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Germany GDP grew 8.2% qoq in Q3, still -4.2% below pre-pandemic level

    By
    ActionForex.com
    -

    Germany GDP grew 8.2% qoq in Q3, above expectation of 7.3% qoq. But that’s not enough to recovery the -9.7% qoq contraction in Q2. Also, when compared with Q4 of 2019, before the pandemic, GDP was still -4.2% lower.

    Destatis said “growth was based on higher final consumption expenditure of households, higher capital formation in machinery and equipment and a sharp increase in exports.”

    Full release here.

    Released too, retail sales dropped -2.2% mom in September, below expectation of -0.5% mom.

    Japanese Finance Minister speaks out amid rapid Yen depreciation

      By
      ActionForex.com
      -

      As Yen continues to face intense selling pressure, Japanese Finance Minister Shunichi Suzuki reiterated the importance of market-determined exchange rates and the undesirability of abrupt currency movements.

      Suzuki stated, “Currency rates should be set by the market, reflecting fundamentals.” He also emphasized the need for stability, saying, “Sharp moves are undesirable, currencies should move stably reflecting fundamentals. With that in mind, we will continue to keep firm watch on market moves.”

      His comments come as the USD/JPY surged past the 143 handle, marking a significant acceleration in Yen’s recent depreciation. The slide began last week following BoJ’s decision to maintain its ultra-loose monetary policy stance. Today’s strong inflation data, rather than tempering Yen’s decline, seemed to have had little impact in averting its downtrend.

      The verbal intervention from Suzuki underscores the growing concern over the pace and extent of Yen’s depreciation. It also signals the government’s readiness to monitor market trends closely, and possibly intervene should the currency’s movements threaten to undermine the economic fundamentals.

      IMF: Trade tensions could become entrenched over medium term

        By
        ActionForex.com
        -

        IMF said in its latest External Sector Report that overall current account surpluses and deficits reached 3 percent of world GDP in 2018. Around 35-40% of them are deemed excessive.

        Higher-than-warranted balances remained centered in the euro area as a whole (driven by Germany and the Netherlands) and in other advanced economies (Korea, Singapore).

        Lower-than-warranted balances remained concentrated in the United Kingdom, the United States, and some emerging market economies.

        China’s external position, however, was assessed to be in line with fundamentals and desirable policies.

        IMF also warned that “an intensification of trade tensions or a disorderly Brexit outcome—with further repercussions for global growth and risk aversion—could, however, affect other economies that are highly dependent on foreign demand and external financing.”

        “Over the medium term, in absence of corrective policies, trade tensions could become entrenched, and further divergence of external stock positions could trigger costly disruptive adjustments in key debtor economies that could spill over to the rest of the world.

        Full report here.

        US PMI composite fell to 50.4, near stagnation

          By
          ActionForex.com
          -

          US PMI Manufacturing fell form 49.0 to 47.0 in August. PMI Services fell from 52.3 to 51.0. PMI Composite fell from 52.0 to 50.4.

          Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:

          “A near-stalling of business activity in August raises doubts over the strength of US economic growth in the third quarter. The survey shows that the service sector-led acceleration of growth in the second quarter has faded, accompanied by a further fall in factory output.

          “Companies report that demand is looking increasingly lethargic in the face of high prices and rising interest rates. A resultant fall in new orders received by firms in August could tip output into contraction in September as firms adjust operating capacity in line with the deteriorating demand environment. Hiring could likewise soon turn into job shedding in the coming months after a near-stagnation of employment in August.

          “Rising wage pressures as well as increased energy prices have meanwhile pushed input cost inflation higher, which will raise concerns over the stickiness of consumer price inflation in the months ahead. One upside is that weak demand is starting to limit pricing power, which should help keep a lid on inflation around the 3% mark.”

          Full US PMI release here.

          AUD/JPY: A head and shoulder bottom failure in the making?

            By
            ActionForex.com
            -

            AUD/JPY could be a very interesting pair to watch this week. From the hourly chart, there’s clearly a beautiful head and shoulder bottom pattern (ls:79.97, h: 79.69, rs: 80.09). Bullish convergence condition is also seen in hourly MACD. So, is AUD/JPY ready for a powerful upside move?

            We’re quite skeptical on it. First of all, we’d like to reiterate that head and shoulder is a classic “reversal” pattern. Believe nobody would disagree to that. But we’d like to clarify that meaning of “reversal”. It means both a) ending the prior trend to start a new trend in the opposite direction, OR b) halting the current trend, starting a counter trend move to correct the prior move. In case of b) the subsequent move could be in form of any corrective pattern, a rectangle, a wedge, a triangle, etc.

            To assess the chance a) for AUD/JPY, we’ll have to see if the pair has completed a down trend that’s in a larger degree of the head and shoulder pattern. That is, we’ll have to look at the bigger picture to see if the conditions are in place for a larger reversal.

            Firstly, AUD/JPY has just resumed the down trend from 2017 high at 90.29, by breaking 80.48 key support level, with solid downside momentum. From the daily MACD, we see that downside momentum is increasing, rather than decreasing.

            Fall from 90.29 is either correcting the up trend from 72.39 to 90.29, or starting a new long term down trend. But even for the former case (less bearish), it hasn’t matched target of 61.8% retracement of 72.39 to 90.29 at 79.22 yet. So, we don’t think conditions are in place to reverse the trend from 90.29 yet.

            Looking a bit closer, if the above view is correct, then fall from 83.92, which started the downside breakout, should be a five-wave sequence. Having a look at the 4 hour chart, 79.69 should be, at worst the end of the third wave from 83.92. Hence, rebound from there is not even reversing the fall from 83.92.

            So in our view, the rebound from 79.69 is likely just a counter trend move that corrects the fall from 82.78. That is, the above mentioned case b). With that in mind, 4 hour 55 EMA (now at 80.99) is the first hurdle. But more importantly, an important cluster resistance zone lies ahead. That is, 100% projection of 76.69 to 80.82 from 80.09 at 81.22, 50% retracement of 82.78 to 79.69 at 81.23, 38.2% retracement of 83.92 to 76.69 at 81.30. We do not expect, as a corrective move, the rise from 79.69 to pass through this 81.22/30 resistance zone.

            For head and should pattern, the target is usually calculated by adding the depth of the head to the neck line. That is, in this case, depth of the head is 80.82-79.69= 1.13. The target is thus 80.82+3.13=81.98. It’s “substantially” higher than the above mentioned 81.22/30 resistance zone. Hence, we’d believe it’s going to be a head and shoulder pattern failure.

            As usual, we could be wrong. Let’s see.

            Tell us your views too.

             

            Fed Kaplan not a fan or proponent of negative interest rates

              By
              ActionForex.com
              -

              Dallas Fed Bank President Robert Kaplan expressed he objection to negative interest rates, for the effects it would have on the financial system, “on intermediaries, on money markets”.

              “I would be against negative interest rates,” Kaplan told CNN International. “I’m a skeptic whether negative interest rates would actually be helpful, or whether the help would be outweighed by the harm it would do to the financial sector.” “So I personally am not a fan or a proponent of negative interest rates.”

              Minneapolis Fed President Neel Kashkari also said policymakers have been pretty unanimous opposing negative interest rate. While he prefer not to say never on negative rates, there are other things Fed could do first. On the economy, he reiterated the view that “we are not going to fix the economy until we get our hands around the virus.” “We might be in this for a long time.”

              Australia Westpac consumer sentiment rose to 106.2, strong resilient despite lockdown

                By
                ActionForex.com
                -

                Australia Westpac-MI consumer sentiment rose 2.0% to 106.2 in September. The index remained comfortably above the levels five years prior to the pandemic. Confidence in New South Wales rose 5.3% while Victoria was steady at 104.1, despite extended lockdown in both states. Queensland jumped 8.4% to 111.6. Overall, the data indicates strong resilience of consumer sentiment and positives reactions to vaccination progresses.

                Westpac added that given that RBA has already defer the next review of the asset purchase program to February, it’s highly unlikely that there will be any policy changes before that meeting. Nevertheless, it added, “with the US Federal Reserve likely to have begun its tapering program by then and the economy likely to be bouncing back as high vaccination levels see easing restrictions, we expect the Board to further taper its bond purchases in February.”

                Full release here.

                NZ goods exports rose 17% yoy in Mar, imports rose 25% yoy

                  By
                  ActionForex.com
                  -

                  New Zealand goods exports rose 17% yoy to NZD 6.7B in March. Goods imports rose 25% yoy to NZD 7.1B. Trade balance was a deficit of NZD -392m, versus expectation of NZD -648m.

                  As a result of the monthly deficit in March 2022, the annual goods trade deficit has further widened to reach NZD -9.1B for the March 2022 year.

                  Full release here.

                  US durable goods orders dropped -1.1%, ex-transport orders dropped -0.3%

                    By
                    ActionForex.com
                    -

                    US durable goods orders dropped -1.1% in September to USD 248.2B, well below expectation of -0.5%. Ex-transport orders dropped -0.3%, versus expectation of -0.2%. Ex-defense orders dropped -1.2%.

                    Full release here.

                    US NFP grew 1763k, unemployment rate dropped to 10.2%

                      By
                      ActionForex.com
                      -

                      US non-farm payroll employment grew 1763k in July, above expectation of 1510k. Notable job gains occurred in leisure and hospitality, government, retail trade, professional and business services, other services, and health care.

                      Unemployment rate dropped to 10.2%, down from 11.1%, better than expectation of 10.7%. Labor force participation was little changed at 61.4%. Average hourly earning rose 0.2% mom, better than expectation of -0.5% mom decline.

                      Full release here.

                      US crude oil inventories rose 4.9m barrels, WTI pressing 42 key resistance

                        By
                        ActionForex.com
                        -

                        US commercial crude oil inventories rose 4.9m barrels in the week ending July 17, versus expectation of -2.1m barrels decline. At 536.6m barrels, oil inventories are about 19% above the five year average for this time of the year. Total motor gasoline inventories dropped -1.8m barrels. Distillate fuel inventories rose 1.1m barrels. Propane/propylene inventories rose 2.0m barrels. Total commercial petroleum inventories rose 8.8m barrels.

                        WTI gyrated higher to 42.29 this week with rather weak upside momentum. 42.05 key resistance level was breached but WTI couldn’t sustain above it yet. We’d maintain that 42.05 should eventually hold. Break of 38.45 support would confirm short term topping and bring long-overdue pull back. However, sustained break of 42.05 would carry some larger bullish implications.

                        Fed Powell: Risk of policy intervention still asymmetric

                          By
                          ActionForex.com
                          -

                          Fed Chair Jerome Powell said in a speech that the economic expansion is “still far from complete”. “At this early stage I would argue that the risks of policy intervention are still asymmetric,” he added. “Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses.”

                          Powell also noted, “the risks of overdoing it seem, for now, to be smaller. Even if policy actions ultimately prove to be greater than needed they will not go to waste. The recovery will be stronger and move faster.”

                          On the economy, Powell also said that the improvement has “moderated” and  “risk that the rapid initial gains from reopening may transition to a longer-than-expected slog back to full recovery.”

                          Full speech here.

                          UK Fox: No-deal Brexit is not suicide, but no Brexit is unrecoverable political disaster

                            By
                            ActionForex.com
                            -

                            UK International Trade Minister Liam Fox emphasis today that ‘the government will want to leave with a deal but the government will want to prepare for no deal if it’s impossible to get any agreement through the House of Commons. That would be the default policy.” He added that “I don’t regard no deal as national suicide. I think that no deal would damage our economy but I think it’s survivable. I think no Brexit, politically, is a disaster from which we might not recover.”

                            Separately, RTE News reported the EU is going to issue a letter to the UK today, with a series of reassurances on the Irish backstop. EU might reiterate that the backstop itself is not the preferred solution. But it does help avoiding a hard border. Also, EU will emphasize there is no attempt to “annex” Northern Ireland. But EU will also insist that there will be no renegotiation of the Brexit deal, including the Irish backstop. It’s over all, hardly anything new. UK Prime Minister Theresa May is set to make a statement at 1530GMT regarding the so called new assurances from the EU.

                            Fed Daly: No material change to US economy due to coronavirus

                              By
                              ActionForex.com
                              -

                              San Francisco Fed President Mary Daly told CNBC that monetary policy is now in a “really good position”. Uncertainties like US-China trade tensions receded while hard Brexit was avoided. The three rate cuts last year “puts the US economy in a good place to weather these storms” like China’s coronavirus.

                              She added that China’s coronavirus “bears further watching and of course we are keeping a close eye, but right now I am not looking for this to do anything material to our economy.” She expected China to has a “couple of quarters perhaps of weaker growth but then bounce back once this has been resolved and then that to have a temporary impact on the US economy and go away once things have been resolved”.

                               

                              UK manufacturing PMI hits 24-month high, encouraging start to H2

                                By
                                ActionForex.com
                                -

                                UK PMI data for July reveals a promising start to the second half of the year. PMI Manufacturing rose to 51.8, exceeding expectations of 51.1 and marking a 24-month high. PMI Services also increased slightly from 52.1 to 52.4, though just below the forecast of 52.5. The overall PMI Composite index improved from 52.3 to 52.7.

                                Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, noted, “The flash PMI survey data for July signal an ‘encouraging start’ to the second half of the year, with output, order books, and employment all growing at faster rates amid rebounding business confidence, while price pressures moderated.”

                                Post-election business sentiment has surged, with increased demand and hiring in both manufacturing and services sectors. Despite the slowest price rise in three and a half years, suggesting potential for a summer rate cut, caution remains.

                                “Policymakers will likely take a cautious approach to loosening policy amid signs of inflationary pressures pivoting away from services towards manufacturing, where Red Sea shipping delays and higher freight prices are adding to costs again,” Williamson added. The renewed hiring trend could also sustain wage pressures, keeping inflation somewhat persistent.

                                Full UK PMI release here.

                                How to benefit when BTC price goes down?

                                  By
                                  CryptoRocket
                                  -

                                  Intro

                                  It is no secret that Bitcoin is volatile, as all cryptocurrencies are! The trick is, knowing when prices will move and what to do when the inevitable movement comes. Sounds simple, right?

                                  There are many investors out there that have heavily backed Bitcoin and expect the price to keep rising. But what if the value of a coin was not reaching the heights you expected to? Is this something to be overly concerned about?

                                  Since Bitcoin’s arrival on the global stage, it has experienced many highs and lows. Massive swings which happen regularly which can last days, span a few hours or move big, without warning, in the space of a few minutes.

                                  This article will explore why Bitcoin moves in the way it does and we will also look at how we can benefit from a downward price movement on the original, world-famous, digital asset.

                                  At CryptoRocket (www.cryptorocket.com) you can trade over 30 digital assets including the following Bitcoin pairs:

                                  BTC/USD, BCH/BTC, ETH/BTC, LTC/BTC, NEO/BTC, XMR/BTC, ZEC/BTC

                                  Volatility

                                  Volatility can be described as something liable to change drastically, quickly and without warning. This description is accurate when we are putting the definition next to Bitcoin.

                                  Traditional stock volatility is measured by the volatility index which was created by the Chicago Board Options Exchange in 1993. Also known as the VIX, what it does is represents a real-time market index showing the expected next 30 day movements with a focus on how volatile a stock might be. A useful tool for stock traders….

                                  Bitcoin does not have such a tool for Crypto investors to make use of. What we do know however is that Bitcoin is volatile and can move up to ten times as much as USD in a single trading day.

                                  So why is Bitcoin so volatile and what are the reasons behind it?

                                  One of the key reasons is that, although, in its 10th year, it is still relatively new technology. With new technology, new consumers need to get to grips with it and understand what the product is and how it functions. There are people out there, dare I say the older generation who can be more resistant to change when it comes to technology. This is evident when you look at statistics in supermarkets and which age groups are more willing to use self-checkout technology when purchasing their goods.

                                  People need time to adjust and adapt to change. Some people take longer than others, but in terms of how long currency and cold hard cash has been around, Bitcoin is still a new product and some people will need a little more encouragement to use technology as opposed to cash and banks.

                                  Bitcoin price is heavily affected by the news and media, especially when it comes to geopolitical events. In times of crisis within a country, new Bitcoin investors can surge within that country. This is especially true when examining the Cypriot banking crisis in 2013. The EU bailed out Cypriot banks but this came with terms and conditions. The cost of bailout was around the $20Billion mark yet the EU would only give Cyprus $13Billion. This meant that Cyprus would have to raise the further $7Billion themselves and they realized this by levying a tax on deposits.

                                  The tax was 6.75 percent from insured deposits of €100,000 or less, and 9.9 percent from uninsured amounts above €100,000. What this tax achieved was massive distrust in the banks from Cypriots and many Russians who live in Cyprus. The distrust in banks made trust in decentralized currency flourish. Bitcoin prices spiked thanks to this bailout.

                                  Many celebrities who have spoken out against Bitcoin and as influential people, this can truly have a knock-on effect on the value of a coin. Also, major incidents such as the closure of Silk Road harmed the price of Bitcoin. The FBI and Interpol shut down Silk Road in 2013 resulting in a life sentence for creator Ross Ulbricht. Many Bitcoin users lost trust in Bitcoin at this time and looked to sell as governments use rhetoric to suggest making Bitcoin follow some sort of compliance and regulation.

                                  Strategies to capitalize in downward movements and how to benefit

                                  As prices can rise, they can also crash and as investors, it is important to understand why and how we can manage this effectively. In 2018, the price of Bitcoin collapsed 61% – from an $8,300 high to $3,200 low in just six months showing just how much price can swing in a short period.

                                  There are a few things that can be done to capitalize on Bitcoin value taking a downward turn.

                                  For a start, a holder could straight up sell their Bitcoin and then buy again when the price reaches a severe low. Or low enough in the consumers’ opinion to make it worth buying before making an upturn.

                                  Traders can take advantage of a Bitcoin downturn by ‘going short’ or selling Bitcoin, staking money that Bitcoin will have a downward price movement – often referred to as profitable shorting.

                                  Users can also use margin trading or trading with leverage to further inflate profits. Leverage allows the ‘average trader’ to get involved in potentially high-profit trades without having to invest vast swathes of capital.

                                  In today’s modern trading world, thanks to high leveraged trading, more people than ever can speculate on markets with relatively low capital with the potential for high returns.

                                  It is advised that before trading with high leverage to investigate further and develop a trading strategy. Where can you do this you might ask? Many brokers in the marketplace offer a free to use ‘demo account’ for traders to perfect a strategy, get used to the available instruments and become accustomed to the MT4 trading platform.

                                  Start trading with CryptoRocket (www.cryptorocket.com) and benefit from a downward movement by using a max leverage of 1:100 for your favorite Cryptocurrency pairs with over 30 on offer including BTC/USD.

                                  Review the performance of other Cryptocurrencies to give yourself an idea of how the market is behaving and where Crypto investors are putting their money.

                                  Use a range of analysis to help form an overview of what is happening in the market. Draw on various types of media including social media, follow influencers in the Bitcoin world such as the Winklevoss twins. However, be wary when sourcing your information. John McAfee recently claimed that Bitcoin HAS to reach the million-dollar mark by the end of 2020. Recently he claimed this was a PR stunt – proving it is vital to collect your information from a range of sources. Bitcoin price today is at $8,745.56 a long way to go to a million in 11 months!

                                  Conclusion

                                  We have learned that Bitcoin is undoubtedly volatile and prices can and do take downturns. But it is not all doom and gloom. If you are holding onto Bitcoin, don’t stress too much about a negative price movement, instead, harness that energy and trade short to protect your investment!

                                  Bill Gates once said that if he could find an easy way to short Bitcoin, he would do. This was highlighted by one of the Winklevoss twins on Twitter. Guess what, Bill? You can short Bitcoin at CryptoRocket (www.cryptorocket.com). What’s more, they will be there for you 24/7 to assist you with all your account set up to get you started on your shorting adventure!

                                  Good luck!

                                  UK PMI manufacturing finalized at 32.6, production, new orders, employment, new exports all at record lows

                                    By
                                    ActionForex.com
                                    -

                                    UK PMI Manufacturing was finalized at 32.6 in April, down from March’s 47.8. Markit said that “manufacturing production, new orders and employment all contracted at the fastest rates in the 28-year survey history”. Also, the coronavirus pandemic “hit overseas demand, leading to a series-record drop in new export business.”

                                    Rob Dobson, Director at IHS Markit: “The outstanding question remains how long the current restrictions will need to remain in place, and which sectors can start to safely reopen. The pressure is mounting, as the longer the global economy remains in lockdown the greater the cost to industry will grow, and the greater the likelihood that more jobs will be cut.”

                                    Full release here.

                                    European update: Dollar suffers renewed selling, Euro strongest

                                      By
                                      ActionForex.com
                                      -

                                      Dollar suffers deep selling in European session, in particular against European majors and Yen. This could be partly due to delayed reaction to Fed’s dovish shift overnight. Also there are rumors that US Commerce Department’s report regarding autos imports on US markets is delayed to mid January. German magazine WirtschaftsWoche said that the investigation report regarding imposition of 25% tariffs on auto was not approved during the consultation process between government departments.

                                      Euro leads the way higher, with EUR/USD breaking 1.1443 and 1472 resistance levels. The development could have now set the stage for further rise back towards 1.1814 resistance. Sterling remains cautious ahead of BoE rate decision, despite stellar retail sales data. Even though Canadian, Australian and New Zealand Dollar recover against Dollar too, they remains the weakest ones for the week, with no sign of bottoming yet.

                                      In other markets, at the time of writing:

                                      • FTSE is down -0.30%
                                      • DAX is down -0.90%
                                      • CAC is down -1.33%
                                      • German 10 year yield is down -0.0032 at 0.239
                                      • Italian 10 year yield is down -0.022 at 2.749
                                      • German-Italian spread stays at around 250. With budget approved by EU, spotlight will be off Italy, at least for a while.

                                      Earlier in Asia:

                                      • Nikkei dropped -2.84% to 20392.58, both losses were limited elsewhere
                                      • Hong Kong HSI dropped -0.94%
                                      • China Shanghai SS dropped -0.52%
                                      • Singapore Strait Times dropped -0.26%
                                      • Japan 10 year JGB yield dropped -0.0032 to 0.031

                                      ECB Lagarde: Stay the course is my mantra for monetary-policy purposes

                                        By
                                        ActionForex.com
                                        -

                                        ECB President Christine Lagarde said, “We have to also stay that course of resilience that we observed in 2022. Stay the course is my mantra for monetary-policy purposes.”

                                        “I hope that in 2023 fiscal policy will not work in a counter-cyclical way to monetary policy,” she said. “We don’t need to be pushed to do more than is necessary.”

                                        Lagarde also noted that China’s reopening “will have inflationary pressure on many of us, simply because the level of energy that was consumed by China last year was certainly less than what they will consume this year, the amount of LNG that [they] will be buying from the rest of the world will be higher than what we have seen and there is not so much spare capacity in terms of oil and gas.”

                                        “So there will be constraints, there will be more inflationary pressure coming out of that added demand,” she added.

                                        New Zealand retail sales dropped -8.1% qoq in Q3, 12 of 15 industries down

                                          By
                                          ActionForex.com
                                          -

                                          New Zealand retail sales dropped -8.1% qoq in Q3, better than expectation of -10.2% qoq. Ex-auto sales dropped -6.7% qoq, also better than expectation of -7.6% qoq.

                                          Twelve of the 15 industries had lower sales volumes. By industry, the largest movements were: Food and beverage services – down -19%; Motor vehicle and parts retailing – down -12%; Department stores – down -24%; Hardware, building, and garden supplies – -down 15%.

                                          The Auckland region dominated the national fall with a record decrease of -15% (1.5 billion), compared with the 6.2% ($618 million) rise in the June 2021 quarter.

                                          Full release here.

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