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US oil inventories dropped -8m barrels, WTI steady after this week’s rebound

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    ActionForex.com
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    US commercial crude oil inventories dropped -8m barrels in the week ending October 30, versus expectation of 0.3m barrels rise. At 484.4m barrels, oil inventories are about 7% above the five year average of this time of year. Gasoline inventories rose 1.5m barrels. Distillate dropped -1.6m barrels. Propane/propylene dropped -2.6m barrels. Commercial petroleum inventories dropped -14.7m barrels.

    WTI rebounded strongly after drawing support from 34.10/36 support zone, despite breaching to 33.50. For now near term outlook will stay neutral first. WTI needs to sustain above 55 day EMA (now at 39.28) to provide the first sign of uptrend resumption. Nevertheless, even in case of another fall, we’d continue to expect strong support from 33.50 to contain downside.

    ISM non-manufacturing dropped to 56.6, employment down to 50.1

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      ActionForex.com
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      US ISM Non-Manufacturing Composite dropped to 56.6 in October, down from 57.8, missed expectation of 57.8. Business activity dropped -1.8 pts to 61.2. New orders dropped -2.7 pts to 58.8. Employment also dropped -1.7 to 50.1.

      ISM: “According to the Services PMI, 16 services industries reported growth. The composite index indicated growth for the fifth consecutive month after a two month contraction in April and May. There has been a slight pull back in the rate of growth in the Services Sector in the month of October. Respondents’ comments are cautiously optimistic about business conditions and the economy. There is a degree of uncertainty due to the pandemic, capacity constraints, logistics and the elections.”

      Full release here.

      US ADP employment grew only 365k, well below expectation

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        ActionForex.com
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        US ADP private employment grew only 365k in September, well below expectation of 690K. By company size, small businesses added 114k jobs, medium businesses added 135k, large businesses added 116k. By sector, goods-producing industries added 17k, service-providing industries added 348k.

        “The labor market continues to add jobs, yet at a slower pace,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Although the pace is slower, we’ve seen employment gains across all industries and sizes.”

        Full release here.

        Eurozone PPI at 0.3% mom, -2.4% yoy in Sep

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          ActionForex.com
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          Eurozone PPI came in at 0.3% mom, -2.4% yoy in September, matched expectations. For the month, Industrial producer prices increased by 0.8% mom in the energy sector and by 0.1% mom for intermediate goods, while prices remained stable for capital goods, durable consumer goods and non-durable consumer goods. Prices in total industry excluding energy remained stable.

          EU PPI was at 0.3% mom, -2.2% yoy. The highest increases in industrial producer prices were recorded in Ireland (+4.3% mom), Hungary (+1.2% mom) and the Netherlands (+0.9% mom), while the largest decreases were observed in Cyprus (-1.3% mom), Estonia and Finland (both -0.8% mom), Greece and Lithuania (both -0.3% mom).

          Full release here.

          UK PMI: Economy on course for double-dip recession

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            ActionForex.com
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            UK PMI services was finalized at 51.4 in October, sharply lower from September’s 56.1. PMI Composite was finalized at 52.1, down from 56.5. That’s also the lowest level for four months.

            Tim Moore, Economics Director at IHS Markit: “October data indicates that the UK service sector was close to stalling even before the announcement of lockdown 2 in England… November’s lockdown in England and a worsening COVID-19 situation across the rest of Europe means that the UK economy seems on course for a double-dip recession this winter and a far more challenging path to recovery in 2021.”

            Full release here.

            Eurozone PMI composite finalized at 50.0, outlook increasingly dark except for Germany

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              ActionForex.com
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              Eurozone PMI Services was finalized at 46.2 in October, down from September’s 48.0. PMI Composite dropped to 50.0, down from last month’s 50.4. Germany PMI Composite hit a 3-month high at 55.0. But Italy (49.2), Ireland (49.0), France (47.5) and Spain (44.1) were in contraction.

              Chris Williamson, Chief Business Economist at IHS Markit said: “With lockdown measures being tightened, it is becoming increasingly hard to see how the eurozone economy will avoid falling back into decline, especially as some countries, including France, Italy and Spain, are already contracting again. Only in Germany has the strength of the manufacturing sector countered the renewed downturn in service sector activity, leading to increasingly polarised economic trends among the euro area’s member states. However, for all countries the outlook has grown increasingly dark.”

              Full release here.

              China Caixin PMI services rose to 56.8, composite rose to 55.7

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                ActionForex.com
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                China Caixin PMI Services rose to 56.8 in October, up from 54.8, beat expectation of 55.2. That’s the second best reading since 2020, just after June’s high of 58.4. PMI Composite rose to 55.7, up from 54.5.

                Wang Zhe, Senior Economist at Caixin Insight Group said: “Overall, as the domestic epidemic situation stabilizes, recovery remained the main economic theme…. The development of the epidemic in Europe and the U.S. is still an uncertain factor affecting economic trends. In the coming months, a continued recovery of the Chinese economy is highly likely, but it is necessary to be cautious about the normalization of monetary and fiscal policies in the post-epidemic period.”

                Full release here.

                Australia retail sales dropped -1.1% mom in Sep

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                  ActionForex.com
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                  Australia retail sales dropped -1.1% mom in September, better than preliminary reading of -1.5% mom. It’s also an improvement over August’s -4.0% mom.

                  In seasonally adjusted terms, there were falls in New South Wales (-0.9%), Queensland (-1.2%), Western Australia (-1.7%), South Australia (-2.9%), Victoria (-0.4%), the Australian Capital Territory (-2.4%), and Tasmania (-2.0%). The Northern Territory (4.3%) rose.

                  Full release here.

                  Australia AiG construction index rose to 52.7, first expansion since Aug 2018

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                    ActionForex.com
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                    Australia AiG Performance of Construction Index rose to 52.7 in October, up from 45.2. It’s the first expansionary result since August 2018.

                    Ai Group Head of Policy, Peter Burn, said: “The expansion of the Australian construction industry in October was driven by further strength in house building and smaller declines in the apartment and engineering construction sectors while commercial building fell further behind. Across the industry employment lifted modestly over the month. With activity restrictions in Victoria now easing and new orders rising strongly across the country, the near-term outlook is encouraging. There is a note of caution in that the improvement in the sector and elsewhere in the economy is still heavily reliant on wage and apprentice support measures and spurred along by exceptionally low interest rates.”

                    Full release here.

                    New Zealand unemployment rate surged to 5.3%, most people unemployed in 8 years

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                      ActionForex.com
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                      New Zealand unemployment rate jumped to 5.3% in Q3, up from Q2’s 4.0%, but was slightly better than expectation of 5.4%.The 1.3% jump was the biggest quarterly increase on record. Labor force participation rate rose 0.2% to 70.1%. Employment dropped -0.8% over the quarter, matched expectations. 37k more New Zealanders were unemployed, bringing the total to 151k, highest in eight years.

                      “We are continuing to see the economic effects of COVID-19, and its associated border and business closures,” labour market and household statistics senior manager Sean Broughton said. “Last quarter’s low unemployment rate of 4.0 percent was explained in part by people’s inability to be ‘actively seeking’ and available for work during the national lockdown that was in place for much of the quarter. This quarter’s increase in unemployment reflects a return to more normal job-hunting be ha vi ours.”

                      Full release here.

                      BoJ Kuroda: Extremely important to keep exchange rate moves stable

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                        ActionForex.com
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                        BoJ Governor Haruhiko Kuroda emphasized in an online meeting with business leaders, “it’s extremely important to keep exchange-rate moves stable.” “As a central bank, we won’t act directly to stabilise markets,” he added. “But we of course will work closely with financial authorities and overseas central banks to help keep currency moves stable.”

                        “Global market developments remain jittery reflecting uncertainty over the outlook.” BoJ will also “closely watch global and economic market developments, including those after the U.S. presidential election.”

                        Kuroda also noted that “the spread of COVID-19 has not subsided globally, including Europe and the United States, and public health measures have been tightened in European countries… Under these circumstances, the consequences of COVID-19 and the magnitude of their impact on domestic and overseas economies are highly unclear.”

                        Released from Japan, monetary base rose 16.3% yoy in October, versus expectation of 14.5% yoy.

                        EU to consider legal actions as UK missed response deadline

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                          ActionForex.com
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                          EU confirmed today that it received not response from the UK regarding the breach of the Brexit Withdrawal Agreement due to the Internal Market Bill. EU is now considering legal actions.

                          “We sent a letter of formal notice on 1 October to the UK for breaching its obligations under the Withdrawal Agreement.,” European Commission Spokespersona Daniel Ferrie said. As you know it had until the end of the month to submit its observations to that letter. To date I can confirm that the EU has received no reply from the UK. Therefore we are considering next steps, including issuing a reasoned opinion.”

                          Ferrie added: “More generally I would recall the EU is fully committed to achieving the full, timely and effective implementation of the Withdrawal Agreement within the remaining time available. That’s why we started the infringement procedure on 1 October. “This dispute will have to be resolved.”

                           

                          Swiss CPI ticked up to -0.6% yoy in Oct

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                            ActionForex.com
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                            Swiss CPI came in at 0.0% mom in October, matched expectations. Annually, CPI improved to -0.6% yoy, up from -0.8% yoy, matched expectations.

                            FSO said: “The stability of the index compared with the previous month is the result of opposing trends that counterbalanced each other overall. Prices for clothing and footwear increased, as well as those for glasses and contact lenses. In contrast, prices for combined offers for fixed-line and mobile communication, as well as those for other fruits (melons and grapes) decreased.”

                            Full release here.

                            RBA Lowe: We’re not out of firepower, but negative rate still extraordinarily unlikely

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                              ActionForex.com
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                              In the post meeting press conference, RBA Governor Philip Lowe said ” it would be incorrect to conclude that we are out of firepower” after today’s package of easing measures. He emphasized the central bank still has a “range of tools”, including ” further liquidity provision, asset purchases and transactions in the foreign exchange market.”

                              Still, negative rate policy is “extraordinarily unlikely”. “There is little to be gained from lowering the policy rate into negative territory,” he added. “While a negative rate might lead to a helpful depreciation of the Australian dollar, it could impair the supply of credit to the economy and lead some people to save more, rather than spend more. ”

                              Full speech here.

                              AUD/CAD dives after RBA, AUD/NZD steady

                                By
                                ActionForex.com
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                                Australian Dollar is trading generally lower after RBA easing announcement, including against other commodity currencies. AUD/CAD’s decline is one of the more apparent. Rebound from 0.9247 might be slightly stronger than expected. Yet, the cross is held comfortably below falling 55 day EMA, keeping near term outlook bearish. The corrective fall from 0.9696 should resume sooner or later as long as 0.9433 resistance holds. Break of 0.9247 will target 38.2% retracement of 0.8066 to 0.9696 at 0.9073.

                                AUD/NZD is holding in very tight range so far today. Downside momentum is somewhat diminishing, yet there is no sign of bottoming yet. As long as 1.0717 support turned resistance holds, further decline remains in favor. 1.0565 structural support is the key trend defining level. Strong rebound from there will keep the rally form 0.9994 intact, and retain the prospect of another rise through 1.1043 at a later stage. But Sustained break of 1.0565 will argue that such rise has completed. Deeper fall would be seen to 61.8% retracement of 0.9994 to 1.1043 at 1.0395 and below.

                                RBA cut rate to 0.1%, to purchase AUD 100B of bonds of 5- to 10-yr maturity

                                  By
                                  ActionForex.com
                                  -

                                  RBA announced a package of policy action today, as widely expected. The package includes:

                                  • Cut in cash rate target to 0.1%
                                  • Cut in 3-year AGS yield target to around 0.1%
                                  • Cut in Term Funding Facility interest rate to 0.1%
                                  • Cut in Exchange Settlement balances rate to 0%
                                  • Purchase of AUD 100B of government bonds of maturities of around 5 to 10 years over the next six months.

                                  The central bank acknowledged that recent data have been “a bit better than expected” and “near-term outlook is better than it was three months ago”. But “recovery is still expected to be bumpy and drawn out and the outlook remains dependent on successful containment of the virus.”

                                  Q3 GDP is expected to report positive growth. But it will “take some time to reach the pre-pandemic level of output”. GDP is projected to grow around 6% over the year to June 2021, and 4% in 2022. Unemployment rate is projected to peak at a little below 8 per cent, rather than the 10 per cent expected previously. Unemployment rate is expected to drop be to around 6% at the end of 2022.

                                  Full statement here.

                                  Gold defending 1848/59 key support zone for now

                                    By
                                    ActionForex.com
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                                    Regarding the development of Gold, this question has been in our minds for some time. Is gold just correcting the rise from 1451.16 to 2075.18? Or it’s correcting the whole up trend from 1160.17? We’d probably find out very soon as the results of US election unfolds, which should set the direction of the financial markets for the next few months.

                                    1848.39 support is a key level, as it largely overlaps with 23.6% retracement of 1160.17 to 2075.18 at 1859.23. Sustained break of this support zone will favor the case that it’s in a larger scale correction. Deeper decline should be seen to 38.2% retracement at 1509.70, which is close to 55 week EMA (now at 1735.45.

                                    Nevertheless, even in case of a brief breach, failure to sustain below 1848.39, followed by break of 1933.17 resistance, will argue that the correction is a smaller scale one, and has probably completed. Retest of 2075.18 high should be seen rather soon, with prospect of a break out. We’ll see.

                                    WTI oil rebounds on OPEC+ product cut extension talks

                                      By
                                      ActionForex.com
                                      -

                                      After initial dive to 33.50 yesterday, WTI oil price staged a strong rebound and it’s now back above 36 handle. The rebound was driven by news that Russia discussed a three-month extension of OPEC+ oil production cuts, until March 2021.

                                      Technically, WTI drew support from 34.10/36 zone as we have expected. The zone covers 100% projection of 43.50 to 35.98 from 41.62 at 34.10 and 34.36 structural support. Break of 36.72 resistance indicates short term bottoming, on bullish convergence condition in 4 hour MACD. Immediate bearishness is now neutralized. There is little prospect of strong rally as long as 55 day EMA (now at 39.27) holds. Though, even in case of another fall, 33.50 should provide the floor.

                                      US ISM manufacturing rose to 59.3, corresponds to 4.8% annualized growth in GDP

                                        By
                                        ActionForex.com
                                        -

                                        US ISM Manufacturing Index rose to 59.3 in October, up from 55.4, way better than expectation of 55.6. The month-over-month gain of 3.9 pts is the second largest since May 2009. It’s also the highest reading since September 2018 while the overall economy has been in the sixth month in a row.

                                        Looking at some details, new orders rose 7.7pts to 67.9. Production rose 2.0 pts to 63.0. Prices rose 2.7pts to 65.5. Employment rose 3.6 pts to 53.2, back in expansion.

                                        “The past relationship between the Manufacturing PMI and the overall economy indicates that the Manufacturing PMI® for October (59.3 percent) corresponds to a 4.8-percent increase in real gross domestic product (GDP) on an annualized basis,” says Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

                                        Full release here.

                                        ECB Mersch: Crisis measures must be temporary and targeted

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                                          ActionForex.com
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                                          ECB Executive Board member Yves Mersch said in a speech that the pandemic emergency purchase programme (PEPP) is the “most appropriate instrument compared with a recalibration of standard policy tools, such as interest rate cuts”. PEPP purchases are “separate from and cannot be consolidated with APP purchases”, making it a “distinct monetary policy measure”.

                                          He also emphasized that “crisis measures must be temporary and targeted. They are justified only in the light of the exceptional circumstances seen during the pandemic. Extraordinary times require extraordinary action. As the crisis evolves and subsides, the ECB will reconsider its tools and supervisory practices.

                                          Full speech here.

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