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German Gfk consumer confidence dropped to -0.1, economic expectations tumbled

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    ActionForex.com
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    German Gfk consumer confidence dropped -0.1 to 9.6 in January. Economic expectations dropped sharply to -4.4, down from 1.7. Gfk said that ” impression among consumers that the German economy will weaken significantly has been reinforced.”. Also, “The trade conflicts between the US and China, on the one hand, and the US and the EU, on the other, continue to smolder, hanging like a sword of Damocles over Germany, a nation highly dependent on exports”.

    Full release here.

    UK Gfk consumer confidence rose to -11, robust increase in economic confidence

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      ActionForex.com
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      UK Gfk Consumer Confidence rose to -11 in December, up from -14. In particular, index for General Economic Situation over the last 12 months improved 3 pts to -31. Index for General Economic Situation over the next 12 months improved 7 pts to -27.

      Joe Staton, Client Strategy Director at GfK, said: “We haven’t seen such a robust increase in confidence about our economic future since the summer of 2016. Despite official warning signs about the flat-lining of Britain’s economy, we know that record high employment and below target levels of inflation are helping to boost consumers’ expectations for the year ahead.

      Full release here.

      Japan national CPI core ticked up to 0.5%

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        ActionForex.com
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        Japan national CPI core (ex-fresh food), accelerated to 0.5% yoy in November, ticked up from 0.4% yoy. However, taking away the effect of sales tax hike, started in October, core inflation came in at just 0.2% yoy. All item CPI rose from 0.2% yoy to 0.5% yoy. CPI core-core (ex-fresh food and energy) rose from 0.7% yoy to 0.8% yoy.

        While it’s the 35th straight month of core price increases, it remained well below BoJ’s 2% target. An official from the Ministry of Internal Affairs and Communications said, “although at a slower pace, the index continues to rise, so there is no change in our view that the prices are rising moderately.”

        Japan cabinet approved record budget for next fiscal year

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          ActionForex.com
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          Japanese Primes Minister Shinzo Abe’s cabinet approved a record JPY 102.7T general account budget today, for the fiscal year beginning April 2020. That marks a 1.2% rise from the current fiscal year. There will be JPY 61.7T in general spending, with JPY 36T on social security. JPY 23.4T will be used for debt servicing. JPY 15.8T will be transferred to regional and local governments.

          Meanwhile, the government projected to have JPY 63.5T in tax revenue, JPY 32.6T in revenue from bond issuance, and JPY 6.6T income from others sources. Also, the government doesn’t project a balanced budget until fiscal 2027.

          US House passed USMCA by 385-41 votes

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            ActionForex.com
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            In the US, House passed the legislation to implement the USMCA by 385-41 votes yesterday, with 38 Democrats, two Republicans and one independent lawmakers voted no. At this point, it’s unsure when Senate will take it up. Senate Republican leader Mitch McConnell said before that a USMCA vote would likely follow the impeachment trial on President Donald Trump, possibly in January.

            Mexican Foreign Minister Marcelo Ebrard said “We’re going forward. Good news” after the passage. He added that the new will start new phase of investment and growth for Mexico, ending a period of uncertainty. Canadian Prime Minister Justin Trudeau said Canada’s Parliament would approve USMCA “as quickly as we can.” But Parliament is not scheduled to return to Ottawa before Jan. 27.

            Philadelphia Fed manufacturing outlook dropped sharply to 0.3

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              ActionForex.com
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              Philadelphia Fed Manufacturing Outlook dropped sharply to 0.3 in December, down from 10.4, and missed expectation of 8.5. It’s also the worst reading in six months. The result indicated “essentially flat growth” in the region’s manufacturing sector. Looking at some details, employment index dropped -4pts to 17.8. Prices paid index rose 11 pts to 19.0.

              Full release here.

              US initial jobless claims dropped to 234k, but above expectation

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                ActionForex.com
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                US initial jobless claims dropped -18k to 234k in the week ending December 14, but was higher than expectation of 225k. Four-week moving average of initial claims rose 1.5k to 225.5k.

                Continuing claims rose 51k to 1.722m in the week ending December 7. Four-week moving average of continuing claims rose 6.25k to 1.684m.

                Full release here.

                BoE kept rate unchanged at 0.75%, Haskel and Saunders dissented again

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                  ActionForex.com
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                  BoE left monetary policy unchanged as widely expected. Bank Rate was held at 0.75% with 7-2 vote. Jonathan Haskel and Michael Saunders dissented and voted for -25bps rate cut again. Asset purchase target was kept at GBP 435B on unanimous vote.

                  In the accompanying statement, BoE said since the previous meeting “economic data have been broadly in line” with November forecasts. GDP is expected rise “only marginally” in Q4. Household consumption has continued to grow steadily, but business investment and export orders have remained weak. There were some signs of “loosening” in labor market, but it remains tight. Headline CPI is expected to fall to around 1.75% by spring, “owing to the temporary effects of falls in regulated energy and water prices.”

                  BoE also noted that “monetary policy could respond in either direction to changes in the economic outlook”. “monetary policy may need to reinforce the expected recovery in UK GDP growth and inflation” should Brexit uncertainties remain entrenched, or global growth fails to stabilize. However, if the risks do not materialize and economy recovers in line with latest projections, “some modest tightening of policy, at a gradual pace and to a limited extent, may be needed”.

                  UK retail sales dropped -0.6%, all sectors contracted

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                    ActionForex.com
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                    In November, UK retail sales came in at -0.6% mom, 1.0% yoy, well below expectation of 0.5% mom, 2.4% yoy. Retail sales ex-fuel came in at -0.6% mom, 0.8% yoy, also well below expectation of 0.3% mom, 1.6% yoy. Total retail sales for the three months to November dropped -0.4% over the previous three months.

                    All sectors contributed negatively to the month-on-month figures. With fuel contributed -0.1%, non-store retailing -0.2%, non-food stores -0.1%, food stores -0.2%.

                    Full release here.

                    New Zealand GDP grew 0.7%, led by strong retail growth

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                      ActionForex.com
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                      New Zealand GDP grew 0.7% qoq in Q3, above expectation of 0.5% qoq. Q2’s growth rate was revised sharply lower from 0.5% qoq to 0.1% qoq. Looking at some details, primary industries grew 1.1%. Good-producing industries grew 0.5%. Services industries grew 0.4%.

                      Services growth, which account for 2/3 of the GDP, was led by retail. The 2.4% growth in retail and accommodation was also the fastest in eight years, dominated by electronics.

                      Also released, exports rose NZD 371m, or 7.6% yoy, to NZD 5.2B. Imports rose NZD 119m, or 2.0% yoy, to NZD 6.0B. Trade deficit came in at NZD 753m, slightly larger than expectation of NZD 700m.

                      Australia added 39.9k jobs, driven by part-time jobs

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                        ActionForex.com
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                        Australia employment grew 39.9k in November, well above expectation of 14k. Full-time jobs rose 4.2k while part-time jobs grew 35.7k. Unemployment rate dropped -0.1% to 5.2%, below expectation of 5.3%. Participation rate was unchanged at 66.0%.

                        Looking at some details, the largest increases in employment were recorded in Queensland (up 17.3k) and Victoria (up 13.7k). The only decrease was in New South Wales (down -2.8k). Unemployment rate increased by 0.1% in South Australia (6.3%), and by less than 0.1% in Western Australia (5.8%). Unemployment rate decreased by -0.2 pts in New South Wales (4.7%) and Victoria (4.6%), and by -0.1% in Queensland (6.3%)

                        Overall, unemployment rate remains well above RBA’s estimated full employment of 4.5%. More policy easing is still needed.

                        Full release here.

                        BoJ stands pat, expect economy to continue moderate expanding trend

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                          ActionForex.com
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                          BoJ left monetary policy unchanged as widely expected. Short-term policy rate was held at -0.1%. Purchase of JGB will continue to keep 10-year yield at around 0%, with monetary base expanding at JPY 80T per annum. Y. Harada and G. Kataoka dissented as usual in 7-2 vote.

                          The central bank said the economy is “likely to continue on a moderate expanding trend”. Impact of global slowdown is expected “to be limited”. Domestic demand is expected to “follow an uptrend” despite the impact of consumption tax hike. Exports are projected to “continue showing some weakness”, but are expected to be on “moderate increasing trend”. CPI is “likely to increase gradually toward 2 percent”.

                          Full statement here.

                          Fed Evans: It’s important that we overshoot inflation

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                            ActionForex.com
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                            Chicago Fed President Charles Evans said yesterday that the US economy is doing “remarkably well”. And he expected “the economy to continue to growth, labor markets to continue to be strong.” He echoed comments of many other Fed officials and said monetary policy is in “a good place”. He emphasized that ” inflation would have to go above 2% by some meaningful amount for me to really think that we need something more restrictive.” And it’s “extremely important that we get inflation up to 2% …I actually think it’s important that we overshoot.”

                            New York Fed President John Williams said “I feel very good about how the economy’s been this year, how it’s progressed and feel very good about how it’s going to look next year.” He expected the economy to growth by about 2% in 2020, with unemployment staying close to current 3.5%. Also, he expected inflation to approach Fed’s 2% target.

                            Richmond Fed President Thomas Barkin “the major reason the consumer is strong is they have jobs and not only do they have jobs but real wages are up”. He said that Fed’s rate cuts this year “have helped some, but they’ve helped in the context of what’s been a very strong consumer all year long.”

                            Canada CPI jumped to 2.2% in Nov, ex-gasoline unchanged at 2.3%

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                              ActionForex.com
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                              Canada CPI accelerated to 2.2% in November, up from 1.9% yoy, matched expectations. Excluding gasoline, CPI rose 2.3%, unchanged from October’s reading. CPI common was unchanged at 1.9% yoy, matched expectations. CPI median rose to 2.4%, up from 2.2%, beat expectation of 2.2% yoy. CPI trimmed accelerated to 2.2% yoy, up from 2.1% yoy, matched expectations.

                              Full release here.

                              Coeure: ECB could communicate the range of inflation outcomes as target

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                                ActionForex.com
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                                Outgoing ECB Executive Board Member Benoit Coeure said in farewell event today that the central bank should be more flexible with its inflation target. He said, “the ECB should clarify that it aims to deliver inflation of 2% over the medium term.  And it could communicate the range of inflation outcomes that can be considered acceptable in normal times.”

                                A band around the target wouldn’t weaken the central bank’s resolve. He added, “research shows that central banks have a strong incentive to already respond to inflation deviations within the tolerance zone, rather than waiting until inflation has crossed the edges.”

                                Eurozone CPI finalized at 1.0%, core CPI at 1.3%

                                  By
                                  ActionForex.com
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                                  Eurozone CPI was finalized at 1.0% yoy in November, up from October’s 0.7% yoy. Core CPI was finalized at 1.3% yoy, up from October’s 1.1%. The highest contribution came from services (+0.82%), followed by food, alcohol & tobacco (+0.37%), non-energy industrial goods (+0.10%) and energy (-0.33%).

                                  EU28 CPI was finalized at 1.3%, core CPI at The lowest annual rates were registered in Italy, Portugal (both 0.2%) and Belgium (0.4%). The highest annual rates were recorded in Romania (3.8%), Hungary (3.4%), Slovakia (3.2%) and Czechia (3.0%).

                                  Full release here.

                                  UK CPI unchanged at 1.5%, core CPI at 1.7%

                                    By
                                    ActionForex.com
                                    -

                                    UK CPI was unchanged at 1.5% yoy in November. Core CPI was also unchanged at 1.70%. Both matched expectations. RPI accelerated to 2.2% yoy, up from 2.1% yoy, beat expectation of 2.1% yoy.

                                    PPI input came in at -0.3% mom, -2.7% yoy, versus expectation of -1.2% mom, -4.9% yoy. PPI output was at -0.2% mom, 0.5% yoy, versus expectation of 0.0% mom, 0.9% yoy. PPI output core was at -0.1% mom, 1.1% yoy, versus expectation of 0.1% mom, 1.5% yoy.

                                    German Ifo rose to 96.3, more confident into new year

                                      By
                                      ActionForex.com
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                                      German Ifo Business Climate rose to 96.3 in December, up from 95.0, beat expectation of 95.5. Current Assessment Index rose to 98.8, up from 97.9, beat expectation of 98.1. Expectation Index rose to 93.8, up from 92.1, beat expectation of 93.1. “The German economy is heading into the New Year with more confidence,” Ifo President Clemens Fuest said.

                                      Looking at some details, manufacturing improved from -5.8 to -5.0. Service rose from 17.4 to 21.3. However, trade dropped from 0.9 to 0. Construction also dropped from 20.3 to 17.9.

                                      Full release here.

                                      Asian business sentiment swung from decade low to 18-month high

                                        By
                                        ActionForex.com
                                        -

                                        Thomson Reuters/INSEAD Asian Business Sentiment jumped to 71 in Q4. That was a large swing from Q3’s 58, which was close a decade low, to the highest since June last year. The change was also a noticeable shift from neutral to optimistic even though majority of firms are not yet confident enough to plan hiring.

                                        Antonio Fatas, economics professor at INSEAD, said, “conditions, expectations and some of the uncertainty has improved over the last quarter. But I don’t see this uncertainty disappearing, I think some of these tensions are going to stay with us maybe for years or decades.”

                                        Full report here.

                                        Japan export contracted for 12-straight months

                                          By
                                          ActionForex.com
                                          -

                                          In non-seasonally adjusted terms, Japan’s exports dropped -7.9% yoy to JPY 6.38T in November. Even though that’s a smaller than expected decline, it still marked the 12-month straight month of contraction. Exports were dragged down by cars and construction equipment to the US, as well as shipment of chemical production to China. Imports dropped -15.7% yoy to JPY 6.46T. Trade surplus dropped sharply by -88.9% yoy to JPY 0.082T.

                                          In seasonally adjusted terms, exports dropped -0.3% mom to JPY 6.28T. Imports dropped -0.1% mom to JPY 6.35T. Trade deficit came in at JPY -0.06T.

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