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Eurozone retail sales rose 0.1%, led by automotive fuels

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    ActionForex.com
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    Eurozone retail sales rose 0.1% mom in September, matched expectations. Volume of retail trade increased by 0.4% for automotive fuels and by 0.1% for non-food products while food, drinks and tobacco fell by 0.4%.

    EU28 retail sales rose 0.2% mom. Among Member States for which data are available, the highest increases in the total retail trade volume were registered in Croatia (2.6%), Ireland (2.4%) and Romania (0.7%). The largest decreases were observed in Portugal (-2.4%), Latvia (-1.0%) and Slovenia (-0.7%).

    Full release here.

    Eurozone PMI Services finalized at 52.2, time needed for ECB policy changes to take effect

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      ActionForex.com
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      Eurozone PMI Services was finalized at 52.2 in October, up from September’s reading of 51.6. PMI Composite was finalized at 50.6, up from prior month’s 50.1. Looking at some member states, Germany PMI Composite improved to 48.9, hitting a 2-month high but stayed below 50. Ireland PMI Composite dropped to 89-month low of 50.6. Spain’s reading dropped to 71-month low of 51.2. Though, France and Italy improved to 52.6 and 50.6 respectively.

      Chris Williamson, Chief Business Economist at IHS Markit said:

      “The euro area remained close to stagnation in October, with falling order books suggesting that risks are currently tilted towards contraction in the fourth quarter. While the October PMI is consistent with quarterly GDP rising by 0.1%, the forward looking data points to a possible decline in economic output in the fourth quarter.

      “Worryingly, what little growth was seen in October was supported by firms eating into previously placed work, meaning demand needs to revive to boost new business inflows and prevent more firms coming under further pressure to cut activity and jobs.

      “As for the immediate outlook, much depends on geopolitical issues such as US tariff developments and Brexit, though we will also be watching Christine Lagarde’s first policy meeting on 12th December to assess the appetite for further stimulus from the ECB. Time is needed for recent policy changes to take effect, though if the data flow continues to disappoint more action is on the cards for early next year.”

      Full release here.

      New Zealand unemployment rate rose to 4.2%, NZD/USD eyes 0.6333 support

        By
        ActionForex.com
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        New Zealand employment grew 0.2% in Q3, slowed from 0.6% in Q2, missed expectation of 0.3%. Unemployment rose rose sharply to 4.2%, up from 3.9%, higher than expectation of 4.1%. Labor force participation rate rose 0.1% to 70.4%. Labor cost index rose 0.6% qoq, matched expectations.

        Despite the surge in unemployment rate, it’s still lower than the 4.4% forecast by RBNZ in the August Monetary Policy Statement. Then, there should be any change to RBNZ’s decision next week, when markets are expecting a hold. Nevertheless, the data still raises some concern over the sustainability of of impact of RBNZ’s -50bps rate cut back in August.

        NZD/USD’s sharp decline today now raises the chance that corrective recovery from 0.6203 has completed at 0.6465, after failing to sustain above 0.6450 resistance, on bearish divergence condition in 4 hour MACD. Focus is back on 0.6333 support. Break will add more credence to this case and target a test on 0.6203 low. Break will extend the down trend form 0.7557 (2017 high), to retest 0.6102 (2015 low).

        BoJ minutes noted increasing downside risks and discussed policy responses

          By
          ActionForex.com
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          In the minutes of September BoJ meeting, “members shared the view that, while slowdowns in overseas economies continued to be observed and their downside risks seemed to be increasing, it was becoming necessary to pay closer attention to the possibility that the momentum toward achieving the price stability target would be lost.”

          One member warned “given the concern that the delay in the recovery in overseas economies would have a negative impact on Japan’s economic activity and prices, it was necessary to consider desirable policy responses while paying attention to the side effects.”

          Another member also urged that BOJ must consider “all possible policy measures without preconception, including cutting the short-term policy interest rate, lowering the target level of 10-year JGB yields, expanding asset purchases, and accelerating the expansion of the monetary base”

          Also, it’s noted noted that “there was relatively large room for monetary easing among yields in the short- to medium-term zone, and lowering the short-term policy interest rate was deemed appropriate.”

          Full minutes here.

          UK CBI: Optimism of SME manufacturers worst since Brexit referendum

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            ActionForex.com
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            According to a CBI survey, business optimism amongst SME manufacturing firms deteriorated in the three months to October, at the fastest pace since July 2016, around the time of Brexit referendum. Business sentiment dropped to -32 in the three months to October. 64% of respondents cited cited political/economic conditions abroad as likely to limit export orders – a survey record high.

            Alpesh Paleja, CBI Lead Economist, said: “Activity among SME manufacturers remains listless. Firms are caught between the perfect storm of perennial Brexit uncertainty at home, and sluggish growth in the global economy. As well as hitting output, orders and hiring, these issues are depressing investment plans across the board.

            “As a first step to lifting the malaise, the next government must get behind business to deliver on a Brexit deal, particularly one that unlocks a smooth transition period. Then the real heavy lifting can begin on forging a future relationship with our biggest trading partner. Ending political uncertainty will enable a renewed focus on domestic priorities, which is critical for the economy’s longer-term growth.”

            Full release here.

            ISM non-manufacturing roes to 54.7, 13 industries reported growth

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              ActionForex.com
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              ISM Non-Manufacturing Index rose to 54.7 in October, up from 52.6, beat expectation of 53.2. Business Activity rose 1.8 to 57.0. New orders rose 1.9 to 55.6. Employment also improved by 3.3 to 53.7. According to the NMI, 13 non-manufacturing industries reported growth. The non-manufacturing sector had an uptick in growth after reflecting a pullback in September. The respondents continue to be concerned about tariffs, labor resources and the geopolitical climate.”

              Full release here.

              US trade deficit widened to USD 52.5B, exports dropped -0.9%, imports dropped -1.7%

                By
                ActionForex.com
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                US trade deficit widened -4.7% mom to USD 52.5B in September, slightly smaller than expectation of USD 53.0B. Exports dropped -0.9% to USD 206.0B. Imports dropped -1.7% to USD 258.4B.

                Trade deficit with China dropped USD 0.9B to USD 28.0B. Exports dropped USD 1.0B to USD 9.0B. Imports also dropped USD 1.9B to USD 37.0B. With Germany, deficit dropped USD 1.9B to USD 5.0B. With Canada, deficit rose USD 0.9B to USD 2.5B.

                Full release here.

                Fed Barkin watching three meaningful conflicts closely

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                  ActionForex.com
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                  Richmond Fed President Thomas Barkin said in a speech that the economy “looks healthy”, with solid GDP growth, robust consumer spending and a strong labor market. There are headwinds from trade and uncertainty, that might be “lowering business confidence and dampening investment”. They might also ” lessen the effectiveness of traditional fiscal and monetary policy”.

                  He will be “closely watching the divergence between consumer spending and business investment; the strength of the U.S. economy versus weakness internationally; and the optimism of the stock market compared to the pessimism of the bond market.”

                  Barkin also spelt out “three meaningful conflicts” they’d watch closely. Firstly, consumer spending is strong but investment is weak. Secondly, the US economy is strong but international economies are weak. Thirdly, bond market is pessimistic but stock markets is still upbeat.

                  Full speech here.

                  UK PMI services rose to 50.0, overall PMIs suggest -0.1% GDP contraction

                    By
                    ActionForex.com
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                    UK PMI Services rose to 50.0 in October, up from 49.5 and beat expectation of 49.6. It’s now back at 50.0 no-change market. However, new business falls for second month running. Expectations pick up slightly but remain subdued. All Sector PMI rose to 49.5, up from 48.8, but stayed below 50.

                    Chris Williamson, Chief Business Economist at IHS Markit, which compiles the survey:

                    “The UK PMI surveys collectively indicated a further overall decline in private sector output in October. Contractions have now been recorded in four of the past five months, marking the worst spell since 2009 during the global financial crisis.

                    “The seasonally adjusted IHS Markit/CIPS ‘all-sector’ Output Index rose from 48.8 in September to 49.5 in October, signalling a weaker rate of contraction, but the volume of new business fell at a pace similar to that seen in September.

                    “The October reading is historically consistent with GDP declining at a quarterly rate of 0.1%, similar to the pace of contraction in GDP signalled by the surveys in the third quarter. While official data may indicate more robust growth in the third quarter, the PMI warns that some of this could merely reflect a pay-back from a steeper decline than signalled by the surveys in the second quarter, and that the underlying business trend remains one of stagnation at best.”

                    Full release here.

                    Yuan rebounds on trade optimism, USD/CNH breaks 7 handle

                      By
                      ActionForex.com
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                      Chinese Yuan jumps sharply on talks that US officials are considering removing the 15% tariffs on USD 112B worth of Chinese goods, put to effect back on September 1. In return, the Financial Times said that US would demand stronger intellectual property protections. If realized with the phase one trade deal, that would be the first real de-escalation of tariff war between US and China.

                      USD/CNH (off-shore Yuan), breaks through 7 handle for the first time since August. It’s now pressing 6.990 cluster support (38.2% retracement of 6.670 to 7.185 at 6.994. We’d look for strong support from current level to, at least bring recovery attempt. However, sustained break will be significant near term bearish development. Deeper fall would be seen to 61.8% retracement at 6.871 and possibly below.

                      Xi pledges opening market access as China pushes for US tariff reliefs

                        By
                        ActionForex.com
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                        At the opening of China International Import Expo in Shanghai, Chinese President Xi Jinping reiterated the usual pledge to continue to open up China’s market. He listed a handfuls of measures taken since last year, and claimed they showed “we do honour our commitments” and “we will deliver on what we have promised”. He added that “China will throw open its arms, and provide more market opportunities, investment opportunities and growth opportunities for countries in the world, so we can share the growth together.”

                        Separately, it’s reported that China is pushing for more tariff reliefs by the US for phase 1 trade deal. It’s requesting US to scrap the tariffs scheduled for December 15, on round USD 156B in Chinese imports, including electronic goods and toys. Additionally, China wanted US to drop the 15% tariffs on about USD 125B goods that started on September , as well as some reliefs from earlier 25% tariffs on around USD 250B of imports from machinery and semiconductors to furniture.

                        However, overall expectations on the so called phase one deal are rather low. China is not expected to do anything substantive in terms of addressing any of the structural problems, including forced technology transfer. More importantly, there is no indication from China on addressing the subsidies to and privileges of state-owned enterprises in the Chinese markets.

                        BoJ Kuroda: There are various possible measures for additional easing

                          By
                          ActionForex.com
                          -

                          BoJ Governor Haruhiko Kuroda reiterated that the new forward guidance indicated “downward bias on policy rates”. However, it “does not limit additional monetary easing measures to rate cuts”. He added that “there is no change to our understanding that, besides lowering policy rates, there are various possible measures for additional easing.”

                          Nevertheless, Kuroda maintained his optimism regarding Japan’s economy, and expected the moderate expansion to continue on robust capital expenditure and a tight job market. He said, “although the timing of a pick-up in overseas economies has been delayed, our view is that Japan’s economy will not decelerate substantially.”

                          China Caixin PMI services dropped to 51.1, employment dipped to contraction

                            By
                            ActionForex.com
                            -

                            China Caixin PMI Services dropped to 51.1 in October, down from 51.3 and missed expectation of 52.8. PMI Composite Index edged up from 51.9 to 52.0, best reading since April. Markit noted that solid rate of manufacturing output growth contrasts with only marginal rise in services activity. Composite employment falls fro the first time in three months. Outstanding business at was at the fastest expansion since March 2011.

                            Commenting on the China General Services PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said:

                            “The Caixin China General Services Business Activity Index dipped to 51.1 in October from 51.3 in the previous month, marking the slowest expansion in eight months amid subdued market conditions.

                            1) Demand across the services sector grew at a reduced pace, with the gauge for new business falling to the lowest level since February. The measure for new export business picked up slightly.

                            2) While the job market expanded at a weaker clip, with the employment gauge falling from the previous month’s recent high, the measure for outstanding business rose further into expansionary territory. This implied a mismatch between labor supply and demand.

                            3) Both gauges for input costs and prices charged by service providers edged down, but they remained in positive territory, reflecting relatively high pressure on costs, including those of workers, raw materials and fuel.

                            4) The measure for business expectations dropped to the lowest point in 15 months, indicating depressed business confidence.

                            “The Caixin China Composite Output Index inched up to 52 in October from 51.9 in the month before, amid an improvement in manufacturing, but a softer service sector performance. The employment gauge dipped into contractionary territory, indicating renewed pressure on the labor market, which was likely due mainly to structural unemployment. The measure for backlogs of work climbed to the highest level since early 2011, highlighting bottlenecks in production capacity and inventories due to weak business confidence.

                            “China’s economy continued to recover in general in October, thanks chiefly to the performance of the manufacturing sector. Domestic and foreign demand both improved. However, business confidence remained weak, constraining the release of production capacity. Structural unemployment and rising raw material costs remained issues. The foundation for economic growth to stabilize still needs to be consolidated.”

                            Full release here.

                            Australia AiG services rose to 2.7, improved business and consumer spending

                              By
                              ActionForex.com
                              -

                              Australia AiG Performance of Services Index rose 2.7 to 54.2 in October. Trading conditions improved for some businesses due to improved business and consumer spending. In trend terms the PSI indicated expansion in six of the eight services sectors, except business & property services, and wholesale trade. All consumer-oriented segments reported more positive conditions. Sales, new orders, employment and deliveries all rose over the month too.

                              Full release here.

                              RBA stands pat, maintains easing bias, outlook little changed

                                By
                                ActionForex.com
                                -

                                RBA left cash rate unchanged at 0.75% as widely expected. In the accompanying statement, it noted that rate cuts since June are supporting employment, income growth and return of inflation to target. But given global developments and domestic spare capacity, ” it is reasonable to expect that an extended period of low interest rates will be required”. The central bank also maintained it’s “prepared to ease monetary policy further if needed”.

                                Outlook for the Australian economy is “little changed” from three months ago. The central scenario is for the economy to growth by 2.25% in 2019 (slight downgrade from 2.5% as mentioned in August), and then gradually pick up to 3% in 2021. Unemployment rate is expected to remain at around 5.25% for some time, before gradually declining to a little below 5% in 2021.

                                Inflation data were “broadly as expected”. Central scenario remains for inflation to pick up, “but do so so only gradually”. It’ expected to be close to 2% in 2020 and 2021. Back in August, RBA said “inflation is expected to be a little under 2 per cent over 2020 and a little above 2 per cent over 2021.”

                                Full statement here.

                                DOW surges to new record high, target 28461 projection level next

                                  By
                                  ActionForex.com
                                  -

                                  DOW finally catches up with S&P 500 and NASDAQ and hits new record high today. Considering overall upside momentum in the markets, DOW should target 100% projection of 24680.57 to 27398.68 from 25440.39 at 28461.57. This will remain the favored case as long as 26918.29.

                                  The strong support from 55 week EMA is also a sign of medium term bullishness. Though, we’d still be cautious on near term topping as DOW approaches 61.8% projection of 15450.56 to 26951.81 from 21712.53 at 28820.30.

                                  UK PMI construction rose to 44.2, clear signs of extended soft patch

                                    By
                                    ActionForex.com
                                    -

                                    UK PMI Construction rose to 44.2 in October, up from 43.3, beat expectation of 44.0. Markit said civil engineering declines at fastest pace since October 2009. New orders and employment continue to decrease. Business expectations for the year ahead remain subdued.

                                    Tim Moore, Economics Associate Director at IHS Markit, which compiles the survey:

                                    “UK construction companies experienced a downturn in business performance during October as political uncertainty and subdued economic conditions again combined to hold back sales. New orders have fallen in each month since April, which is the most prolonged period of decline recorded for more than six years.

                                    “Civil engineering was the worst-performing area of activity in October, with business activity dropping at the fastest pace in ten years. Construction companies also voiced concerns about the uncertain outlook for large-scale infrastructure projects upon which growth is expected to rest in the coming years.

                                    “House building has also lost momentum this autumn amid a broader slowdown in market conditions, with the latest survey data signalling the sharpest drop in residential work since June 2016.

                                    “There are clear signs that construction firms are positioning for an extended soft patch for project starts, as highlighted by a further decline in purchasing volumes and another month of cuts to workforce numbers through the non-replacement of voluntary leavers.”

                                    Full release here.

                                    Eurozone Sentix investor confidence rose to -4.5, deeper recession could be averted

                                      By
                                      ActionForex.com
                                      -

                                      Eurozone Sentix Investor Confidence improved to -4.5 in November, up from -16.8 and beat expectation of -13.0. Current Situation Index rose to -5.5, up from -15.5. Expectations Index rose to -3.5, up from -18.0, highest since May, 2019.

                                      Sentix said that the indices “give hope that a deeper recession can be averted in the eurozone”. The turnaround in ECB’s monetary policy has been “well received” by investors. It’s also measuring a stronger rise in money supply aggregates again, which usually has a “stimulating effect” on the economy. Growth is also expected to be supported by “higher government spending”.

                                      For Germany, the Overall Index rose to -6.5, up from -19.4. Current Situation Index rose from -18.0 to -8.3.l Expectations Index rose from -20.8 to -4.8, also highest since May. “Since the trend reversal that is now becoming apparent is also being led by the Asia ex Japan region, the hope that the slide into recession can be averted is also nourishing hope for the German economy”.

                                      Full release here.

                                      Eurozone PMI manufacturing finalized at 45.9, stuck in its steepest decline for seven years

                                        By
                                        ActionForex.com
                                        -

                                        Eurozone PMI manufacturing was finalized at 45.9 in October, up from September’s 45.7. Markit noted sustained weakness in output, new orders and purchasing. Also, job shedding accelerated to the sharpest since start of 2013. Looking at some member states, Germany reading recovered 42.1 but stayed well below 50. Spain dropped to 78-month-of 46.8. Italy dropped to 7-month low of 47.7. France recovered to 50.7.

                                        Commenting on the final Manufacturing PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

                                        “Eurozone manufacturing remained stuck in its steepest decline for seven years in October, meaning the goods producing sector is on course to act as a severe drag on GDP again in the fourth quarter. The survey data are consistent with industrial production falling at a quarterly rate in excess of 1%.

                                        “Geopolitical concerns, ranging from Brexit to US trade policy, continue to create uncertainty, further dampening demand both at home and in export markets.

                                        “The focus of manufacturers remains on cost cutting, reducing inventories and investment spending while also lowering payroll numbers at an increased rate. The steeper pace of job losses is especially worrying, as it magnifies the risk of the downturn spilling over into the household sector.

                                        “Producer prices, meanwhile, fell at a rate little changed on September’s three-and-a-half year record as weak demand prompted companies to offer discounts, which is likely to feed through to lower inflation in the coming months.

                                        “The severity of the downturn, alongside poor trends in employment and prices is especially disappointing given the ECB’s recent stimulus measures, underscoring how new ECB head Christine Lagarde is taking over the reins at a particularly difficult juncture for the eurozone economy.”

                                        Full release here.

                                        Swiss consumer climate dropped to -10.4, weak economic development in near future

                                          By
                                          ActionForex.com
                                          -

                                          Swiss SECO Consumer Climate dropped to -10.4 in Q4, down from -8.0, missed expectation of -8.0. SECO said: “Consumer sentiment has worsened slightly. Consumers have proved less optimistic about both general economic development and the labour market than in previous quarters.”

                                          Looking at some details, expectations regarding general economic development have deteriorated significantly, from -0.9 to -19.6. That’s also the first time in more than three years that the index is below it’s long term average (-9). Overall, these results point to weak economic development in the near future.

                                          Full release here.

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