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AUD/NZD in correction downwards, but no change in bullish trend

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    ActionForex.com
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    AUD/NZD formed a short term top at 1.0840 on overbought condition and turn into corrective fall. While some more downside is likely in the cross, we’re not expecting a complete reversal in fortune. Downside of pull back should be contained by 38.2% retracement of 1.0415 to 1.0840 at 1.0678, which is close to 55 day EMA (now at 1.0688). Above 1.0788 minor resistance will bring retest of 1.0840 resistance first.

    However, firm break of 1.0678 would bring deeper fall to 61.8% retracement at 1.0577. Overall, the depth of the correction could eventually determine how far the rise from 1.0415 would extend to.

    Australia goods exports jumped 16% in Dec, imports dropped -9%

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      ActionForex.com
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      According to preliminary data, Australia’s export of goods rose 16% mom to AUD 34.9B. Imports of goods dropped -9% mom to AUD 26.0B. There was a goods trade surplus of AUD 9.0B.

      Exports to China jumped 21% to AUD 2312m, to Japan rose 24% to AUD 864m, to US rose 58% to AUSD 678m, to India rose 35% to AUD 339m, to South Korea dropped -14% to AUD 317m.

      Imports from China dropped -7% to AUD 641m, from US dropped -33% to AUD 1274m, from Germany dropped -10% to AUD 127m, from Japan rose 6% to 95m, from Thailand rose 8% to AUD 101m.

      “Imports have fallen following a November spike to be more in line with recent history”, said ABS Head of International Statistics, Katie Hutt, “while exports of metalliferous ores and cereals are the strongest in history, resulting in the fourth highest goods trade surplus on record”.

      Full release here.

      Canada retail sales rose 1.3% in Nov, up in 7 of 11 subsectors

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        ActionForex.com
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        Canada retail sales rose 1.3% mom to CAD 55.2B in November, well above expectation of 0.0% mom/ That’s the seventh consecutive monthly gain, led by sales at food and beverage stores, along with an uptick in e-commerce sales. Ex-auto sales rose 2.1% mom, above expectation of 0.3% mom.

        Sales were up in 7 of 11 subsectors, representing 53.4% of retail trade. In volume terms, retail sales rose 1.2% in November.

        Full release here.

        UK PMI composite dropped to 40.6 in Jan, sharp contraction in Q1

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          ActionForex.com
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          UK PMI manufacturing dropped sharply to 52.9 in January, down from 57, missed expectation of 53.0, a 7-month low. PMI Services dropped to 38.8, down from 49.4, missed expectation of 45.3, an 8-month low. PMI Composite dropped to 40.6, down from 50.4, an 8-month low.

          Chris Williamson, Chief Business Economist at IHS Markit, said:

          “A steep slump in business activity in January puts the locked-down UK economy on course to contract sharply in the first quarter of 2021, meaning a double-dip recession is on the cards. Services have once again been especially hard hit, but manufacturing has seen growth almost stall, blamed on a cocktail of COVID-19 and Brexit, which has led to increasingly widespread supply delays, rising costs and falling exports.

          “Worryingly, January also saw companies reduce headcounts at an increased rate again – albeit less so than seen between March and November. The steepest loss of jobs was recorded in the hotels, restaurants, travel and leisure sectors, reflecting the new lockdown measures.

          “Encouragingly, the current downturn looks far less severe than that seen during the first national lockdown, and businesses have become increasingly optimistic about the outlook, thanks mainly to progress in rolling out COVID-19 vaccines. Business hopes for the year ahead have risen the highest for over six-and-a-half years, boding well for the economy to return to solid growth once virus restrictions ease.”

          Full release here.

          Eurozone PMI composite dropped to 47.5, double-dip recession increasingly inevitable

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            ActionForex.com
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            Eurozone PMI Manufacturing dropped to 54.7 in January, down from 55.2, missed expectation of 55.0. PMI Services dropped to 45.0, down from 46.4, above expectation of 44.8. PMI Composite dropped to 47.5, down from 49.1.

            Chris Williamson, Chief Business Economist at IHS Markit said: “A double-dip recession for the eurozone economy is looking increasingly inevitable as tighter COVID- 19 restrictions took a further toll on businesses in January…. Some encouragement comes from the downturn being less severe than in the spring of last year, reflecting the ongoing relative resilience of manufacturing, rising demand for exported goods and the lockdown measures having been less stringent on average than last year…

            “The roll out of vaccines has meanwhile helped sustain a strong degree of confidence about prospects for the year ahead, though the recent rise in virus case numbers has caused some pull-back in optimism. The survey data therefore add to the view that t he eurozone will see a soft start to 2021, but that the economy should pick up momentum again as the vaccine roll out gathers pace.”

            Full release here.

            Germany PMI manufacturing dropped to 57.0, services down to 46.8

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              ActionForex.com
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              Germany PMI Manufacturing dropped to 57.0 in December, down from 58.3, missed expectation of 58.0. PMI services dropped to 46.8, down from 47.0, above expectation of 46.8. PMI Composite dropped to 50.8, down form 52.0, hitting a 7-month low.

              Phil Smith, Associate Director at IHS Markit said: “There were few surprises from January’s flash Germany PMI release, with the manufacturing data remaining strong but showing a slight loss of momentum, while services activity was further depressed by the lockdown measures introduced in the middle of December. All in all, the German economy has made a slow start to the year, and the extension of the current containment measures until at least mid-February means this looks like being the picture for several more weeks to come.”

              Full release here.

              France PMI composite dropped to 47 in Jan, but return of employment growth a big positive

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                ActionForex.com
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                France PMI Manufacturing rose to 51.5 in January, up from 51.5, a 6-month high and beat expectation of 50.8. PMI services. on the other hand, dropped to 46.5, down from 49.1, missed expectation of 48.3. PMI Composite dropped to 47.0, down from 49.5.

                Eliot Kerr, Economist at IHS Markit said: “The French private sector started the new year as it ended the last, with COVID-19 restrictions driving a further decline in business activity. However, there were one big positive to be gleaned from the latest PMI data, and that was the return of employment growth. The fact that firms have returned to recruitment activity points to some confidence in an economic recovery in the second half of this year. That confidence was also evident in the broader expectations figures, which were only slightly off December’s 11-month high.

                Full release here.

                Japan CPI core dropped to -1% yoy in Dec, worst since 2010

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                  ActionForex.com
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                  Japan CPI core (all item ex-fresh food) dropped further to -1.0% yoy in December, down from -0.2% yoy, but was above expectation of -1.1% yoy. That’s still the biggest annual decline in core inflation since September 2010. Headline CPI (all items) dropped to -1.2% yoy, down from -0.9% yoy. CPI core-core (all item ex-fresh food and energy) dropped to -0.4% yoy, down from -0.3% yoy.

                  “I don’t think the risk of Japan sliding back into deflation is high,” BOJ Governor Haruhiko Kuroda insisted yesterday. “But potential growth may be falling so we need to look at the impact (on prices) carefully.”

                  Full release here.

                  Japan PMI manufacturing dropped to 49.7 in Jan, short-term activity undoubtedly hampered by rising coronavirus cases

                    By
                    ActionForex.com
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                    Japan PMI Manufacturing dropped to 49.7 in January, down from 50.0, back in contraction. PMI Services dropped to 45.7, down from 47.7. PMI Composite dropped to 46.7, down from 48.5.

                    Usamah Bhatti, Economist at IHS Markit, said: “Short-term activity will undoubtedly be hampered by rising coronavirus disease 2019 (COVID-19) cases, as the government declared a state of emergency in Tokyo and introduced further measures to curb rising infection rates. As a result, positive sentiment weakened across the private sector. Firms are still predicting growth over the coming 12 months, although concern remains that the impact of the pandemic will be prolonged.”

                    Full release here.

                    Australia retail sales dropped -4.2% mom in Dec, Victoria down -7%

                      By
                      ActionForex.com
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                      Australia retail sales dropped -4.2% mom in December, much worse than expectation of -1.5% mom. Over than year, sales rose 9.4% yoy. Victoria led the falls by state, down -7% following a 22% rise in November, while New South Wales fell -5% as localized restrictions in Sydney impacted turnover. All states and territories, except for the Northern Territory, fell this month.

                      Full release here.

                      Australia CBA PMI manufacturing rose to 57.2, 49-month high

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                        ActionForex.com
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                        Australia CBA PMI manufacturing rose to 57.2 in January, up from 55.7. That’s also the highest level in 49 months. PMI Services dropped to 55.8, down from 57.0. PMI Composite dropped slightly to 56.0, down from 56.6.

                        Pollyanna De Lima, Economics Associate Director at IHS Markit, said: “The Australian private sector remained resilient at the start of the year, despite the COVID-19 pandemic, with the flash PMI showing sustained growth of new orders, output and employment… While this boost in demand is welcome, inflationary pressures seem to be mounting…. Material shortages and restricted freight capacity remained key themes of the survey….

                        “Businesses were upbeat towards the year-ahead outlook for output, with hopes pinned on vaccine developments and the eventual lifting of restrictions globally. However, optimism weakened in January, dampened by concerns over the long-term effects of the COVID-19 pandemic on the economy.”

                        Full release here.

                        New Zealand CPI unchanged at 1.4% yoy in Q4, underlying inflation higher

                          By
                          ActionForex.com
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                          New Zealand CPI rose 0.5% qoq in Q4, above expectation of 0.2% qoq. Annually, CPI was unchanged at 1.4% yoy, above expectation of 1.0% yoy.

                          The trimmed means CPI, which exclude extreme price movements, ranged from 1.7% to 2.1% yoy, indicating that underlying inflation is higher than the 1.4% overall increase in CPI.

                          Full release here.

                          New Zealand BusinessNZ manufacturing dropped to 48.7, caution heading into the New Year

                            By
                            ActionForex.com
                            -

                            New Zealand BusinessNZ Manufacturing index dropped to 48.7 in December, down from 54.7. The manufacturing was back in contraction after staying in expansion territory for six straight months. Looking at some details, production dropped from 55.0 to 51.5. Employment dropped from 51.3 to 49.9. New orders dropped from 56.5 to 49.9. Finished stocks dropped from 59.2 to 45.9. Deliveries also dropped from 51.5 to 44.5.

                            BNZ Senior Economist, Doug Steel said that “the PMI’s three-month moving average sits at an expansionary 51.8, albeit below its long-term average of 53.0. This all suggests some expansion in the final quarter of last year, but the softer December month suggests some caution heading into the New Year.”

                            Full release here.

                            ECB Lagarde: Risk tilted to the downside but less pronounced

                              By
                              ActionForex.com
                              -

                              In the post meeting press conference, ECB President Christine Lagarde said “the roll-out of vaccines, which started in late December, allows for greater confidence in the resolution of the health crisis”. But it will “take time until widespread immunity is achieved”. Thus “further adverse developments related to the pandemic cannot be ruled out.

                              But over the medium term, recovery of Eurozone should be supported by “favourable financing conditions, an expansionary fiscal stance and a recovery in demand as containment measures are lifted and uncertainty recedes.”

                              Lagarde also said that risks surrounding growth outlook remain “tilted to the downside but less pronounced”. Positive development including vaccination, and EU-UK agreement.

                              Full introductory statement here.

                              US initial jobless claims dropped to 900k, continuing claims down to 5.05m

                                By
                                ActionForex.com
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                                US initial jobless claims dropped -26k to 900k in the week ending January 16, higher than expectation of 860k. Four-week moving average of initial claims rose 23.5k to 848k.

                                Continuing claims dropped -127k to 5054k in the week ending January 9. Four-week moving average of continuing claims dropped -67k to 5126k.

                                Full release here.

                                Also released, Philly Fed manufacturing conditions rose to 26.5 in January, up from 9.1, above expectation of 12.2. Housing starts rose to 1.67m in December versus expectation of 1.56m. Building permits rose to 1.71m versus expectation of 1.60m.

                                ECB press conference live stream

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                                  ActionForex.com
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                                  Full introductory statement.

                                   

                                  ECB maintains very accommodative monetary policy stance

                                    By
                                    ActionForex.com
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                                    ECB left the “very accommodative monetary policy stance” unchanged as widely expected. Main refinancing rate was held at 0.00%, marginal lending rate a and deposit rate at 0.25% and -0.50% respectively. Rates will “remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.”

                                    Envelope of the “pandemic emergency purchase programme (PEPP)” is kept at EUR 1850B, running through at least March 2022. Asset purchase programme (APP) will continue at monthly net purchase of EUR 20B. ECB will will also continue to provide “ample liquidity” through refinancing operations, in particular the third series of targeted longer-term refinancing operations (TLTRO III).

                                    Full statement here.

                                    Bitcoin accelerates lower after rejection by 55 H EMA, on track to 30635 support

                                      By
                                      ActionForex.com
                                      -

                                      Bitcoin’s decline from 37936 continues and accelerates lower today. The rejections by both 4 hour 55 EMA and 55 H EMA affirm near term bearishness. We’re holding on to the view that corrective pattern from 41964 is still extending, with fall from 40000 as the third leg. Deeper decline remains expected as long as 35669 resistance holds holds, for 30635 support.

                                      For now, we’d continue to expect strong support from around 30k handle to contain downside to complete the consolidation. But firm break of 30635 will target 61.8% retracement of 17629 to 41964 at 26924.

                                      1902 to cap Gold’s upside despite stronger than expected rebound

                                        By
                                        ActionForex.com
                                        -

                                        Gold’s rebound from 1810.07 was stronger than expected and broke 1863.51 resistance. The development suggests that the first leg of the fall from 1959.15 has completed and stronger recovery could be seen to 61.8% retracement of 1959.16 to 1810.07 at 1902.20. But upside should be limited there to bring another fall.

                                        We’re still holding on to the view that corrective pattern from 2075.18 is not completed yet. Below 1832.40 minor support will turn bias to the downside for 1810.07, and then 1764.31 support and below.

                                        BoJ Kuroda: Risk of sliding back into deflation is not high

                                          By
                                          ActionForex.com
                                          -

                                          In the post meeting press conference, BoJ Governor Haruhiko Kuroda admitted that “output gap is worsening sharply at present”. However, they won’t have a “huge immediate negative impact on medium- and long-term inflation expectations”. “I don’t think the risk of Japan sliding back into deflation is high,” he added.

                                          Also, “it’s too early to exit from our massive monetary easing programme at this point. Western economies have been deploying monetary easing steps for a decade, and none of them are mulling an exit now.”

                                          Regarding the march policy review, Kuroda maintained that yield curve control is “working properly”. In the review, ” we will seek how best to balance the need to curb the side-effects of yield curve control (YCC) while making it more effective … We also need to make our framework sustainable and be able to respond flexibly as needed.”

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