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RBA Debelle: Decline in interest rates across yield curve has lowered exchange rate

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    ActionForex.com
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    In a speech, RBA Deputy Governor Guy Debelle said the comprehensive package of measures implemented through this year “has materially lowered the structure of interest rates in the Australian financial system”. Additionally, “the decline in interest rates across the yield curve has lowered the exchange rate, relative to what it otherwise would be.”

    He acknowledged that the news about vaccines “should help bolster that confidence”. But recovery will be “uneven”. “It is likely to be some time before the vaccines will be widely available and distributed.”

    Full speech here.

    BoJ Kuroda: Japan isn’t heading toward deflation

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      ActionForex.com
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      BoJ Governor Haruhiko Kuroda told the parliament that there is no need to “overhaul our projections” despite resurgence of coronavirus infections globally. The central bank forecasts the economy to contract -5.5% in the fiscal year ending March 2021, then expand 3.6% in the following year.

      “Our view is that Japan isn’t heading toward deflation, though we’re watching developments in service consumption and capital expenditure carefully,” he added.

      Kuroda also said, “there is no need now to review our policy framework. But there could be debate at an appropriate timing in the future.”

      Fed Evans: No Rate hike probably even in 2024

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        ActionForex.com
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        Chicago Fed President Charles Evans said there is still “quite a long way to go” for the US economy to recovery from the pandemic crisis. He didn’t expect inflation to reach 2% targe4t until late 2022 or even 20223. Hence, “we are not expecting the funds rate to be raised before 2023 – probably late, maybe even 2024 in my opinion,” he said.

        He also noted, “in the past the Fed has not put enough weight on valuing getting inflation to 2% and above”. Fed should get core inflation up to 2.5%, and, “I don’t think we should get involved in trying to fine-tune the overshoot…I would be surprised if we were to seek to increase interest rates sooner than 2023, given the objectives that we’ve laid out.”

        Gold downside breakout, heading to 1750

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          ActionForex.com
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          Gold’s selloff today finally pushes it to a downside break out. For now, near term outlook will stay bearish as long as 1879.75 minor resistance holds. Sustained trading below 1848.39 support will confirm resumption of whole decline from 2075.18. Such fall is seen as a correction to the long term up trend from 1160.17. Next medium term target will be 55 week EMA (now at 1750.89). Though, we’d expect strong support from 38.2% retracement of 1160.17 to 2075.18 at 1725.64 to contain downside. Meanwhile, break of 1879.75 resistance will dampen this bearish view and turn outlook neutral first.

          US PMI composite rose to 57.9, 68-month high, very encouraging reading

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            ActionForex.com
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            US PMI Manufacturing rose to 56.7 in November, up from 53.4, a 74-month high. PMI Services rose to 57.7, up from 56.9, a 68-month high. PMI Composite rose to 57.9, up from 56.3, a 68-month high.

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

            “The November PMI surveys provide the first post-election snapshot of the US economy, and makes for very encouraging reading, though stronger economic growth is quite literally coming at a price.

            “First the good news: business activity across both manufacturing and services rose in November at the strongest rate since March 2015. The upturn reflected a further strengthening of demand, which in turn encouraged firms to take on staff at a rate not previously seen since the survey began in 2009.

            “However, the surge in demand and hiring has pushed prices and wages higher. Average selling prices for goods and services rose at the fastest rate yet recorded by the survey, with shortages of supplies also more widespread than at any time previously reported.

            “Firms are scrambling for inputs and workers to meet the recent growth of demand, and to meet rising future workloads. Expectations about the year ahead have surged to the most optimistic for over six years, reflecting the combination of a post-election lift to confidence and encouraging news that vaccines may allow a return to more normal business conditions in the not too distant future.”

            Full release here.

            BoE Haldane: Reasonable to speak of 2021 as turning a leaf

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              ActionForex.com
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              BoE Chief Economist Andy Haldane said, “the vaccine announcements of the past few weeks offer hope at the end of the tunnel”. However, “even with a vaccine, it’s clear this crisis will lead to some lasting scars, particularly on the poorest and the most disadvantaged.”

              Haldane added that around two-thirds of pandemic economic loss had been recouped so far. “It’s now reasonable and realistic to speak of next year as turning a leaf for us economically,” he said.”

              UK PMI Composite dropped to 47.4, double-dip recession

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                ActionForex.com
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                UK PMI Manufacturing rose to 55.2 in November, up from October’s 53.7, well above expectation of 50.5, and hit a 3-month high. PMI Services, however, dropped sharply to 45.8, down from 51.4, hitting a 6-month low but beat expectation of 42.5. The results pushed PMI Composite to 47.4, down from 52.1, a 6-month low.

                Chris Williamson, Chief Business Economist at IHS Markit, said: “A double-dip is indicated by the November survey data, with lockdown measures once again causing business activity to collapse across large swathes of the economy… Some comfort comes from the data suggesting that the impact of the lockdown has not been as severe as in the spring, and manufacturing has also received a significant boost from inventory building and a surge in exports ahead of the UK’s departure from the EU at the end of the year, providing a fillip for many companies. However, while the lockdown will be temporary, so too will this pre-Brexit boost.”

                Full release here.

                Eurozone PMI composite dropped to 45.1, plunged back into a severe decline

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                  ActionForex.com
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                  Eurozone PMI Manufacturing dropped to 53.6 in November, down from 54.8, a 3-month low but above expectation of 53.1. PMI Services dropped to 41.3, down from 46.9, a 6-month low and missed expectation of 42.5. PMI Composite dropped to 45.1, down from 50.0, also a 6-month low.

                  Chris Williamson, Chief Business Economist at IHS Markit said: “The eurozone economy has plunged back into a severe decline in November amid renewed efforts to quash the rising tide of COVID-19 infections. The data add to the likelihood that the euro area will see GDP contract again in the fourth quarter…. The further downturn of the economy signalled for the fourth quarter represents a major set-back to the region’s health and extends the recovery period. After a 7.4% contraction of GDP in 2020, we are expecting only a 3.7% expansion in 2021.”

                  Full release here.

                  Germany PMI composite dropped to 52.0, resilient manufacturing

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                    ActionForex.com
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                    Germany PMI Manufacturing dropped to 57.9 in November, down from October’s 58.2, above expectation of 56.5. . PMI Services dropped to 46.2, down from 49.6, a 6-month low, similar to expectation of 46.3. . PMI Composite dropped to 52.0, down from 55.0, a 5-month low.

                    Phil Smith, Associate Director at IHS Markit said: “As expected, the introduction of new lockdown measures in November to combat the spread of COVID-19 has had a disruptive impact on German economic activity, with the flash PMI data showing the service sector suffering its worst performance since May. However, the resilience being exhibited by the manufacturing sector, which the survey shows is benefitting for growing sales to Asia in particular, supports our view that any downturn in the final quarter is expected to be far shallower than those seen in the first half of the year.”

                    Full release here.

                    France PMI composite dropped to 39.9, businesses adapting well to new restrictions

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                      ActionForex.com
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                      France PMI Manufacturing dropped to 49.1 in November, down from October’s 51.3, missed expectation of 50.1. PMI Services dropped to 38.0, down from 46.5, matched expectations. PMI Composite dropped to 39.9, down from 47.5. All are 6-month lows.

                      Eliot Kerr, Economist at IHS Markit said: “With the renewed tightening of restrictions in France at the end of October, a sharp decline in private sector activity during November was almost inevitable. However, it is somewhat positive to see that the latest contraction in activity was substantially slower than during the previous lockdown. These results suggest that some French businesses have been able to adapt their operations to the new conditions and are subsequently less susceptible to sharp downturns in activity when tighter restrictions are imposed.

                      Full release here.

                      Australia PMI manufacturing rose to 35-month high

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                        ActionForex.com
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                        Australia CBA PMI manufacturing surged to 56.1 in November, up from 54.2, hitting a 35-month high. PMI Services rose to 54.9, up from 53.7, a 4-month high. PMI Composite rose to 54.7, up from 53.5, also a 4-month high.

                        Bernard Aw, Principal Economist at IHS Markit, said: “Latest PMI data showed the recovery in the Australian private sector economy gained pace during November, setting the scene for a stronger GDP performance during the final quarter of 2020… That said, the subdued rise in new business remains a concern. Renewed lockdown measures in parts of the world due to second waves of infections may keep border controls and travel restrictions in place for a longer period, thereby dampening external demand. If Australian sales growth continues to lag behind the rise in business activity in the months ahead, the current economic recovery could risk losing momentum.”

                        Full release here.

                        New Zealand retail sales rose 28% qoq in Q3

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                          ActionForex.com
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                          New Zealand retail sales rose 28.0% qoq in Q3 while ex-auto sales rose 24.1% qoq. Comparing to Q3 2019, total volume of retail sales rose 8.3% yoy. However, for the 12-month period from October 2019 to September 202, total retail sales value was still down -0.2%.

                          “A strong September quarter has contributed to the year-ended sales coming in just shy of last year’s value,” retail statistics manager Sue Chapman said.

                          Full release here.

                          UK and Canada struck GBP 20B trade deal

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                            ActionForex.com
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                            Over the weekend, the UK and Canada struck a rollover trade deal that underpins GBP 20B worth of trade after the Brexit transition period. The agreement “largely replicates” the EU deal on tariff reductions and provisions for labour and environment.

                            UK International Trade Minister Liz Truss said the deal ” locks in certainty for thousands of jobs”. Canada Minister of Small Business, Export Promotion and International Trade, Mary Ng said, “we do want an ambitious, high level comprehensive trade agreement with the UK,”

                            Separately, the UK and EU will enter their final week of negations. Chancellor Rishi Sunak told BBC that “no deal is better than a bad deal”. “We should not be going for a deal at any price, that would be the wrong thing to do and I think there are things that are important to us in these negotiations, and we’ve been entirely, as I said, reasonable, consistent and transparent.”

                            ECB Lane: Economy will not exit pandemic crisis without being weakened over a long period of time

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                              ActionForex.com
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                              ECB Chief Economist Philip Lane admitted in an interview with Les Echos that current lockdowns will “lead to a drop in activity” in Europe. But the measures are “less harsh” than those in Spring. Now, “manufacturing has been kept open, construction is continuing, essential shops remain open, and there is not too much disruption to supply chains.” Hence, the impact is likely to be “less severe” this time. Still “the situation will not materially improve in the last weeks of 2020.”

                              Based on ECB’s projections, it’s assumed that coronavirus vaccine will be rolled out throughout 2021. Lane said “full recovery of GDP, back to where it was in 2019, will not happen before the autumn of 2022”. Also, “in spite of the vaccine, there will be some persistent damage and the European economy will not exit this crisis without being weakened over a long period of time.”

                              Full interview here.

                              Canada retail sales rose 1.1% in Sep, 5th consecutive month of growth

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                                ActionForex.com
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                                Canada retail sales rose 1.1% mom to CAD 53.9B in September, above expectation of 0.2% mom. That’s also the fifth consecutive monthly increases since the record decline in April. Core retail sales rose 1.1%, also well above expectation of 0.0% mom. Sales were up in 9 of 11 subsectors, representing 93.2% of retail trade. Rounding out Q3, sales were up 22.6% comparing with Q2 in volume terms.

                                Full release here.

                                WTO Good Trade Barometer jumped to 100.7, but growth likely to slow in Q4

                                  By
                                  ActionForex.com
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                                  WTO said it’s Good Trade Barometer marked a dramatic improvement to 100.7. It hit a low at 84.5 back in August, ” which reflected collapsing trade and output in the second quarter as lockdowns and travel restrictions were employed to fight the virus”.

                                  It added, “the latest reading indicates a strong rebound in trade in the third quarter as lockdowns were eased, but growth is likely to slow in the fourth quarter as pent-up demand is exhausted and inventory restocking is completed.”.

                                  However, trade-related uncertainty “remains high” with a seconGd wave of pandemic underway in Europe and North America. But progress has been reported in vaccine development as a “more positive note”.

                                  Full release here.

                                  UK retail sales rose 1.2% mom in Oct, now 6.7% above Feb’s pre-lockdown levels

                                    By
                                    ActionForex.com
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                                    UK retail sales rose 1.2% mom, 5.8% yoy in October. Retail sales ex-fuel rose 1.3% mom, 7.8% yoy. ONS said: “We see sharp falls in sales at the start of the lockdown in March and April 2020, followed by strong growth to recovery in May and June 2020. A slower rate of growth is seen in the latest three months, with volume sales in October 2020 now 6.7% higher than February’s pre-lockdown levels.”

                                    Full release here.

                                    Japan PMI manufacturing dropped to 48.3, path to recovery remains fraught

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                                      ActionForex.com
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                                      Japan PMI Manufacturing dropped to 48.3 in November, down from October’s 48.7, missed expectation of 48.9. The data signalled a deterioration in the sector for the 19th straight month. In particular, production and new orders contracted at faster rates, as well as employment. PMI Services also dropped to 46.7, down from 47.7. PMI Composite dropped to 47.0, down from 48.0.

                                      Bernard Aw, principal Economist at IHS Markit, said: “Looking ahead, the path to recovery remains fraught with challenges as a renewed rise in the number of COVID-19 cases worldwide could dampen global economic activity and trade, thereby putting Japanese exporters in a tough situation”.

                                      Full release here.

                                      Japan CPI core dropped to -0.7% yoy in Oct, worst in nearly a decade

                                        By
                                        ActionForex.com
                                        -

                                        Japan CPI core (all item ex-food), dropped to -0.7% yoy in October, down from -0.3% yoy, matched expectations. That’s also the worst deflation reading in nearly a decade, since March 2011. Nevertheless, the poor reading was seen as a result of high base effect due to sales take hike, and a recent government campaign to boost tourism.

                                        Headline CPI (all item) dropped to -0.4% yoy, down form 0.0% yoy, missed expectation of -0.3% yoy. CPI core-core (all item ex-food and energy), dropped -0.2% yoy, down from 0.0% yoy, matched expectations.

                                        Full release here.

                                        Australia retail sales rose 1.6% mom in Oct, strong rebound in Victoria

                                          By
                                          ActionForex.com
                                          -

                                          According to preliminary estimate, Australia retail sales rose 1.6% mom or AUD 460.5m in October, a strong rebound from September’s -1.1% decline. Annually, sales rose 7.3% yoy.

                                          Ben James, Director of Quarterly Economy Wide Surveys, said “The reopening of retail stores in Victoria at the end of October led to a boost to all industries, with the exception of food retailing. Victoria rose 5.2 per cent from September 2020 but remains 5.7 per cent below the levels of October 2019.”

                                          Full release here.

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