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US oil inventories rose 1.3m barrels, WTI dives following broad based risk selloff

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    ActionForex.com
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    US commercial crude oil inventories rose 1.3m barrels in the week ending May 14, below expectation of 1.5m barrels. At 486m barrels, oil inventories are about 1% below the five year average for this time of year. Gasoline inventories dropped -2.0m barrels. Distillate dropped -2.3m barrels. Propane/propylene rose 0.4m barrels. Commercial petroleum inventories dropped -0.2m barrels.

    WTI crude oil drops sharply today, following broad based risk selloff. The current development suggest rejection by 67.83 high as expected. Rise from 57.31, the second leg of the consolidation pattern from 67.83, should have completed at 66.98. Deeper fall would now be seen to 60.62 support first. Break would target 57.31 support and possibly below. Tentatively, we’re looking for support from 38.2% retracement of 33.80 to 67.83 at 54.83 to complete the consolidation pattern.

    Downside potential limited in Bitcoin after breaking 30k, recovery should follow soon

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      ActionForex.com
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      Bitcoin’s freefall intensifiies again today after China’s central bank warned against engagement of virtural currency transactions by businesses in the country. A document read, “recently, crypto currency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order.”

      Bitcoin dived through cluster support at 41964 (38.2% retracement of 4000 to 64828 at 41591) today, and hit as low as 29563. It’s now trying to draw support from 28989 support, which is in proximity to 61.8% retracement at 27236. We’d believe that downside potential is limited for now. A corrective recovery should following soon, but there is little prospect of break through 47112 resistance turned support any time soon. We’ll take note of the structure of the recovery to gauge what the next move would be.

      Canada CPI rose to 3.4% yoy in April, ex-energy rose to 1.6% yoy

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        ActionForex.com
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        Canada CPI surged to 3.4% yoy in April, up from March’s 2.2% yoy, above expectation of 3.2% yoy. Statistics Canada said that “a significant proportion of this increase was attributable to a steep decline in prices in April 2020, as the monthly CPI rose 0.5% in April 2021”. Excluding energy, CPI rose 1.6% yoy, up from 1.1% yoy.

        CPI common rose to 1.7% yoy, up from 1.5% yoy, matched expectations. CPI median rose to 2.3% yoy, up from 2.1% yoy, above expectation of 2.1% yoy. CPI trimmed rose to 2.3% yoy, up from 2.2% yoy, matched expectations.

        Full release here.

        Eurozone CPI finalized at 1.6% yoy in Apr, core CPI at 0.7% yoy

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          ActionForex.com
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          Eurozone CPI was finalized at 1.6% yoy in April, up from March’s 1.3% yoy. Core CPI was finalized at 0.7% yoy. The highest contribution to the annual euro area inflation rate came from energy (+0.96 percentage points, pp), followed by services (+0.37 pp), food, alcohol & tobacco (+0.16 pp) and non-energy industrial goods (+0.12 pp).

          EU CPI was finalized at 2.0% yoy, up from March’s 1.7% yoy. The lowest annual rates were registered in Greece (-1.1%), Portugal (-0.1%) and Malta (0.1%). The highest annual rates were recorded in Hungary (5.2%), Poland (5.1%) and Luxembourg (3.3%). Compared with March, annual inflation fell in three Member States, remained stable in one and rose in twenty-three.

          Full release here.

          ECB de Guindos: Present level of yields favorable

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            ActionForex.com
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            ECB Vice President Luis de Guindos said today that “as the euro area emerges from the third wave of the pandemic, risks to financial stability remain elevated and have become more unevenly distributed.”

            As fiscal support is “gradually removed”, “considerably higher insolvency rates than before the pandemic cannot be ruled out, especially in certain euro area countries,” he added. “Extensive policy support, particularly for corporate, could gradually move from being broad-based to more targeted.”

            He also noted that “the present level of yields permits that the financing conditions of the governments as well as… for households and corporates are favourable.”

            The comments on yields came as Germany 10-year yield breaks above -0.1 level today, hitting the highest level since mid-2019.

            BoJ Kuroda: Risks to outlook skewed to the downside

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              ActionForex.com
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              BoJ Governor Haruhiko Kuroda said today that “for the time being, risks to Japan’s economic outlook are skewed to the downside,” even though, it’s likely to “recover on rising external demand” on the back of fiscal and monetary support.

              He expected the economy to resume a “sustainable growth path as rising income supports spending”. Capex would more rise more clearly ahead as corporate profits improve.

              On inflation, Kuroda said the impact of mobile fees on CPI is likely temporary. He doesn’t expect Japan to return to deflation.

              “Economic activity will remain below post-pandemic levels for the time being,” he added. “The near-term focus would be to respond to the pandemic’s impact.” “Taken into account the impact of the pandemic, we will consider extending further” the measures to ease funding strains.

              UK CPI jumped to 1.5% yoy, core CPI up to 1.4% yoy

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                ActionForex.com
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                UK CPI accelerated to 1.5% yoy in April, up from 0.7% yoy, above expectation of 1.4% yoy. Core CPI jumped to 1.3% yoy, up from 1.1% yoy, above expectation of 1.2% yoy. RPI rose to 2.9% yoy, up from 1.5% yoy, above expectation of 2.3% yoy.

                Also released, PPI input came in at 1.2% mom, 9.9% yoy, versus expectation of 0.6% mom, 4.4% yoy. PPI output was at 0.4% mom, 3.9% yoy, versus expectation of 0.4% mom, 3.5% yoy. PPI core output was at 0.5% mom, 2.5% yoy, versus expectation of 0.3% mom, 1.8% yoy.

                US, Canada and Mexico commit to prohibit import of forced labor produced goods

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                  ActionForex.com
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                  Trade ministers from the US, Canada and Mexico held “robust” talks on the new U.S.-Mexico-Canada trade agreement, which took effect last July. In a joint statement, they said, “the USMCA commits us to a robust and inclusive North American economy that serves as a model globally for competitiveness, while prioritizing the interests of workers and underserved communities.”

                  Additionally, the statement noted, “the United States, Mexico, and Canada discussed our shared obligation to ensure the Agreement’s prohibition of the importation of goods produced by forced labor and recommitted to working closely to promote a fair, rules-based international trading system where products made with forced labor do not enter the trading system.”

                  Full statement here.

                  Dollar index broke 90 as focus turns to FOMC minutes

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                    ActionForex.com
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                    Dollar’s selloff continued overnight as focus now turns to minutes of April 27-28 FOMC meeting. While markets were a bit nervous on much stronger than expected consumer inflation readings, Fed officials were in unison in toning down the threat. Current jump in price is generally viewed as transitory by the policymakers. On the other hand, recent data like non-farm payrolls and retail sales argue that the recovery might be more vulnerable than it looks. The minutes would reiterate that Fed is still far from even considering tapering nor interest rate normalization.

                    Dollar index resumed the fall from 93.43 this week and is on track to retest 89.20 low. At this point, it’s rather unsure if such decline is the second leg of the consolidation pattern from 89.20, or it’s resuming the down trend from 102.99. We’ll stay cautious on a strong rebound from 89.20 level. Break of 90.90 resistance will suggest that the near term trend has changed and stronger rebound would be seen back towards 93.43 resistance. Though, firm break of 89.20 will, of course, confirm down trend resumption. In that case, we should see EUR/USD taking out 1.2348 resistance in tandem.

                    Australia consumer sentiment dropped -4.8%, still second highest since 2010

                      By
                      ActionForex.com
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                      Australia Westpac-Melbourne Institute consumer sentiment dropped -4.8% mom to 113.1 in May, down from 118.8. Still, it’s the second highest print for the index since April 2010. Westpac said, “The fall may also represent some disappointment in the Federal Budget as a very generous Budget was still unable to exceed the exuberant expectations of the community.”

                      On RBA policy, Westpac expects the board to extend QE to a further AUD 100B starting in September, and to switch the target bond in the yield curve control from April 2024 to November 2024. It said, “this view is based on the expectation that the Board will be committed to monetary stimulus (reducing QE or restricting YCC to the April bond are akin to tightening policy) for the remainder of 2021.”

                      Full release here.

                      New Zealand PPI input jumped 2.1% qoq, output rose 1.2% qoq, electricity price surged

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                        ActionForex.com
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                        New Zealand PPI input jumped 2.1% qoq in Q1, versus expectation of 0.0% qoq. PPI output rose 1.2% qoq, above expectation of 0.0% qoq. The largest output industry contributions were from electricity and gas supply, which was up 17.4%. Petroleum and coal product manufacturing rose 12.2%. daily cattle farming rose 5.1%.

                        The largest input industry contributions were from electricity and gas supply, which was up 28.7%. Dairy production manufacturing rose 4.7%. Petroleum and coal product manufacturing rose 9.3%.

                        “Lower lake levels in the South Island have driven up wholesale prices for electricity generation, while an unexpected fall in production at the Pohokura gas field has seen gas supply prices also increase,” business prices delivery manager Bryan Downes said. “The quarterly price change is the largest since 2018 but is nowhere near the magnitude seen in the 2008 power crisis.”

                        Full release here.

                        US building permits permits rose to 1.76m, housing starts dropped to 1.57m

                          By
                          ActionForex.com
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                          US building permits rose 0.3% mom to 1760k in April, slightly below expectation of 1770k. Housing starts dropped -9.5% mom to 1569k, well below expectation of 1710k.

                          Full release here.

                          Eurozone GDP dropped -0.6% qoq in Q1, EU down -0.4% qoq

                            By
                            ActionForex.com
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                            According to the flash estimate by Eurostats, Eurozone GDP contracted -0.6% qoq in Q1, matched expectations. Compared with the same quarter of the previous year, GDP dropped 1.8% yoy. Employment dropped -0.3% qoq, -2.1% yoy.

                            EU GDP dropped -0.4% qoq, -1.7% yoy. Employment dropped -0.3% qoq, -1.8% yoy.

                            Full release here.

                            ECB Villeroy: No risk of durable return of inflation in Eurozone

                              By
                              ActionForex.com
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                              ECB Governing Council member Francois Villeroy de Galhau said in a webcast, “as of today, there is no risk of a durable return of inflation in the euro zone and therefore, it goes without saying, there is no doubt that the monetary policy of the ECB will remain very accommodative.”

                              The Bank of France head also expected French economy to grow at least 5.5% this year.

                              UK unemployment rate edged lower to 4.8% in March

                                By
                                ActionForex.com
                                -

                                UK unemployment dropped to 4.8% in the three months to March, down from 4.9%, better than expectation of 4.9%. Unemployment rate remained 0.8% higher than pre-pandemic period of December 2019 to February 2020. Employment rate was estimated at 75.2%, -1.4% below pre-pandemic level. Average earnings including bonus rose 4% 3moy, below expectation of 4.6% 3moy. Average earnings excluding bonus rose 4.6% 3moy, matched expectations. Claimant count dropped -15.1k in April.

                                Full release here.

                                Japan GDP contracted -1.3% qoq in Q1, CHF/JPY in healthy up trend

                                  By
                                  ActionForex.com
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                                  Japan GDP contracted -1.3% qoq in Q1, slightly worse than expectation of -1.2% qoq. In annualized term, GDP contacted -5.1%, versus expectation of -4.6%. Looking at some details, capital expenditure dropped -1.4% qoq versus expectation of 1.1% qoq. External demand dropped -0.2% qoq, matched expectations. Private consumption dropped -1.4% qoq, better than expectation of -2.0% qoq. Price index dropped -0.2% yoy, below expectation of -0.1% yoy.

                                  Yen continues to trade as one of the weakest for the month, along with Dollar. In particular, we’d like to point out that CHF/JPY’s medium term rally remains in force, which could give extra pressure to Yen. As long as 119.96 support holds, we’re expect the current rise from 106.71, as the third leg of the pattern from 101.66 (2016.06), to continue to 100% projection of 101.66 to 118.59 from 106.71 at 123.64.

                                  AUD/JPY recovers after RBA minutes, still bounded in consolidations

                                    By
                                    ActionForex.com
                                    -

                                    Minutes of RBA’s May 4 meeting reiterated that rate hike was unlikely “until 2024 at the earliest”. Members would “consider whether to retain the April 2024 bond as the target bond for the 3-year yield target or to shift to the next maturity” in July.

                                    Concerning QE, the members suggested they were “willing to undertake further bond purchases if doing so would assist with progress towards the Bank’s goals of full employment and inflation”. All actions are dependent on incoming economic data.

                                    However, given that unemployment rate (5.6%) has stayed markedly above RBA’s long-term target of 4-4.5%, the central bank would likely extend QE with another AUD 100B at the July meeting.

                                    More in RBA:

                                    Australian Dollar trades mildly higher earlier today, mainly due to broad based risk sentiment. AUD/JPY is struggling in range below 85.78, as consolidation continues. There is no change in the bullish outlook with 83.91 support intact. Upside break through 85.78 is in favor, and up trend from 59.89 should then target 90.29 long term structural resistance.

                                    However, break of 83.91 support will delay the bullish case. AUD/JPY could have a deeper correction towards 55 week EMA (now at 79.33) first, before resuming the up trend at a later stage.

                                    Fed Kaplan: Possible to hike interest rates before 2022 end

                                      By
                                      ActionForex.com
                                      -

                                      Dallas Fed President Robert Kaplan expected inflation to decline in the fall, but may remain elevated by year-end. He added that Fed will continue to monitor inflation closely, as the economy works through imbalances caused by the pandemic.

                                      Meanwhile, he expects GDP to grow by 6.4% this year, while unemployment rate will fall to 4% by year end.

                                      Kaplan also reiterated that it’s possible for Fed to raise interest rates before the end of 2022. “I haven’t seen anything from that point to today that’s changed my view,” he added.

                                      BoE Vlieghe: Monetary policy requires focusing on medium term outlook

                                        By
                                        ActionForex.com
                                        -

                                        BoE MPC member Gertjan Vlieghe said yesterday that inflation is likely to overshoot the 2% target later this year, due to temporary bottlenecks and base effects. Though, “the fact that we’re going to have, or we’re likely to have, temporarily high growth rates and temporarily high inflation in the coming months, is not the main concern of monetary policy,” he said.

                                        “Instead, monetary policy will focus on returning to inflation sustainably to its target, which requires focusing on the medium term outlook,” he added.

                                         

                                        US Empire state manufacturing dropped to 24.3, both price indexes hit record highs

                                          By
                                          ActionForex.com
                                          -

                                          US Empire State Manufacturing general business condition dropped to 24.3 in May, down from 26.3, above expectation of 24.0.

                                          Looking at some details, new orders rose from 26.9 to 28.9. Shipments rose from 25.0 to 29.7. Delivery time dropped from 28.1 to 23.6. Inventories dropped from 11.6 to 7.1. Price paid rose form 74.7 to 83.5. Prices received also rose from 34.9 to 37.1. Number of employees dropped slightly from 13.9 to 13.6. Average employee workweek rose notably from 12.7 to 18.7.

                                          New York Fed noted that “manufacturing activity grew at a sturdy pace”. “Both price indexes reached record highs”.

                                           

                                          Full release here.

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