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Australia PMI composite rose to record 58.8 in Apr, strong start to Q2

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    Australia PMI Manufacturing rose to 59.6 in April, up from 56.8. PMI Services rose to 58.6, up from 55.5. PMI Composite rose to 58.8, up from 55.5. All three indexes were at record highs.

    Pollyanna De Lima, Economics Associate Director at IHS Markit, said: “Australia’s private sector started the second quarter on a strong footing, with growth of output accelerating for the second time in a row to the steepest on record as sales were boosted by improved market confidence due to a reduction in the negative impact of COVID-19.

    “The stronger growth momentum filtered through to the labour market… The overall degree of business sentiment improved from March’s seven-month low and was above its average… Ongoing supply-chain disruptions continued to exert upward pressure on inflation. The flash results highlighted the steepest increases in both input costs and selling charges since the inception of the survey.”

    Full release here.

    ECB Lagarde: Progress with vaccinations should pave the way for firm rebound

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      In the post meeting press conference, ECB President Christine Lagarde said that while Eurozone real GDP could have contracted again in Q1, data pointed to a “resumption of growth” in Q2. Progress with vaccinations, should “pave the way for a firm rebound in economic activity in the course of 2021”.

      Near-term risks on growth continue to be “on the downside, but medium-term risks remain “more balanced”. Headline inflation is “likely to increase further in the coming months”, reflecting “changing dynamics of idiosyncratic and temporary factors”. These factors can be expected to “fade out” early next year.

      Full opening remarks here.

      ECB Lagarde press conference live stream

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        US initial claims dropped to 547k, lowest since March 2020

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          US initial jobless claims dropped -39k to 547k in the week ending April 17, better than expectation of a rise to 642k. That’s also the lowest level since March 14, 2020. Four-week moving average of initial claims dropped 28k to 651k, lowest since March 14, 2020 too.

          Continuing claims dropped -34k to 3674k in the week ending April 10, lowest since March 21, 2020. Four-week moving average of continuing claims dropped -42k to 3713k, lowest since March 28, 2020.

          Full release here.

          ECB stands pat, reconfirm its very accommodative stance

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            ECB left monetary policy unchanged and “reconfirm its very accommodative monetary policy stance”. Main refinancing rate, marginal lending facility rate, and deposit rate are held at 0.00%, 0.25%, and -0.50% respectively.

            The pandemic emergency purchase programme (PEPP) will continue with an envelop of EUR 1850B, “until at least the end of March 2022”. It also expects PEPP to be carried out at a “significantly higher pace” during the current quarter. ECB also stands ready to “recalibrated” the envelop if required. The asset purchase programme (APP) will continue at a monthly pace of EUR 20B. It will also continue to provide “ample liquidity” through the refinancing operations.

            Finally, ECB “stands ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry.”

            Full statement here.

            ECB in focus, Euro lacks upside momentum except versus Dollar

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              ECB meeting is a major focus for today, but expectations are rather low. No change in monetary policy is expected. Also, updated economic projections will not be released until June.

              Even though US yields continued their march higher, European yields have stabilized since the central bank announced to accelerated significantly the pace of PEPP purchases back in mid-march. ECB will likely reiterate that the increase in PEPP purchases will continue until June. The question is whether there would be hints on scaling back the monthly purchases after that.

              Here are some previews:

              Euro has been relatively firm this month, up against most except Swiss Franc and Kiwi. Yet, upside momentum is disappointing so far. There is follow through buying, even against Yen. Price actions against Sterling Aussie are corrective in a down trend setting. The better performance is seen against Dollar only.

              At this point, as long as 1.1941 support holds, we’re still expecting EUR/USD’s rebound from 1.1703 to continue to retest 1.2242/2348 resistance zone. But that would more likely be due to Dollar’s own weakness.

              Australia NAB business confidence rose to 17 in Q1, economic recovery built further momentum

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                Australia NAB quarterly business confidence rose to 17 in Q1, up from 15. Business conditions rose from 11 to 17. Business condition for next 3 months rose form 19 to 26. Business conditions for next 12 months rose form 24 to 31. Next 12-month capex plans rose from 31 to 34, highest level since mid 1990s.

                Alan Oster, NAB Group Chief Economist: “The survey suggests that the economic recovery built further momentum in Q1. What is particularly welcome is that the improvement is broad-based with conditions and confidence improving in most industries and are at an above-average level in all. Moreover, the lift in trading conditions and profitability over the last two quarters is now being translated into the Survey’s employment indicator”.

                Full release here.

                BoC press conference live stream

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                  Gold resuming rebound, to take on 1800 handle

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                    Gold is resuming the rebound from 1677.69 today and it’s now eyeing 1800 handle. Overall near term outlook is unchanged. A double bottom reversal pattern (1676.54, 1677.69) was formed. Further rise is expected as long as 1763.36 support holds, for 38.2% retracement of 2075.18 to 1676.65 at 1828.88.

                    Sustained break of 1828.88 will further affirm the case that whole correction from 2075.18 has completed with three waves down to 1676.65. Stronger rally would then be seen back to channel resistance (now at 1874.90) for confirmation.

                    US oil inventories rose 0.6m barrels, WTI risks more downside

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                      US commercial crude oil inventories rose 0.6m barrels in the week ending April 16, versus expectation of -3.7m barrels. At 493m barrels, oil inventories are about 1% above the five year average for this time of year. Gasoline inventories rose 0.1m barrels. Distillate fuel inventories dropped -1.1m barrels. Propane/propylene inventories dropped -0.1m barrels. Commercial petroleum inventories rose 3.6m barrels.

                      WTI crude oil formed a temporary top at 64.34 earlier this week and retreated. The structure of the recovery from 57.31 to 64.34 argues that correction from 67.83 may not be completed yet. Sustained trading below 4 hour 55 EMA will bring retest of 57.31 support. On the upside, though, break of 64.34 will bring retest of 67.83 high.

                      CAD surges after BoC, a look at EUR/CAD, CAD/JPY

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                        Canadian Dollar jumps broadly after BoC statement. The tapering was well expected. But BoC now expects economic slack to be absorbed in H2 2022, suggesting that the timing of rate hike could happen much earlier than prior expected.

                        CAD/JPY appears to have drawn strong support from 55 day EMA and rebounded. Focus is back on 86.88 minor resistance. Break will suggest that pull back from 88.28 has completed at 85.40. Stronger rise would then be seen back to retest 88.28 high quickly.

                        EUR/CAD’s fall is also back on 1.4949 support with the steep post BoC fall. Break will indicate that corrective rebound form 1.4723 has completed at 1.5191, and bring retest of 1.4723 low.

                        BoC tapers, expects economic slack to be absorbed in H2 of 2022

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                          ActionForex.com
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                          BoC left overnight rate target unchanged at 0.25% as widely expected. Bank rate and deposit rate are held at 0.50% and 0.25% respectively. Weekly net purchases of Canadian Government bonds is reduced from CAD 4B to CAD 3B, as widely expected too. It noted that “this adjustment to the amount of incremental stimulus being added each week reflects the progress made in the economic recovery.”

                          Also, as economic prospect improve, BoC now expects that economic slack will be absorbed some time in H2 of 2022, much earlier than March’s expectation of “until into 2023”. BoC will only commits to hold policy interest rate at ELB until then.

                          BoC revised real GDP growth forecast to 6.5% in 2021 (up from 4%), 3.75% in 2022 (down from 5%) and 3.25% in 2023 (up from 2.25%). Inflation is expected to rise “temporarily” to around top of 1-3% target range over the next few months, due to base-year effects. But CPI is expected to ease back to 2% over H2 of 2021. As slack is absorbed, inflation should return to 2% on a “sustained basis some time in the second half of 2022”.

                          Full statement here.

                          Canada CPI jumped to 2.2% yoy in March, accentuated by base-year effects

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                            Canada CPI accelerated to 2.2% yoy in March, up from February’s 1.1% yoy, slightly below expectation of 2.3% yoy. CPI common rose to 1.5% yoy, up from 1.3% yoy , above expectation of 1.4% yoy. CPI median rose to 2.1% yoy, up from 2.0% yoy, matched expectations. CPI trimmed rose to 2.2% yoy, up from 1.9% yoy, above expectation of 2.0% yoy.

                            StatCan said price growth in March 2021 was “accentuated by what is known as base-year effects, originating in March 2020. “As the upward impact of these temporary base-year effects will influence the 12-month movement over the next few months, the historical movements affecting current growth trends will be examined.”

                            Full release here.

                            UK CPI accelerated to 0.7% yoy, core CPI rose to 1.1% yoy

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                              ActionForex.com
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                              UK CPI accelerated to 0.7% yoy in March, up from 0.4% yoy , matched expectations. Core CPI also accelerated to 1.1% yoy, up from 0.9% yoy, above expectation of 1.0% yoy. “The rate of inflation increased with petrol prices rising and clothes recovering from the falls seen in February,” Office for National Statistics official Jonathan Athow said.

                              Also released, RPI accelerated to 1.5% yoy in March. PPI input came in at 1.3% mom, 5.9% yoy. PPI output was at 0.5% mom, 1.9% yoy. PPI output core was at 0.4% mom, 1.7% yoy.

                              CAD/JPY extends correction as BoC tapering awaited

                                By
                                ActionForex.com
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                                BoC is widely expected to become the first major central bank to scale back monetary stimulus today. It would announce to its asset purchases to CAD3B/week, from CAD4B/week previously. Overnight rate will be held at effective lower bound of 0.25%. The central will also likely revise up its economic projections.

                                The main question is whether the more optimistic outlook would prompt a change in the forward guidance. BoC had indicated that the policy rate will stay unchanged “until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved”, and this would unlikely happen until 2023. A better economic outlook might lead the members to see slack be absorbed earlier than 2023.

                                Here are some previews:

                                Canadian Dollar is currently the weakest one for the week, even worse than the greenback. Tapering of asset purchase was well priced in already. If there is no significant upgrade in the outlook, we’d expect CAD’s correction to continue. CAD/JPY’s break of 86.05 support overnight suggests that deeper correction in underway. Near term bearishness is also affirmed by rejection by 4 hour 55 EMA. We’d now expect deeper fall to 38.2% retracement of 77.91 to 88.28 at 84.31.

                                New Zealand CPI rose 0.8% qoq, 1.5% yoy in Q1

                                  By
                                  ActionForex.com
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                                  New Zealand CPI rose 0.8% qoq in Q1, matched expectations. Annually, CPI accelerated to 1.5% yoy, up from 1.4% yoy. Looking at some details, the rises in prices were led by transport, which rose 3.9% qoq, biggest quarterly rise in over a decade. Rent prices rose 1.0% qoq, biggest quarterly rise in a year.

                                  Full release here.

                                  Australia retail sales rose 1.4% mom in Mar, led by Victoria and Western Australia

                                    By
                                    ActionForex.com
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                                    Australia retail sales rose 1.4% mom, or AUD 423.9m, in March. Over the year, sales was up 2.3% yoy. The rises were led by Victoria (4%) and Western Australia (5.5%), with both states rebounding from COVID-19 lockdown restrictions during February. Queensland, which saw COVID-19 restrictions impact March 2021, saw a minor fall.

                                    Full release here.

                                    NASDAQ rejected by 14175 resistance, Yen rebounds as stocks pull back

                                      By
                                      ActionForex.com
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                                      Yen rebounds strong in US morning as pull back in stocks intensify. In particular, NASDAQ appears to be rejected solidly by 14175.11 resistance. It’s down around -1.3% at the time of writing. The development suggests that consolidation pattern from 14175.11 is extending with another falling leg. NASDAQ could be heading back to 55 day EMA (now at 13429) and below. We’d see if such development could help push for a deeper pull back in Yen crosses.

                                      AUD/JPY and NZD/JPY extending rebound, to retest recent highs

                                        By
                                        ActionForex.com
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                                        AUD/JPY powers through 84.39/46 minor resistance today, as rise from 83.02 resumes. Further rally is now expected as long as 83.73 support holds. At this point, it’s unsure whether consolidation pattern from 85.43 has completed already. Hence, we’d pay attention to topping at around 85.43. Though, eventually, the whole up trend from 59.89 is expected to resume sooner or later. It’s just a matter of time. Next medium term target is 61.8% projection of 73.13 to 85.43 from 83.02 at 90.62.

                                        Similarly, NZD/JPY is also resuming rise from 75.61 today, and hits as high as 78.36 so far. Further rally is expected as long as 77.38 minor support holds, for retesting 79.19 high. We’d also be cautious on topping around there. But eventually upside breakout is anticipated. Next medium term target is 61.8% projection of 68.86 to 79.19 from 75.61 at 81.99.

                                        UK claimant counts rose 10.1k in Mar, unemployment rate dropped to 4.9% in Apr

                                          By
                                          ActionForex.com
                                          -

                                          UK Claimant Count rose 0.4% mom, or 10.1k to 2.7million in march. The level was still 114.3%, or 1.4m, above March 2020. Though, it has been relatively stable since May 2020.

                                          Unemployment rate dropped to 4.9% in the three months to February, down from 5.0%, better than expectation of a rise to 5.2%. Average earnings excluding bonus rose 4.4% 3moy versus expectation of 4.2%. Average earnings including bonus rose 4.5% 3moy, below expectation of 4.8%.

                                          Full release here.

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