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Eurozone economic sentiment rose to 87.7, recovered 60% of losses in Mar and Apr

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    ActionForex.com
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    Eurozone Economic Sentiment Indicator rose to 87.7 in August, up form 82.4, above expectation of 84.9. EU ESI rose 5 pts to 86.9. The ESIs in both regions have so far recovered around 60% of the combined losses of March and April.

    As for Eurozone, industrial confidence rose from -16.2 to -12.7. Services confidence rose from -26.2 to -17.2. Consumer confidence rose slightly from -15.0 to -14.7. Retail trade confidence rose from -15.1 to -10.5. Construction confidence, however, dropped from -11.4 to -11.8. Employment Expectations also rose from 86.7 to 89.6.

    Full release here.

    NZD/JPY jumps as markets now sees Nov RBNZ hike

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      ActionForex.com
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      New Zealand Dollar jumps broadly today as economists pull head their expectation on RBNZ rate hike. The change in forecasts came after strong NZIER Quarterly Survey of Business Opinion, which shows a sharp improvement in both business confidence and demand in firms’ own business.

      General business confidence jumped to 10.1 in Q2, from Q1’s -7.9. Trading activity in the past three months rose to 25.6, from -0.4. Trading activity for the next three months rose to 27.6, from 7.8.

      ASB Bank now predicts a rate hike from historical low at 0.25% in November. BNZ quickly followed in expecting a hike this November. Markets are indeed now pricing in 70% chance of that happening.

      NZD/JPY’s break of 78.46 resistance now suggests that rebound from 76.20 is resuming. Further rise should be seen as long as 77.74 support holds, to retest 80.17 high. At this point, we’re not expecting a firm break of 80.17 to resume the up trend from 59.49 low yet. Consolidation pattern from 80.17 could still extend with another falling leg. We’ll keep an eye on the upside momentum to assess it again later.

      Fed Barkin: It’s helpful to have a few months to evaluate

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        ActionForex.com
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        Richmond Fed President Tom Barkin said yesterday that it’s helpful to have “a few more months” to evaluate to see “where reality is in this economy, and if the need to act is there”. He added that “we’re not going to hesitate” to accelerate tapering to get ahead of inflation is needed”.

        But, “I personally think it’s very helpful for us to have a few more months to evaluate, is inflation going to come back to more normal levels? Is the labor market going to open up as people spend through some of this savings?”

        China GDP grew 3.2% yoy in Q2, June retail sales weak

          By
          ActionForex.com
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          China’s GDP grew 3.2% yoy in Q2, above expectation of 2.5% yoy. Barring the steep -6.8% contraction in Q1, Q2’s figure is still the worst on record. For H1 as a whole, the economy contracted -1.6% yoy from a year earlier. On quarter-on-quarter basis, GDP rose 11.5% qoq in Q2, higher than expectation of -9.6% qoq, and sufficient to reverse the -9..8% qoq decline in Q1.

          Also from China, retail sales dropped -1.8% yoy in June, below expectation of 0.3% yoy rise. Industrial production rose 4.8% yoy in June, slightly above expectation of 4.7% yoy. Fixed asset investment dropped -3.1% ytd yoy in June, slightly above expectation of -3.2% ytd yoy.

          USD/CNH’s fall from 7.1961 is in progress. Such decline is seen as the third leg of the medium term sideway pattern from 71.953. While deeper decline could be seen, strong support should be provided by 6.8452, which is close to 38.2% retracement of 6.2354 to 7.1935 at 6.8286, to contain downside to bring rebound. Break of 7.0970 resistance will suggests that the decline has completed.

          Australia NAB Business confidence dropped to 0, conditions improved slightly

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            ActionForex.com
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            Australia NAB Business Confidence dropped to 0 in September, down from 1. On the other hand, Business Conditions improved to 2, up from 1. Looking at some details, Trading Condition rose from 3 to 4. Profitability Condition rose from -3 to -2. Employment Condition rose from 2 to 3.

            Alan Oster, NAB Group Chief Economist “The results of the September survey suggest more of the same for the business sector. Conditions edged up, and confidence was marginally lower, but both remain below their long run average – well below the levels seen just over a year ago. This suggests that activity in the business sector has slowed and we fear the risk that this spreads to both investment and employment intentions”.

            And: “We continue to watch the business sector closely – the housing downturn and the weakness in the retail sector are likely to continue to play out further, adding to private sector weakness in the economy. Rate cuts will help but will lag and with a weak consumer and higher global uncertainty, we are unlikely to see a material improvement in the short-term”

            Full release here.

            BoJ: Global risks tiled to the downside, uncertainties heightened

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              ActionForex.com
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              As shown in the Summary of Opinions at the December 19/20 meeting, BoJ board members sounded more concerned with global developments. The summary noted that “regarding the outlook for the global economy, risks have been tilted to the downside on the whole amid heightening uncertainties and a prevailing view that such situation will be protracted.”

              Specially, it said “looking at the latest data on trade activities in China, both exports and imports marked negative growth on a month-on-month basis, which possibly indicates a deceleration in the Chinese economy”. For Japan, ” it cannot be said that the actual condition of restoration-related demand and production stemming from natural disasters has been strong”. Also, “recovery in exports to China has been weak, and exports as a whole also have shown weak developments.”

              BoJ also maintained that “it is necessary to persistently continue with the current powerful monetary easing as the momentum toward 2 percent inflation is maintained.” And it warned that “trying to normalize monetary policy prematurely before achieving the price stability target could adversely strengthen the side effects.” The summary also noted that long-term yield should be allowed to “temporarily turn negative” and “move upward and downward more or less symmetrically from around zero percent”.

              Full BoJ Summary of Opinions

              Eurozone PMI services finalized at 12-month High, growth to continue in months ahead

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                ActionForex.com
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                Eurozone PMI Services were finalized at 56.2 in April, up from March’s 55.0, marking a 12-month high. PMI Composite was finalized at 54.1, up from March’s 53.7, an 11-month high.

                Among member states, Italy’s PMI composite rose to 55.3, a 17-month high, while Germany’s increased to 54.2, a 12-month high. Ireland rose to 53.5, a 2-month high. However, Spain dropped to a 2-month low of 56.2, and France fell to a 2-month low of 52.4.

                HCOB noted that the service sector is robust across Eurozone, with companies able to pass on at least some inflation in intermediate inputs to customers. Service firms’ confidence was reflected in the solid index reading for business expectations and increased staffing levels compared to the previous month.

                However, HCOB also highlighted that Eurozone order backlog grew at a weaker pace, nearly stagnating in Germany and falling slightly in Italy. Despite this, all PMI indicators suggest that growth in the Eurozone services sector will continue in the months ahead.

                Full Eurozone PMI Services release here.

                CAD rebounds as US dropped one of the toughest protectionist demand in NAFTA talks

                  By
                  ActionForex.com
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                  Canadian Dollar rebounds strongly on news that US will drop contentious auto-content proposal in NAFTA talks. It’s seen as clearing and important road block in NAFTA renegotiation. The Loonie is trading as the strongest major currency in Asian session.

                  There was a demand for vehicles made in Canada and Mexico for export to the US contain at least 50% US content. But Canada’s Globe and Mail reported that this contentious demand was dropped during NAFTA meeting in Washington last week. This is seen by some as one of the US toughest protectionist demand.

                  CAD is now the strongest one as seen in heatmap for today, followed by Euro. NZD, AUD and USD are the weakest ones.

                  From Action Bias chart, 6H bias turned neutral after USD/CAD hit 1.3124. And H bias turned negative with current dip through 1.305. For now, it’s more of a correction then a change in trend.

                  ECB Lagarde: Overall effects from US inflation spill-overs are moderate

                    By
                    ActionForex.com
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                    ECB President Christine Lagarde said in a European Parliament committee hearing, “the outlook for the economy is indeed brightening as the pandemic situation improves, the vaccination campaigns progress, and confidence begins to rise.”

                    “We expect economic activity to improve strongly in the second half of 2021, supported by a robust rebound in consumer spending and solid business investment,” she added. “The risks surrounding the growth outlook have become broadly balanced.” “Euro area annual inflation has picked up over recent months, largely owing to temporary factors, including strong increases in energy price inflation.”

                    Lagarde also said, “international spill-overs from US inflation can be amplified if people in the euro area shape their inflation expectations also on the basis of developments in the United States.” Though, “overall, however, the effects on euro area HICP inflation are expected to be moderate.”

                    Full remarks here.

                    Eurozone goods exports rose 23.6% yoy in Sep, imports rose 44.5% yoy

                      By
                      ActionForex.com
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                      In September, Eurozone goods exports, to the rest of the world, grew 23.6% yoy to EUR 210.1B. Goods imports rose 44.5% yoy to EUR 294.0B. Goods trade deficit came in at EUR -34.4B. Intra-Eurozone trade rose 27.3% yoy to EUR 247.6B.

                      In seasonally adjusted terms, Eurozone exports rose 1.6% mom to EUR 250.0B. Imports dropped -2.0% mom to EUR 287.7B. Trade deficit narrowed from EUR -47.6B to EUR -37.7B. Intra-Eurozone trade dropped from EUR 241.8B to EUR 238.9B.

                      Full trade balance release here.

                      According to the second estimate, Eurozone GDP grew 0.2% qoq in Q3, slowed from Q2’s 0.8% qoq. Employment grew 0.2% qoq, slowed from Q2’s 0.4% qoq.

                      Full GDP release here.

                      Japan CPI core slowed to 0.7% yoy, drifting away from BoJ’s target

                        By
                        ActionForex.com
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                        Japan national CPI core (all items less fresh food) slowed to 0.7% yoy in February, down from 0.8% yoy and missed expectation of 0.8% yoy. CPU core-core (all items less food and energy) remained sluggish at 0.4% yoy, unchanged from January. Headline all items CPI was unchanged at 0.2%.

                        Despite BoJ’s massive monetary stimulus, there is no sign for CPI core to achieve the 2% target. And even worse, it’s actually moving farther away from the goal. Sluggish core-core reading is providing no help too. Moreover, there are risks of drag by slowdown in overseas economy. For now, there is practically no case for BoJ to exit ultra-loose policy any time soon.

                        US PPI rose 1.0% mom in Jul, accelerated to 7.8% yoy

                          By
                          ActionForex.com
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                          US PPI for final demand rose 1.0% mom in July, above expectation of 0.6% mom. Over that last 12 months, PPI accelerated to 7.8% yoy, up from 7.3% yoy, above expectation of 7.4% yoy. That’s the largest yoy rate since November 2010.

                          PPI for final demand less foods, energy and trade services rose 0.9% mom, largest rise since January. Over the last 12 months, PPI for final demand less foods, energy and trade services rose 6.1% yoy, highest since August 2014.

                          Full release here.

                          ECB Draghi worried about central bank independence in the most important jurisdiction in the world

                            By
                            ActionForex.com
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                            ECB President Mario Draghi said he’s “certainly worried about central bank independence in other countries, especially… in the most important jurisdiction in the world’. He emphasized, “central banks ought to be left free to choose what’s the best way to comply with the mandate.”

                            He added: “Because if you don’t let them be free, then they’re not accountable. That’s the central banking framework since the 80s everywhere.”

                            On Eurozone economy, he warned that risk of hard Brexit and global trade war continued to “loom large”. But he’s still optimistic that factors weighing down Eurozone growth are waning. And there will be recovery in the second half.

                            UK Leadsom confirms schedule for next Brexit vote on Feb 27

                              By
                              ActionForex.com
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                              UK Leader of the House of Commons Andrea Leadsom confirmed to hold a vote on Brexit on Wednesday February 27. Prime Minister Theresa May will deliver a statement on Tuesday first. The vote will either be on an updated Brexit agreement, or on the other way ahead.

                              Leadsom said “if the government has not secured a majority in this house in favor of a withdrawal agreement and a political declaration, the government will make a statement on Tuesday Feb. 26, and table an amendable motion relating to the statement and a minister will move that motion on Wednesday Feb. 27, thereby enabling the house to vote on it and any amendments to it on that day.”

                              NY Fed: 1-yr inflation expectation unchanged at 4.8%, 3-yr rose to 3.7%

                                By
                                ActionForex.com
                                -

                                According to the July Survey of Consumer Expectations by the New York Fed, median one-year-ahead inflation expectations were unchanged at record 4.8%. Also, 3-year inflation expectation rose further from 3.6% to 3.7%, hitting the highest level since August 2013.

                                Full release here.

                                Eurozone export rose the first time since Feb in Dec

                                  By
                                  ActionForex.com
                                  -

                                  Eurozone exports rose 2.3% yoy to EUR 190.7B in December. This is the first increase since February 2020. Imports dropped -1.3% yoy to EUR 161.5B. Trade surplus came ion at EUR 29.2B. Intra-eurozone trade rose to EUR 148.7B, by 0.9% yoy.

                                  In seasonally adjusted term, Eurozone exports rose 1.1% mom to EUR 191.6B. Imports dropped -0.3% mom to EUR 164.0B. Trade surplus widened to EUR 27.5B, above expectation of EUR 22.3B.

                                  Full release here.

                                  NZDUSD and NZDJPY spike lower after RBNZ cut, more downside ahead

                                    By
                                    ActionForex.com
                                    -

                                    Both NZD/USD and NZD/JPY spike lower after RBNZ rate cut even though they quickly pare back some losses. For NZD/USD, breach of 0.6551 support further affirms a bearish case. That is, consolidation pattern from 0.6422 has complete with three waves to 0.6938. And, larger down trend from 0.7558 (2017 high) might be ready to resume. For now, near term outlook in NZD/USD will stay bearish as long as 0.6629 resistance holds. 0.6422 low is next target.

                                    NZD/JPY’s sharp fall solidifies that case that corrective rebound from 69.18 has completed at 76.78 already. Near term outlook will stay bearish as long as 0.7340 resistance holds. Deeper decline should be seen back to retest 69.18 low. However, this level is close to a key long term fibonacci level. That is 50% retracement of 44.19 (2009 low) to 94.01 (2014 high) at 69.18. We’ll pay attention to bottoming signal there.

                                     

                                    Gold dips as correction from 1611 extends

                                      By
                                      ActionForex.com
                                      -

                                      Gold correction from 1611.37 extends lower today and hits as low as 1535.91 so far. At this point, we’re seeing such decline as corrective the whole five way sequence from 1160.17. Deeper fall could be seen to 55 day EMA (now at 1501.65) first. Sustained break there will affirm our view and target 1145.59, which is close to 38.2% retracement of 1160.17 to 1611.37 at 1439.01. However, break of 1563.11 will dampen our view and turn focus back to 1611.37 high instead.

                                      Germany ZEW economic sentiment dropped to 79.8, current situation surged to -9.1

                                        By
                                        ActionForex.com
                                        -

                                        Germany ZEW economic sentiment dropped from 84.4 to 79.8 in June, below expectation of 85.3. Current situation index improved from -40.1 to -9.1, well above expectation of -28.0. Eurozone ZEW economic sentiment dropped from 84.0 to 81.3, below expectation of 85.5. Eurozone current situation rose 27.0 pts to -24.4.

                                        “The economic recovery is progressing. Although the ZEW Indicator of Economic Sentiment has experienced a drop in June, it remains at a very high level. The decline in expectations is probably largely due to the considerably better assessment of the economic situation, which is now back at pre-crisis levels. The financial market experts therefore continue to expect a strong economic recovery for the next six months,” comments ZEW President Professor Achim Wambach on current expectations.

                                        Full release here.

                                        RBNZ holds steady at 5.50% but signals potential hike later in 2024

                                          By
                                          ActionForex.com
                                          -

                                          RBNZ kept Official Cash Rate unchanged at 5.50%, as widely anticipated. However, RBNZ surprised markets by raising its projected rate path, suggesting the possibility of another rate hike later this year. Additionally, the timeline for rate cuts has been pushed further into the latter half of 2025. According to key forecast variables, the OCR is expected to rise from the current 5.5% to 5.7% in Q4 2024 before declining to 5.4% in Q3 2025.

                                          Minutes of the meeting highlighted that members agreed on the “significant upside risk” posed by persistent non-tradable inflation. They noted that the influence of recent inflation outcomes on future inflation expectations is critical for price setting, wage expectations, and the stance of monetary policy. Moreover, slower output growth than currently assumed could reduce the pace at which spending can grow without increasing inflationary pressures.

                                          “Monetary policy may need to tighten and/or remain restrictive for longer if wage and price setters do not align with weaker productivity growth rates,” the minutes stated.

                                          Full RBNZ statement here.

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