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UK retail sales rose 0.8% mom in Oct, ex-fuel sales grew 1.6% mom

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    ActionForex.com
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    UK retail sales grew 0.8% mom in October, above expectation of 0.5% mom. Ex-fuel sales jumped 1.6% mom, above expectation of 0.2% mom.

    However, over the three months to October, sales volumes dropped -2.3% when compared with the previous three months. Compared with the same period a year earlier, sales volumes over the last three months dropped -0.5%.

    Retail sales values, unadjusted for price changes, rose by 1.6% in October 2021, following an increase of 0.2% in September. Over the last three months to October 2021, the value of sales was up 3.3% on the same period a year earlier, reflecting an annual retail sales implied price deflator of 3.8%.

    Full release here.

    ECB upgrades growth and inflation forecasts for 2021 and 2022

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      ActionForex.com
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      In the post meeting press conference, ECB President Christine Lagarde said, business and consumer surveys and high-frequency indicators point to a “sizeable improvement” in activity in Q2. Business surveys indicate a “strong recovery in services” while manufacturing production “remains robust”. Consumer confidence are “strengthening”, suggesting a strong rebound in private consumption in the period ahead. Business investments shows “resilience”.

      According to the baseline scenario, ECB upgraded real GDP growth forecast in 2021 to 4.6% (up from 4.0%) , in 2022 to 4.7% (up from 4.1%). 2023 growth forecast was unchanged at 2.1%. Annual inflation is projected to be at 1.9% in 2021 (up from 1.5%), 1.5% in 2022 (up from 1.2%) and 1.4% in 2023 (unchanged).

      Full statement here.

      New Zealand BusinessNZ manufacturing rose to 54.3, recovery from a large hard hit

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        ActionForex.com
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        New Zealand BusinessNZ Performance of Manufacturing Index rose from 51.6 to 54.3 in October. Looking at some details, production rose from 49.8 to 54.0. Employment dropped from 54.2 to 52.1. New orders dropped from 54.1 to 53.9. Finished stocks rose from 50.2 to 54.9. Deliveries rose from 47.9 to 59.9.

        BNZ Senior Economist, Doug Steel stated that “even though October’s reading is above average, we’d classify it more in the realm of some recovery from a large hit rather than an indication of outright strength.”

        Full release here.

        BoC to stand pat today, EUR/CAD extends rebound

          By
          ActionForex.com
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          Bank of Canada rate decision is a major focus today. Speculation of a September hike cooled drastically as NAFTA negotiation stalled last week. Markets are now generally expecting BoC to hold the overnight rate unchanged at 1.50% today. Instead, markets are expecting BoC to signal a move in October. That signal is a key to Canadian Dollar’s near term movement. Meanwhile, negotiation with US will also resume today. But based on Prime Minister Justin Trudeau’s firm stance on Chapter 19 dispute resolution mechanism, it’s unlikely to a break through any time soon.

          Suggested readings on BoC and Loonie:

          Canadian Dollar recovers mildly today but remains the weakest one for the week, in particular against Dollar and Euro. EUR/CAD’s firm break of 55 day EMA and medium term falling trend line suggests that decline from 1.6151 has completed with three waves down to 1.4798. Immediate focus is now on 38.2% retracement of 1.6151 to 1.4798 at 1.5315. Sustained break there should confirm bullish reversal and bring stronger rally to 61.8% retracement at 1.5634 and above.

          Australia AiG PMI manufacturing dropped to 49.4, lowest since Aug 2016

            By
            ActionForex.com
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            Australia AiG Performance of Manufacturing Index dropped -3.3 pts to 49.4 (seasonally adjusted) in June, below 50-points threshold and was the lowest level since August 2016. In trend terms, PMI dropped -0.4 to 51.9. Three of the six sectors are in deep contraction including metal products, TCF paper & printing, and machinery and equipment. Though, food & beverages, building materials and chemicals are holding first.

            Employment data are mixed. average wage index rebounded by 4.2 points to 59.7, indicating a faster rate of wage increases (seasonally adjusted). However, employment index fell by -5.5 points to be broadly stable at 50.1.

            Full release here.

            Into US session: Sterling weak on GDP contraction, US strongest

              By
              ActionForex.com
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              Entering into US session, Dollar is trading as the strongest one for today, as lifted by US-Mexico deal on migration. Trump revealed today that a part of the agreement will need a “vote by Mexico’s legislative body”. He then threatens Mexican lawmakers that “we do not anticipate a problem with the vote but, if for any reason the approval is not forthcoming, tariffs will be reinstated.” But in any case, tariffs threats are averted for now.

              Saying in the currency markets, Canadian Dollar is the second strongest one. There is, for now, little case for BoC to cut interest rate and the next move is still more likely a hike. The question is just timing. Euro is the third strongest. On the other hand, New Zealand and Australian Dollar are among the weakest after China May imports contracted by most since July 2016. Sterling is the second weakest as UK GDP contracted -0.4% mom, in April, with steep deterioration in manufacturing.

              In other markets, currently

              • DOW future is up 131 pts,
              • Hold is down -1%
              • WTI oil is up 0.37%.

              In Europe:

              • FTSE is up 0.52%.
              • DAX is up 0.77%.
              • CAC is up 0.27%.
              • German 10-yer yield is up 0.034 at -0.220.

              Earlier in Asia:

              • Nikkei rose 1.20%.
              • Hong Kong HSI rose 2.27%.
              • China Shanghai SSE rose 0.86%.
              • Singapore Strait Times rose 0.69%.
              • Japan 10-year JGB yield dropped -0.005 to -0.121.

              New Zealand BNZ manufacturing dropped to 53.4, employment and new orders plunged

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                ActionForex.com
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                New Zealand BusinessNZ Performance of Manufacturing dropped sharply to 53.4 in February, down -4.6 pts from 58.0. Looking at some details, production dropped from 59.3 to 57.3. Employment dropped from 56.1 to 49.8. New orders tumbled from 62.8 to 56.2.

                “Despite the PMI remaining in expansion, the proportion of those outlining negative comments stood at 54%, compared with 46% in January.  Given the second recent partial lockdown, it remains to be seen what impact this will have on the sector over the next few months,” said BusinessNZ’s executive director for manufacturing Catherine Beard.

                BNZ Senior Economist, Craig Ebert said that “supply issues were to the fore from respondents’ comments to February’s PMI survey.  Of those citing negative factors, supply rather than demand problems dominated, with frequent references to supply chains, shipping, freight, costs, and difficulties in finding suitable staff.”

                Full release here.

                BoE Saunders: Tightening cycle may still have some way to go

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                  ActionForex.com
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                  BoE MPC member Michael Saunders said in a speech, “my own view is that further monetary tightening is likely, and indeed, as evident from my votes at the MPC’s recent policy meetings, my preference has been to tighten relatively quickly.”

                  “This partly reflects my view that risks are tilted on the side of a more persistent period of excess demand and domestic inflation pressures than implied by the most recent MPR forecast (published in early May),” he said.

                  “Unless restrained by tighter monetary policy, the relatively high level of longer-term inflation expectations implies that domestic cost growth and firms’ pricing strategies may remain above target-consistent rates even if capacity pressures ease to more normal levels.”

                  Also, the cost of “not tightening promptly enough – would be relatively high at present”, and “such an outcome would increase the costs of returning inflation to target in coming years.”

                  “rather than focus on a precise forecast for Bank Rate over the next year, the key point is that the tightening cycle may (in my view) still have some way to go.”

                  Full speech here.

                  Australia employment grew 12.9k driven by part-time jobs, hours worked fell

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                    ActionForex.com
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                    Australia employment grew 12.9k in January, better than expectation of 0k. Full-time jobs dropped -17k but part-time jobs rose 30k.

                    Unemployment rate was unchanged at 4.2%, but participation rate rose 0.1% to 66.2%. Monthly hours worked, however, dropped -8.8% mom.

                    Bjorn Jarvis, head of labour statistics at the ABS, “While we again saw higher than usual numbers of people taking annual leave – even more so than last year – the 8.8 per cent fall in hours worked in January 2022 also reflected much higher than usual numbers of people on sick leave.”

                    “As with earlier rapid changes in the labour market during the pandemic, hours continue to be much more affected than employment. This reflects people working reduced or no hours, without necessarily losing their jobs.”

                    Full release here.

                    US oil inventories rose 2.2M barrels, WTI heading back to 50.64 support

                      By
                      ActionForex.com
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                      US commercial crude oil inventories rose 2.2M barrels in the week ending June 7, above expectation of -1.0M barrels fall. At 485.5 million barrels, U.S. crude oil inventories are about 8% above the five year average for this time of year. WTI crude oil weakens mildly after the release.

                      Prior recovery from 50.64 was limited at 54.68 and failed to sustain above 54.61 minor resistance. It’s also staying below falling 4 hour 55 EMA. Near term outlook remains bearish and further decline is still expected. Break of 50.64 and sustained trading below 61.8% retracement of 42.05 to 66.49 at 51.38 could pave the way to retest 42.05 low.

                      NZD/USD decline slows, some RBNZ previews

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                        ActionForex.com
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                        RBNZ rate decision will be a major focus in the coming Asian session. There is no chance of a shift in OCR, which is currently at 1.75%. While the economy appeared to have picked up momentum in Q3, Q4 data proved that was only a false dawn. RBNZ’s today in the upcoming statement should at least switch to the absolute neutral stance. That is, the language that next move could be up or down would be reintroduced. And there is prospect for the central to even tilt more to the dovish side.

                        Here are some suggested readings:

                        NZD/USD dived sharply last week after weaker than expected job data. But the decline slowed this week, with 4 hour MACD crossed above signal line. Intraday bias is turned neutral for now. As long as 0.6773 minor resistance holds, we’d expect further decline ahead. Break of 0.6706 will pave the way to 0.6551 low.

                        Nevertheless, break of 0.6773 will indicate shorty term bottoming and bring stronger recovery. But even in that case, we don’t expect a break of 0.6941 resistance in near term.

                        S&P Global: China’s coronavirus to drag Eurozone, UK and US growth

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                          ActionForex.com
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                          S&P Global estimated that China’s coronavirus outbreak could drag Eurozone and UK growth by -0.1% to -0.2% this year. The impact will likely be felt mostly in Q1 though. It noted, “a large share of economic activity hindered by the outbreak of the virus, especially goods production, would just be postponed rather than canceled altogether.” However, “if a catch-up effect materializes, the economic outlook for 2021 could even be slightly higher than our current baseline forecast of 1.2%.”

                          The agency’s US chief economist also warned that “most of the drag on U.S. growth to be in the first quarter, with a smaller hit in the second quarter and a rebound in the latter half.” And, “along with the potentially devastating human toll, if the virus spreads further and lasts longer, the impact on virtually every economy could be far worse,.” US GDP growth in Q1 could be dragged to just 1% annualized, from previous forecasts of 2.2%.

                          US core CPI accelerated to 2.1%, large monthly rise of 0.3% since 2018

                            By
                            ActionForex.com
                            -

                            US headline CPI slowed to 1.6% yoy in June, down from 1.8% yoy, matched expectations. But that was mainly due to a drag from energy price index, which dropped -3.4% yoy.

                            On the other hand, CPI core accelerated to 2.1% yoy, up from 2.0% yoy, beat expectation of 2.0% yoy. Also, over the month, CPI core rose 0.3% mom, largest monthly rise since January 2018.

                            Full release here.

                            BoJ Kuroda: No immediate plans to scale back stimulus

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                              ActionForex.com
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                              BoJ Governor Haruhiko Kuroda told the parliament, “unlike Western countries, we have no immediate plans to scale back our monetary stimulus.” But the central bank will continue to look at inflation expectations. “We will look not just at price indicators, but also surveys showing how the public feels about price moves,” he added.

                              On exchange rate, Kuroda said, “if the yen weakens further, that could push up import costs. But the recent rise in import costs is driven mostly by an increase in dollar-denominated raw material prices, rather than a weak yen.”

                              “It’s desirable for currency rates to move stably reflecting economic fundamentals. I think recent (yen) moves are in line with this trend,” Kuroda added.

                              Mid-US Update: Strong rally in DOW and yield, when will Dollar follow?

                                By
                                ActionForex.com
                                -

                                Solid risk appetite and surging treasury yields are the main theme in the financial markets today. At the time of writing, DOW is up over 190pts or 0.73% at 26438.91. S&P 500 trails and is up 0.23%. But NASDAQ lags behind. US treasury yields continue to show tremendous trend, in particular in the long end. 30 year yield is currently up 0.030, 10 year yield 10 up 0.028 and five yield up 0.021. In Europe, FTSE gained 0.42%, DAX rose 0.50% and CAC added 0.56%.

                                In the currency markets, Swiss Franc remains the weakest one for the day. Dollar gets no support from yield and is the second weakest. Sterling experienced a roller coaster ride on strong CPI and negative Brexit news. But for now, the Pound is patiently awaiting the outcome of the EU summit in Austria. Commodity currencies are the strongest ones, led by Australian Dollar.

                                DOW is having a rather strong rally this week and it shows upside acceleration with daily MACD back above signal line too. Current momentum suggests that DOW will soon challenge 26616.71 record high and should take it out without much difficulty. This will stay the preferred case as long as 26030.35 support holds.

                                TNX’s rally is showing rather strong upside acceleration as seen in daily MACD. 3.115 key resistance should be challenged soon too. It’s early to tell but based on current momentum, it shouldn’t be too difficult to break this key resistance level decisively. And with such developments, Dollar should eventually follow and stage strong rally against other major currencies. It’s just a matter of time.

                                NZD/JPY upside breakout, on track to 77.07 projection level

                                  By
                                  ActionForex.com
                                  -

                                  NZD/JPY finally follows other commodity yen crosses, and break through 76.12 support to resume recent rally. Current rise is seen as part of the up trend from 59.49. Next target is 100% projection of 63.45 to 71.66 from 68.86 at 77.07. At this point, we’d stay cautious on topping around this projection level to complete the five wave sequence from 63.45.

                                  But firstly, break of 75.34 support is needed to be the first signal of short term topping. Secondly, sustained break of 77.07 would likely prompt some upside acceleration for 161.8% projection at 82.14 next.

                                  Fed Williams: Moderation of asset purchase pace may soon be warranted

                                    By
                                    ActionForex.com
                                    -

                                    New York Fed President John Williams said, “assuming the economy continues to improve as I anticipate, a moderation in the pace of asset purchases may soon be warranted.”

                                    Williams expected the economy to grow between 5.5% to 6% this year. Inflation will drop back to 2% next year.

                                    “There is still a long way to go before reaching maximum employment,” Williams said. “And over time it should become clearer whether we have reached 2 percent inflation on a sustained basis.”

                                     

                                    China’s import rose 51.5% yoy in May, exports rose 27.9% yoy

                                      By
                                      ActionForex.com
                                      -

                                      In USD term, in May, China’s total trade rose 37.4% yoy to USD 482.3B. Export grew 27.9% yoy to USD 263.9B, slowed from prior month’s 32.3% yoy. Imports rose 51.5% yoy to USD 218.4B, accelerated from April’s 43.1% yoy. Trade surplus widened to USD 45.5B, up from USD 42.9B, but missed expectation of USD 50.5B. The import growth rate was fastest since January 2011.

                                      From January to May, total trade rose 38.1% yoy to USD 2271.8B. Exports rose 40.2% yoy to USD 1237.6B. Imports rose 35.6% yoy to USD 1034.B. Trade surplus for the period was at USD 203.5B.

                                      Australia AiG construction rose to 47.9, pull back continued

                                        By
                                        ActionForex.com
                                        -

                                        Australia AiG Performance of Construction Index rose 2.6 pts to 47.9 in August. Activity rose 3.5 to 46.2. Employment dropped -5.3 to 47.7. New orders rose 7.9 to 51.0. Supplier deliveries rose 3.4 to 45.6. Input prices dropped -1.2 to 92.6. Selling prices dropped sharply by -18.6 to 68.5. Average wages rose 1.2 to 77.6.

                                        Peter Burn, Chief Policy Advisor at Ai Group said: “The pull back of the Australian construction sector continued in August with three of the four industry segments recording falls in activity and employment across the industry dropping in the month…. Builders and constructors link much of the fall in activity to rises in interest rates in recent months….. Softer demand was also reflected in the steep fall in the selling price index even though input prices and wage increases remain elevated.”

                                        Full release here.

                                        Fed Williams: Higher oil prices not a stagflation issue

                                          By
                                          ActionForex.com
                                          -

                                          New York Fed President John Williams said the higher oil prices stemming from Russia invasion of Ukraine may act like a “tax” on American consumers. But, “the economy is coming into this with a lot of forward momentum. It’s definitely not a stagflation issue.”

                                          Williams expect inflation to come down later this year but stays “well above” 2% target. He emphasized Fed has the “ability to adjust interest rates higher if inflation ends up being much more persistent or staying much higher than we expect or want”.

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