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US initial jobless claims dropped to 709k, continuing claims dropped to 6.8m

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    ActionForex.com
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    US initial jobless claims dropped -48k to 709 in the week ending November 7, better than expectation of 745k. Four-week moving average of initial claims dropped -33k to 755k.

    Continuing claims dropped -436k to 6786k in the week ending October 31. Four-week moving average of continuing claims dropped -653k to 7576k.

    Full release here.

    BoE Bailey: No precise date in mind on finishing negative rates study

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      ActionForex.com
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      BoE Governor Andrew Bailey said he didn’t have a “precise date in mind” regarding when to publish the findings regarding the consultation with banks on interest rates. “There’s a great deal of work we have to do with the banks, particularly to work out what’s doable and what needs to be fixed,” he added.

      Also, in the current environment, policymakers were “talking about all the tools that could possibly be in the box”. But for the UK, ” UK, there isn’t a great call, I think at the moment, for doing more yield curve control at the short end… so I don’t think it’s something that I would see frankly a great need for at the moment.”

      Eurozone industrial production dropped -0.4% in Sep, well below expectations

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        ActionForex.com
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        Eurozone industrial production dropped -0.4% mom in September, much worse than expectation of 0.9% mom. Production of durable consumer goods fell by -5.3% mom, energy by -1.0% mom, while production of intermediate goods rose by 0.5% mom, capital goods by 0.6% mom and non-durable consumer goods by 2.1% mom.

        EU industrial production was unchagned in the month. Among Member States, for which data are available, the largest decreases were observed in Italy (-5.6% mom), Ireland (-4.7% mom) and Portugal (-3.8% mom). The highest increases were registered in Czechia (4.1% mom), Slovakia (3.4% mom) and Poland (3.1% mom).

        Full release here.

        ECB: Forward EONIA curve does not suggest firm expectation of imminent rate cut

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          ActionForex.com
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          In the monthly Economic Bulletin, ECB said ‘the resurgence in coronavirus (COVID-19) infections presents renewed challenges to public health and the growth prospects of the euro area and global economies… the associated intensification of containment measures is weighing on activity, constituting a clear deterioration in the near-term outlook.”

          ECB also noted that “forward curve of the euro overnight index average (EONIA) shifted slightly downwards and remained mildly inverted”. The curve “does not suggest firm market expectations of an imminent rate cut”. Though, “long-term sovereign bond spreads declined steadily across euro area countries, amid expectations of further monetary policy and fiscal support.”

          It’s also reiterated that new round of macroeconomic projections in December ” will allow a thorough reassessment of the economic outlook and the balance of risks”. On that basis, ECB will “recalibrate its instruments, as appropriate, to respond to the unfolding situation”.

          Full release here.

           

          UK GDP grew 1.1% in Sep, still -8.2% below Feb’s level

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            ActionForex.com
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            UK GDP grew 1.1% mom in September, matched market expectations. That’s the fifth consecutive monthly increase. Industrial production rose 0.5% mom, matched expectations. Manufacturing production rose 0.2% mom, below expectation of 0.9% mom. For Q3, GDP grew 15.5% qoq, below expectation of 15.8% qoq.

            Still, comparing with February’s pre-pandemic levels, GDP is still down -8.2%. Index of services was down -8.8%. Index of production was down -5.6%. Manufacturing was down -8.1%. Construction was down -7.4%. Agriculture was down -0.7%.

            Full release here.

            Also from UK, goods trade deficit widened slightly to GBP -9.3B in September versus expectation of GBP -8.8B.

            WTI crude oil losses upside momentum ahead of 43.5 near term resistance

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              ActionForex.com
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              WTI crude oil surges to as high as 42.98 this week as boosted by coronavirus vaccine optimism. Though, it’s starting to lose momentum ahead of 43.50. At this point, we’re not expecting a firm break of 43.50 to resume the medium term rebound yet. At least, that’s not expected until will have a firmer schedule for vaccine deliveries. Break of 39.35 minor support will likely start another falling leg to extend the consolidation pattern from 43.50.

              However, decisive break to 43.50 should have 55 week EMA firmly taken out. That would add to medium term bullishness for a take on 50.64 resistance turned support, which is close to 50 psychological level.

              BoJ Adachi: It’s difficult to envision a post-COVID-19 economy

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                ActionForex.com
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                Bank of Japan board member Seiji Adachi said in a speech that it’s “difficult to envision a post-COVID-19 economy, at least for the time being”. The “process of making drastic changes to the socioeconomic structure can be painful”. It’s worth considering whether monetary might act as a “sort of safety net” for, or a “means of directly promoting” reforms.

                Also, he added, “if the pace of economic recovery is much slower than expected, it is not possible to completely rule out the risk that firms’ positive stance toward the outlook will be lost or that corporate bankruptcies and discontinuation of businesses will increase”. Thus, “it remains necessary in the COVID-19 era to maintain an accommodative monetary policy stance while carefully monitoring economic developments.”

                Full speech here.

                RBNZ Hawkesby sees less stimulus required, NZD/JPY extends rally

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                  ActionForex.com
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                  RBNZ Assistant Governor Christian Hawkesby said today that there is no change in forward guidance that OCR will stay at 0.25% until March 2021. Though, “less stimulus is required than we thought in August”, even though a “substantial amount” is still needed. Negative rates is a policy tool for the central bank is needed. But Hawkesby added that it’s less likely if banks use the cheap loans from the new FLP program.

                  New Zealand Dollar surges this week as markets see less urgency for negative rates due to improvement in outlook. ANZ still expects a cut to negative in August 2021, but it’s now “become a bit of a toss up”.

                  NZD/JPY’s rally from 59.49 resumes this week with strong break of 71.97 resistance The solid support from 55 week EMA is a sign of medium term bullishness. Focus is now on 73.53 structural resistance. Decisive break there should reaffirm this. NZD/JPY, be it starting an up trend or just correcting the long the down trend, should then target 61.8% retracement of 94.01 to 59.49 at 80.82.

                  BoE Tenreyro: Negative rate worked fairly well in Europe

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                    ActionForex.com
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                    BoE MPC member Silvana Tenreyro said in a Yorshire Post interview, “the positive evidence related to negative interest rate policy comes from Europe, where it has worked fairly well.” “It led to lower lending rates and increases in lending; and banks’ profitability actually increased,” she added.

                    Also, “we will be in a world of low-interest rates for a long time, important to engage with the review of negative rates,” she said.

                    Fed Daly: Recent vaccine news is heartening

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                      ActionForex.com
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                      San Francisco Fed President Mary Daly said yesterday that her “modal outlook” is the US economy will continue to expand at a “gradual pace”. The current resurgence in infections gave her “cause for concern”, but the recent vaccine news is “heartening”. “When the virus is behind us, I feel we have the economy in a good position to go,” she said.

                      Kansas City Fed President Esther George said the “calibration” of monetary policy right now is “appropriate”. Those, she’s encouraged and surprised by the strength of bounceback in the economy in Q3. He expected growth to moderate though.

                      Australia Westpac consumer sentiment hits 7-yr high on housing market optimism

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                        ActionForex.com
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                        Australia Westpac Consumer Sentiment rose 2.5% to 107.7 in November, up from 105.0. The index is now 35.3% above it’s level in August, and 13% above the six-month average prior to the pandemic in March. Further, it’s a seven year high, strongest reading since November 2013.

                        Westpac said the main message from this survey is the encouraging optimism which is building around the outlook for the housing market. The boost from record low interest rates is clearly over-riding negatives around high unemployment; the overhang of deferred loans; the prospect of withdrawal of significant fiscal support; slow population growth; and rising vacancy rates.

                        Full release here.

                        NZD/USD surges after RBNZ, targeting 0.7131 next

                          By
                          ActionForex.com
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                          NZD jumps even though RBNZ maintained a dovish tone. Some analysts noted that the FLP could be enough to stimulate the economy as recovery remains on track. Additionally, if a vaccine becomes available early next year, RBNZ might not need to cut rates into negative territory. An RBA style cut to 0.10% might be enough for RBNZ in February.

                          NZD/USD took out 0.6797 resistance early this week to resume whole rebound from 0.5469 low. Next near term target is 61.8% projection of 0.5920 to 0.6797 from 0.6589 at 0.7131.

                          More importantly, NZD/USD is now sitting comfortably above 55 week EMA, indicating continuing medium term bullishness. The rise from 0.5469, be it a corrective move or the start of new trend, would target 0.7557 cluster resistance (61.8% retracement of 0.8840 to 0.5469 at 0.7552), in medium term.

                          RBNZ keeps OCR at 0.25%, launches new stimulus with FLP

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                            ActionForex.com
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                            RBNZ decided to keep the Official Cash Rate unchanged at 0.25% today while the Large Scale Asset Purchase Programme will continue, up to NZD 100B. The central bank introduced additional stimulus through a Funding for Lending Programme, commencing December, to lower banks’ funding costs and lower interest rates.

                            RBNZ also “reaffirmed that an FLP, a lower or negative OCR, purchases of foreign assets, and interest rate swaps remain under consideration.” The banking system is also “on track to be operationally ready for negative interest rates by year end.”.

                            Full statement here.

                            Fed Kaplan cautious and concerned about short term downside risks

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                              ActionForex.com
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                              Dallas Fed President Robert Kaplan said he’s “cautious and concerned” about the short term downside risks in the economy due to resurgence of coronavirus spread. He warned that “the next two quarters are going to be very challenging, very difficult.” In particular, household income and spending will drop off “at some point” without additional fiscal stimulus.

                              Nevertheless, he’s optimistic that growth will rebound with the arrival of vaccines. Business contacts have indicated that they’re gearing up fro a strong H2 in 2021.

                              UK Lords voted to amend Brexit treaty breaking bill, GBP/CHF surges

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                                ActionForex.com
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                                Sterling jumps sharply after UK House of Lords voted against the controversial part of a bill that perceived as breaching Brexit Withdrawal Agreement. The Lords voted 433-165 to pass an amendment to the internal market bill removing measures that see to disapply some of the Northern Ireland protocol. 44 tory rebels were among those voted for the amendment.

                                Prime Minister Boris Johnson’s spokesperson insisted that the clauses ” clauses represent a legal safety net to protect the integrity of the UK’s internal market and the huge gains of the peace process.” The government twill retable these clauses when the bill returns to the House of Commons, which backed the bill by 340 to 256 before.

                                GBP/CHF took out 1.1968 resistance yesterday on the coronavirus vaccine news. The rally accelerates further today and it’s set to take on 1.2222/59 key resistance. Break will carry much bullish implications and resume whole rebound from 1.1102.

                                German ZEW dropped to 39 in Nov, worries over recession

                                  By
                                  ActionForex.com
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                                  German ZEW Economic Sentiment dropped to 39.0 in November, down from 56.1, slightly below expectation of 40.0. Current Situation index dropped to -64.3, down form -59.5, slightly above expectation of -65.0. Eurozone ZEW Economic Sentiment dropped to 32.8, down from 52.4, missed expectation of 43.3. Current Situation indicator rose slightly by 0.2 pts to -76.4.

                                  ZEW President Achim Wambach: “Financial experts are concerned about the economic impact of the second wave of COVID-19 and what this will entail. The ZEW Indicator of Economic Sentiment has therefore once again significantly decreased in November, indicating a slowdown of economic recovery in Germany. There is also the additional worry that the German economy could head back into recession. According to the assertions made by the experts, neither the Brexit negotiations nor the outcome of the US presidential election currently are having an impact on the economic expectations for Germany.”

                                  Full release here.

                                  UK claimant count dropped -29.8k in Oct, unemployment rate rose to 4.8% in Sep

                                    By
                                    ActionForex.com
                                    -

                                    UK claimant count dropped -29.8k in October, much better than expectation of 78.8k rise. That’s a monthly decrease of -1.1% to 2.6million. However, the level was still 112.4% above March’s number before the pandemic hit the job market.

                                    In the three months to September, unemployment rose 0.3% to 4.8%, matched expectations. Average earnings excluding bonus rose 1.9% 3moy, above expectation of 1.5%. Average earnings including bonus rose 1.3% 3moy, also above expectation of 1.0%.

                                    Full release here.

                                    Australia NAB business confidence jumped to 5, but remains fragile

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                                      ActionForex.com
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                                      Australia NAB Business Confidence jumped and turned positive to 5 in October, up from September’s -4. It’s also the highest reading since mid-2019. Business confidence recorded just slight improvement from 0 to 1. Looking at some details, trading conditions rose from 4 to 8. Profitability rose from 1 to 4. But employment remained negative, ticked higher from -6 to -5.

                                      NAB said: “The survey continues to show that the economy has rebounded from the sharp fall in activity in H1 2020 and will likely continue to recover as the economy reopens. However, it will likely take some time for activity to fully recover, with capacity utilisation restored and the pipeline line of work replenished. The improvement in confidence is encouraging but remains fragile, and it will likely remain that way until a vaccine is available. In the interim, confidence will be an important factor for how quickly businesses expand employment and capex as demand normalises.”

                                      Full release here.

                                      Japan mulls new stimulus package that attracts private investment

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                                        ActionForex.com
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                                        Japanese Economy Minister Yasutoshi Nishimura said the cabinet is instructed by Prime Minister Yoshihide Suga to compile a new stimulus package as soon as possible. In particular, Nishimura said, “we’ll want to consider government spending that will attract private investment.” Also, the measures will focus on shifting to a “green society”. For now, the size of the new package hasn’t been decided yet.

                                        Finance Minister Taro Aso said the pace of recovery in private demand was fast, as seen in the automotive sector.

                                        Fed Kaplan: Coronavirus trends are in the wrong direction

                                          By
                                          ActionForex.com
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                                          Dallas Fed President Robert Kaplan warned that the “trends are in the wrong direction” regarding coronavirus trends. He’s still expecting the economy to be around -2.5% smaller by year end, comparing to last year. Growth is expected to be around 3.5% next year. However, rising coronavirus spread could drag down growth this year and early next year.

                                          Separately, Cleveland Fed President Loretta Mester said Fed Chair Jerome Powell will discuss with the Treasury to decide whether to extend the emergency lending programs beyond the end of the year. But in her view, “but in my view, if it were me, I would extend all of them,” Mester said. “The fact that they exist provides confidence to the markets.”

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