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France PMI composite dropped to 51.5, but private sector stays in expansion in the near term

    By
    ActionForex.com
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    France PMI Manufacturing rose to 51.0 in January, up from 50.4, beat expectation of 50.5. PMI Services dropped to 51.7, down from 52.4, missed expectation of 52.1. PMI Composite dropped to 51.5, down from 52.0, hitting a 4-month low.

    Commenting on the Flash PMI data, Pollyanna De Lima, Principal Economist at IHS Markit said:

    “The flash PMI data continued to show a slowdown in economic growth across France. While there were warnings of softer conditions in the service sector, linked to national railway strikes, manufacturing displayed mild signs of revival. Factory orders and exports returned to expansion mode – in part aided by price-discounting strategies – thereby boosting production growth. Goods producers signalled their first drop in charges in close to three-and-a-half years.

    “Encouragingly companies across both sectors are in buoyant mood regarding the year-ahead outlook for business activity, with optimism at a nine-month high. This upbeat growth projections continued to drive job creation and should ensure the private sector stays in expansion territory in the near-term.”

    Full release here.

    Japan PMI composite rose to 51.1, domestic-led economic recovery

      By
      ActionForex.com
      -

      Japan PMI Manufacturing rose to 49.3 in January, up from 48.4, beat expectation of 48.7. PMI Services rose notably to 52.1, up from 49.4, back in expansion. PMI Composite also rose to 51.1, up from 48.6, turned into expansion.

      Joe Hayes, Economist at IHS Market, said: “Positive signs have emerged for Japan’s economy at the start of 2020, with flash PMI data pointing to a domestic-led economic recovery”. While Q4 would likely post an “ugly decline in GDP”, January PMI will “certainly allay fears” of an “impending technical recession”.

      Full release here.

      Japan CPI core accelerated to 0.7%, BoJ minutes show concerns on overseas

        By
        ActionForex.com
        -

        Japan national CPI (all-item) accelerated from 0.8% yoy in December, up from 0.5% yoy, beat expectation of 0.7% yoy. CPI core (ex-fresh food), rose to 0.7% yoy, up from 0.5% yoy, beat expectations. CPI core-core (ex-fresh food, energy) also rose to 0.9% yoy, up from 0.8% yoy and matched expectations. While core CPI remains well below BoJ’s 2% target, the pickup should be welcomed by the central bank.

        In the minutes of December BoJ meeting, some members expressed concerns that gloomy global outlook could underscores market expectations. A few members noted “considering the risk that overseas economies could recover only to a small extent or slow further, the outlook for exports could not be viewed optimistically.”

        Falling global demand might also hurt household income. Some noted that “Close attention should be paid to how developments in corporate profits … would affect winter bonuses.” Capital spending has shown signs of weakness, which is a “matter of concern” too.

        Australia PMI composite dropped to record low 48.6, softness spilled over to 2020

          By
          ActionForex.com
          -

          Australia PMI Manufacturing dropped to 49.1 in January, down from 49.2. PMI Services dropped to 48.9, down from 49.8. PMI Composite dropped to 48.6, down from 49.6. That’s the record worst contraction reading since the survey started in May 2016.

          Commenting on the Commonwealth Bank Flash PMI data, CBA Chief Economist, Michael Blythe said:

          “The January “flash” results show the softness in the Australian economy at the end of 2019 has spilled over into the early part of 2020. There is some fundamental weakness in the Australian economy associated with consumer constraint, the residential construction downturn and the reluctance of business to invest. But the PMI results are also being influenced by the terrible bushfires around Sydney and elsewhere. At this stage the impact seems to be mainly through disruption to supply chains. Supplier delivery times have increased sharply”.

          “The gloom should not be overdone. Key leading indicators like new orders and employment are showing a notably stronger result than the “headline” PMI readings. And expectations about future business remain at encouraging levels”.

          Full release here.

          New Zealand CPI rose 0.5% qoq on transport costs, NZD recovers mildly

            By
            ActionForex.com
            -

            New Zealand CPI slowed to 0.5% qoq in Q4, down from 0.7% qoq, but beat expectation of 0.4% qoq. Annually, CPI accelerated to 1.9% yoy, up from 1.5% yoy, but missed expectation of 2.2% yoy. Transport cost was a main driver of quarterly inflation pickup, rose 2.1%. Recreation and culture rose 1.6%. Housing and household utilities rose 0.5%. On the other hand, food prices dropped -0.6%.

            NZD/USD recovers mildly after the release but upside is so far limited. As long as 0.6665 minor resistance holds, corrective fall from 0.6755 might extend through 0.6851 temporary low. But considering bullish convergence condition in 4 hour MACD, downside should be contained by 38.2% retracement of 0.6203 to 0.6755 at 0.6544 to bring rebound. Break of 0.6665 should bring retest of 0.6755 high.

            Coronavirus an emergency in China, but not international health emergency yet

              By
              ActionForex.com
              -

              Regarding the new coronavirus outbreak in China, WHO Emergency Committee panel chair Didier Houssin said it’s a “bit too early” to consider it a”Public Health Emergency of International Concern.” It’s now just “an emergency in China”. And, “it has not yet become a global health emergency. It may yet become one.”

              As of the situation in China, according to government data, death toll reached 25, with number of confirmed cases exceeding 800. Ten cities in Hubei province are now locked up, with public transportation restrictions, including Wuhan, Huanggang, Xianning, Qianjiang, Xiantao, Ezhou, Chibi, Huangshi, Enshi and Zhijiang.

              USD/CHN retreats mildly after hitting 6.9420 as selloff in Yuan stabilized. For now, we’d still expect rebound from 6.8452 to extend further to near term channel resistance (now at 7.0009). But larger fall from 7.1953 is still expected to extend lower as long as the channel resistance holds.

              ECB Lagarde: Manufacturing remains a drag on ongoing but moderate growth

                By
                ActionForex.com
                -

                In the post meeting press conference, ECB President Christine Lagarde said incoming data since last meeting were in line with the baseline scenario of “ongoing, but moderate, growth” of the economy. Weakness in manufacturing sector remains a “drag” on momentum. But employment and wages growth continue to “support the resilience” of the economy. Inflation remains “subdued overall” but there were signs of moderate increase in underlying inflation.

                Lagarde also repeated that “risks surrounding the euro area growth outlook, related to geopolitical factors, rising protectionism and vulnerabilities in emerging markets, remain tilted to the downside”. But risks were “less pronounced as some of the uncertainty surrounding international trade is receding.”

                Headline inflation is “likely to hover around current levels” in the coming months. Inflation expectations have stabilized or ticked up slightly. Underlying inflation remained generally muted by there were indications of a moderate increase. weaker growth momentum is “delaying” pass-through of labor cost pressures to inflation.

                Lagarde’s press conference here.

                US initial jobless claims rose to 211k, below expectations

                  By
                  ActionForex.com
                  -

                  US initial jobless claims rose 6k to 211k in the week ending January 18, below expectation of 214k. Four-week moving average of initial claims dropped -3.25k to 213.25k.

                  Continuing claims dropped -37k to 1.731m in the week ending January 11. Four-week moving average of continuing claims rose 2k to 1.758m.

                  Full release here.

                  ECB press conference live stream

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                    ActionForex.com
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                    ECB left policy statement unchanged, keeps forward guidance

                      By
                      ActionForex.com
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                      ECB left monetary policy unchanged as widely expected. Main refinancing rate is held at 0.00%. Marginal lending facility and deposit facility rates were held at 0.25% and -0.50% respectively. The asset purchase program will continue at a monthly pace of EUR 20B.

                      The forward guidance was also kept unchanged. “The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.”

                      Full statement here.

                      France and US agreed to work on digital taxation at OECD

                        By
                        ActionForex.com
                        -

                        French Finance Minister Bruno Le Maire said France and the US has agreed today on the way to push digital taxation at the OECD level. The bilateral dispute between the two countries on the issue is set aside. The development reduces the risk of US retaliation on France’s digital taxes.

                        “We had long talks this morning with the US Treasury Secretary and the OECD Secretary General, and I am happy to announce to you that we have found an agreement between France and the United States, providing the basis for work on digital taxation at the OECD,” Le Maire said. “It’s good news, because it reduces the risk of American sanctions and opens up the prospect of an international solution on digital taxation.”

                        A series of proposals were hammered out for redrafting of international tax rules. The proposals will be put to OECD next week for discussions between 137 governments.

                        Chinese stocks & yuan tumble as two cities locked up on coronavirus outbreak

                          By
                          ActionForex.com
                          -

                          Chinese stocks tumbled sharply today, with Shanghai SSE closed down -2.75% to 2976.53. Worries over the new coronavirus intensified today as two major cities were shut down. Wuhan, a city with 11m population, is believed to be the source of the outbreak. All urban transport were shut down at 0200GMT earlier today. Hours later, a neighboring city Huanggang, with 6m population, was also locked down. Cases are already reported outside of China, including Thailand, Japan, South Korea, Taiwan, Hong Kong and the US. But WHO refrained from declaring a global emergency yet, pending the decision for today.

                          With today’s sharp decline and firm break of 55 day EMA, the rise from 2733.92 should have completed at 3127.16 already. More importantly, corrective rebound from 2733.92 might have finished too. Deeper fall should be seen back to 2857.32 support. Break will suggest that fall from 3127.16 is the third leg of the corrective pattern from 3288.45. In this case, retest of 2733.92 low should be seen next.

                          USD/CNH’s rebound today also confirms short term bottoming at 6.8452. Stronger rebound could now be seen back to near term channel resistance (now at 7.0062). As long as this resistance holds, another fall will remain in favor through 6.8452 at a later stage.

                          SNB Jordan: Negative interest rates and intervention still necessary

                            By
                            ActionForex.com
                            -

                            SNB Chairman Thomas Jordan maintained today that negative interest rates are necessary for the Swiss economy. The board is aware of the side effects, and “that is the reason why we changed the threshold”, referring to raising the deposit limit before the charging -0.75% interest. He added, “that gives us the freedom to maintain negative rates for longer and also to cut the rate if necessary.”

                            Jordan also reiterated that the Franc is still “highly valued” and interventions are also necessary. But he emphasized that “we don’t manipulate Swiss Franc exchange rate… never intend to weaken the franc for any advantage”.

                            Yesterday, SNB Governing Board Member Andrea Maechler said there is no change in the monetary policy after US Treasury put Switzerland back into currency manipulator watchlist. She added, “we are doing monetary policy for Switzerland.”

                            UK Leadsom wants both a trade deal with US and digital tax

                              By
                              ActionForex.com
                              -

                              UK Secretary of State for Business, Energy and Industrial Strategy Andrea Leadsom said the government is still pushing for digital tax despite repeated objections by the US. At the same time, it’s just one particular issues which will not stand in the way of a UK-US trade agreement.

                              She told Talk Radio: “The United States and the United Kingdom are committed to entering into a trade deal with each other and we have a very strong relationship that goes back centuries so some of the disagreements that we might have over particular issues don’t in any way damage the excellent and strong and deep relationship between the U.S. and the UK,”

                              “There are always tough negotiations and tough talk but I think where the tech tax is concerned it’s absolutely vital that these huge multinationals who are making incredible amounts of income and profit should be taxed and what we want to do is to work internationally with the rest of the world to cover with a proper regime that ensures that they’re paying their fair share.”

                              ECB to stand pat, reveal details of strategic review

                                By
                                ActionForex.com
                                -

                                ECB rate decision and press conference is the major focus for today. No change in monetary policy is expected. That is, main refinancing rate will be held at 0.00%. Deposit rate should be kept at -0.50% too. Pace of asset purchase program should also be unchanged at EUR 20B per month.

                                Forward guidance should also be unchanged as “the Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.”

                                President Christine Lagarde might acknowledge in the press conference that recent data have shown some stabilization. But momentum of recovery, in particular in the manufacturing sector, has been weak. The board will remain cautious and risk to growth and price remain tilted to the downside.

                                Most attention will likely be on the details of the strategic review to be announced at the meeting. While this would be lengthy exercise, we expect the market to be particularly interested in the revision of inflation target. There have been talks that the current inflation target as “below but close to 2%” can be revised in favor of a symmetric target.

                                Here are some suggested previews on ECB:

                                Australia employment grew 28.9k, unemployment rate dropped to 5.1%, AUD rebounds

                                  By
                                  ActionForex.com
                                  -

                                  Australia employment grew 28.9k to 12.98m in December, much better than expectation of 14.0k. Full-time jobs dropped slightly by -0.3k to 8.83m. Part-time jobs rose 29.2k to 4.15m. Unemployment rate dropped -0.1% to 5.1%, better than expectation of 5.2%. Participation rate remained steady at 66.0%.

                                  ABS Chief Economist Bruce Hockman said: “Trend unemployment rate decreased slightly to 5.1 per cent, its lowest level since April 2019. While there has been stronger growth in part-time employment over the past year, the underemployment rate is still where it was last December, at 8.3 per cent.”

                                  Australian Dollar recovers as markets push back expectation of February RBA rate cut, due to the upside surprises in job data. ANZ said the data reinforce RBA’s view that the economy appears to have reached a “gentle turning point”. it will be difficult to see RBA easing in February even though rate cuts are more likely than not over the course of 2020. CBA said RBA would now likely cut by 25bps to 0.50% in April, instead of February.

                                  WTI oil dives as IEA forecasts 1m bpd surplus in first half 2020

                                    By
                                    ActionForex.com
                                    -

                                    Oil price dropped sharply overnight after International Energy Agency (IEA) Executive Director Fatih Birol said there would be a surplus of as mush as 1m bpd of oil in the first half of the year. He said, there is an “abundance of energy supply” in oil and gas. And it’s the “reason that recent incidents we have seen – with the Iranian general killed, Libya unrest – didn’t boost international oil prices.”

                                    WTI’s fall from 65.38 resumed by taking out 57.35 support and hits as low as 55.60 so far. Such decline is seen as a leg inside the sideway pattern from 66.49. With 55 day EMA firmly taken out not, further fall should be seen to retest 50.84 key support level. Strong support should be seen from there to bring rebound. For now, break of 59.56 resistance is needed to indicate completion of the decline. Otherwise, near term outlook stays bearish in case of recovery.

                                    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!

                                      CAD dives after BoC, but outlook not overwhelmingly bearish

                                        By
                                        ActionForex.com
                                        -

                                        Canadian Dollar turned from being one of the strongest after CPI, to the weakest after dovish BoC. In short, BoC left the option of rate cut open. It noted in the statement “Governing Council will be watching closely to see if the recent slowdown in growth is more persistent than forecast.”

                                        However, outlook in Canadian dollar is not overwhelmingly bearish, except probably against Dollar only, despite today’s sharp fall.

                                        USD/CAD’s development now argues that correction from 1.3664 might have completed as a triangle at 1.2951, on bullish convergence condition in daily MACD. Sustained trading above 55 day EMA will solidify this case and target 1.3327 resistance for confirmation.

                                        The case is building up for CAD/JPY that rise from 78.50 has completed with three waves up to 84.56, after hitting 61.8% retracement of 78.50 to 83.55 from 81.28 at 84.40. But 82.80 support is needed to trigger near term bearishness first. Otherwise, further rise could still be seen.

                                        Despite the today’s rebound EUR/CAD is held below 1.4581 near term resistance so far. There is no indication of short term bottoming yet. And, even if 1.4581 is taken out, that could mean EUR/CAD is in the third leg of consolidation pattern from 1.4415. That is, larger down trend will remain in tact in that case.

                                        AUD/CAD is also staying below 0.9038 resistance. Fall from 0.9150 is in favor to extend to retest 0.8835 low. For now, even in case of another fall, break of 0.8835 is not anticipated. Overall, consolidation form 0.8835 will likely extend further.

                                        BoC stands pat, left rate cut option open, revised down 2020 GDP forecast

                                          By
                                          ActionForex.com
                                          -

                                          BoC left overnight rate target unchanged at 1.75% as widely expected. The central bank said the Canadian economy has been “resilient” but indicators since October have been “mixed”. Globally, the economy is showing “signs of stabilization” with “positive” trade developments. But “there remains a high degree of uncertainty and geopolitical tensions have re-emerged, with tragic consequences.”

                                          BoC left the option of rate cut open, and said the “Governing Council will be watching closely to see if the recent slowdown in growth is more persistent than forecast.” Special attention will be paid to consumer spending, housing and business investment.

                                          In the Monetary Policy Report, 2020 GDP forecast was revised down from 1.7% to 1.6%. But 2021 GDP growth is revised up from 1.8% to 2.0%. 2020 CPI projection was revised up form 1.8% to 1.9%. 2021 CPI projection was left unchanged.

                                          Full Monetary Policy Report here.

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