.4k. Total employment was 45.9k, or 0.4%, higher than March 2020 level. But unemployment rate dropped to 5.5%, down from 5.7%, better than expectation of 5.5%. Participation rate dropped -0.3% to 66.0%.

                                        “We have not seen large changes in the indicators that would suggest a clear JobKeeper impact, such as an increase in people working reduced or zero hours for economic reasons or because they were leaving their job. We also haven’t seen large net flows out of employment across many population groups,” Bjorn Jarvis, head of labour statistics at the ABS said.

                                        Full release here.

                                        Fed minutes: Some think it might be appropriate to discuss tapering in upcoming meetings

                                          By
                                          ActionForex.com
                                          -

                                          The main hawkish surprise from the FOMC minutes released overnight was that, “a number of participants suggested that if the economy continued to make rapid progress toward the Committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases.”

                                          Also, “a couple of participants commented on the risks of inflation pressures building up to unwelcome levels before they become sufficiently evident to induce a policy reaction.” Some participants mentioned “upside risks around the inflation outlook that could arise if temporary factors influencing inflation turned out to be more persistent than expected.”

                                          But overall, “after the transitory effects of these factors fade, participants generally expected measured inflation to ease. Looking further ahead, participants expected inflation to be at levels consistent with achieving the Committee’s objectives over time.”

                                          Full minutes here.

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