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New Zealand good imports jumped 25% yoy on petroleum, imports rose 7.7% yoy

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    ActionForex.com
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    New Zealand goods exports rose 7.7% yoy to NZD 6.4B in June. Goods imports rose 25.0% yoy to NZD 7.1B. Trade balance came in at NZD -701m deficit, versus expectation of NZD 204m surplus.

    “Petroleum and products imports rose $795 million to reach a new high of $1.2 billion,” Stats NZ. “This rise lead the sharp increase in total imports for the month compared with June 2021.”

    US leads monthly export rise, up 22%. Exports to EU were up 28% and Japan up 24%. Exports to China were down -6% and to Australia down -12%.

    Import form all top partners rose, with China up 12%, EU up 11%, Australia up 6%, US up 30%, and Japan up 4.1%.

    Full release here.

    AUD/USD short strategy reinstated after China’s RRR cut ignored

      By
      ActionForex.com
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      The impact of PBoC’s RRR cut on the market was rather muted today. Or actually, it’s done it job of preventing more serious selloff in the stock markets. Shanghai SSE’s -3.72% loss today is rather reasonable considering the selloff in other Asian markets last week. Anyway, AUD/USD was rather unmoved and the overall technical outlook is unchanged. That is, the down trend from 0.8135 is in progress for a test on 0.6826 key support level.

      As the volatility risk is now past, we’d reinstate our strategy discussed in the week report. That is, we’ll sell AUD/USD at 0.7100, slightly above 0.7096 minor resistance. Stop will be placed at 0.7185, slightly above 50% retracement of 0.7314 to 0.7040 at 0.7178. 0.6826 is the first target, which gives risk/reward at 1/3.22. We’ll decide if we’ll get out earlier, or hold through the target, after looking at the momentum of the next fall.

      Eurozone PPI at -0.5% mom, 13.2% yoy in Feb

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        ActionForex.com
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        Eurozone PPI came in at -0.5% mom, 13.2% yoy in February below expectation of -0.3% mom, 13.2% yoy. For the month, industrial producer prices decreased by -1.6% in the energy sector and by 0.1% for intermediate goods, while prices increased by 0.3% for capital goods, by 0.4% for durable consumer goods and by 0.6% for non-durable consumer goods. Prices in total industry excluding energy increased by 0.2%.

        EU PPI stood at -0.6% mom, 14.5% yoy. The largest monthly decreases in industrial producer prices were recorded in Bulgaria (-7.9%), Greece (-3.3%) and Belgium (-3.2%), while the highest increases were observed in Slovakia (+11.5%), Slovenia (+2.7%) and Portugal (+2.5%).

        Full Eurozone PPI release here

        SNB keeps rate at -0.75, inflation not to turn positive until 2022

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          ActionForex.com
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          SNB left sight deposit rate unchanged at -0.75% as widely expected. The central bank “remains will to intervene more strongly in the foreign exchange market”. The overall expansionary monetary policy “remains necessary”.

          Inflation forecast is revised sharply lower. SNB projects inflation to bottom at -1.2% in Q2 2020, and stay negative with gradually improvement till Q2 2021. Inflation is not expected to turn positive until Q2 2022. The downward revision was primarily due to “significantly weaker growth prospects and lower oil prices”. The conditional inflation forecast is based on assumption that the policy rate remains at -0.75% over the horizon.

          On Swiss economy, SNB expects the low points in term of activity came in April, and GDP decline is likely to be stronger in Q2 than in Q1’s -2.6%. Despite positive developments since May, SNB anticipates “there will be only a partial recovery” for the time being. GDP “will not return quickly to its pre-crisis level”. GDP is likely to contract by -6% in 2020, worst since oil crisis in 1970s.

          In SNB’s baseline scenario for the global economy, further waves of coronavirus infections will be “successfully prevented”. But consumption, investment and demand is “likely to remain moderate for the time being”. Production capacity will be “underutilised for some time yet”. Inflation is likely to “remain modest” in most countries.

          Full statement here.

          Swiss GDP contracted -2.6% in Q1, worse than expectation

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            ActionForex.com
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            Swiss GDP contracted -2.6% qoq in Q1, worse than expectation of -2.2% qoq. “Due to the coronavirus pandemic and the measures to contain it, economic activity in March was severely restricted. The international economic slump also slowed down exports.”

            By production approach, manufacturing dropped -1.3% qoq. Construction dropped -4.2% qoq. Trade dropped -4.4%. Accommodation and food dropped -23.4% qoq. Business services dropped -1.9% qoq. Health and social activities dropped -3.9% qoq. Arts, entertainment and recreation dropped -5.4% qoq. On the other hand, finance and insurance rose 1.5% qoq. Public administration rose 0.8% qoq.

            By expenditure approach, private consumption dropped -3.5% qoq. Equipment and software investment dropped -4.0% qoq. Construction investment dropped -0.4% qoq. Export of services dropped -4.4% qoq. Import of goods dropped -1.1% qoq while imports of services dropped -1.2% qoq. On the other and, government consumption rose 0.7% qoq. Exports of goods rose 3.4% qoq.

            Full release here.

            EU Tusk: Cannot betray increasing majority of British people who want to stay in EU

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              ActionForex.com
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              European Commission President Jean-Claude Juncker and European Council President Donald Tusk talked Brexit to the European Parliament day.

              Tusk said the voices of British people whole wanted to stay in the EU shouldn’t be ignored. And he urged the Parliament to be open to a longer Article 50 extension. He said, “I said that we should be open to a long extension if the UK wishes to rethink its Brexit strategy, which would of course mean the UK’s participation in the European parliament elections. And then there were voices saying that this would be harmful or inconvenient to some of you…. Let me be clear: such thinking is unacceptable. You cannot betray the 6 million people who signed the petition to revoke article 50, the 1 million people who marched for a people’s vote, or the increasing majority of people who want to remain in the European Union.”

              Juncker said it’s unclear how Brexit would unfold. And, “I told some of you that if you compare Great Britain to a sphinx then the sphinx would seem to me an open book. We will see in the course of this week how this book will speak,”

              Also, chief Brexit negotiator told lawmakers: “In all scenarios, the Good Friday agreement will continue to apply. The United Kingdom will remain a core guarantor of that agreement and is expected to uphold it in spirit and in letter:” And, “the Commission is ready to make additional resources available to Ireland, technical and financial to address any additional challenges.”

              NASDAQ closed at record, but more resistance levels ahead

                By
                ActionForex.com
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                NASDAQ closed at new record at 14138.77 overnight (S&P 500 also closed at record 4187.62), but was short of intraday record at 4175.11. Further rise is in favor in NASDAQ for now, nonetheless, as long as 13698.66 support holds. Based on current momentum, it should at least breach 14175.11.

                The major near term test is from 61.8% projection of 10822.57 to 14175.11 from 12397.05 at 14468.91. Firm break there will confirm underlying medium term up side momentum, and pave the way to 100% projection at 15749.59. However, rejection by 14468.91, followed by break of 13698.66 support, will extend the corrective pattern from 14175.11 with another fall, before completion.

                RBNZ Orr: Many Covid-19 risks are still with us

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                  ActionForex.com
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                  RBNZ Governor Adrian Orr told a parliamentary committee today that “many covid-19 related economic risks are still with us”. “Although recovery is now underway, it will be a lengthy and difficult process but we are well prepared for this challenge and we stand ready to provide stability and support,” he added.

                  The central announced yesterday to tighten up the Loan-to-Value Ratio (LVR) restriction again to reduce the financial stability risk caused by high-risk mortgage lending. Orr said the central bank was trying to “head off excesses in housing leverage” with the move.

                  US personal income rose 0.5%, spending rose 0.4%, core PCE unchanged at 1.6%

                    By
                    ActionForex.com
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                    In May, US personal income rose 0.5% or USD 88.6B, above expectation of 0.3%. Personal spending rose 0.4% or USD 59.7B, below expectation of 0.5%. Headline PCE deflator slowed to 1.5% yoy, down from 1.6 yoy but matched expectations. Core PCE was unchanged at 1.6% yoy, also matched expectations.

                    Full release here.

                    Confidence on UK PM May’s Brexit negotiation plunged to new low

                      By
                      ActionForex.com
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                      According to the latest monthly Brexit Confidence Tracker by ORB International, confidence on Prime Minister Theresa May regarding Brexit negotiation plunged again to new low in August. There was clear deterioration after the high profile Chequers meeting, which resulted in one white paper and two resignations of key cabinet ministers in Boris Johnson and David Davis.

                      Only 24% of respondents said they approve of the way May’s government is handling Brexit negotiation. That compares to 40% back in April On the other hand, disapproval surged to 76%.

                      Meanwhile, only 22% are confidence that May will get the right Brexit deal. 60% believed that May won’t. And the percentage of “don’t know” also dropped 2% to 17%.

                      Full report here.

                      New Zealand unemployment rate could peak at 26% without additional fiscal support

                        By
                        ActionForex.com
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                        New Zealand Treasury published a report analyzing the economic impacts of the coronavirus pandemic. Assuming no additional fiscal measures beyond the announced NZD 20B direct support, contraction in GDP in the year to March 2021 could range from 13% (the least restrictive scenario), to closer to one-third (with tight restriction through the year).

                        Unemployment rate could peak at 13% in the least restrictive scenario, or 26% in the tight restriction scenario. However, with additional NZD 20B in fiscal spending directed to households and businesses, unemployment rate could be limited to less than 10% in the least restrictive scenario Inflation will remain below 2% midpoint of RBNZ’s target range.

                        Separately, Finance Minister Grant Robertson said that the government will announce further support for businesses this week and more in the Budget next month. He said, “the Budget is also another important part of the response, and it will include significant support to respond to and recover from Covid-19. As is usual with the Budget, there may well be pre-announcements, especially where they relate to urgent Covid-19 response activities.”

                        Eurozone CPI accelerated to 2.2%, core up to 1.1%, unemployment rate unchanged at 8.1%

                          By
                          ActionForex.com
                          -

                          Eurozone CPI accelerated to 2.2% yoy in October, up from 2.1% yoy and matched expectations. Core CPI accelerated to 1.1% yoy, up from 0.9% yoy and beat expectation of 1.0% yoy. Among the components, energy jumped 10.6% yoy (accelerated from 9.5%). Food, alcohol & tobacco rose 2.2% yoy (slowed from 2.6%). Services rose 1.5% yoy (accelerated from 1.3%). Non-energy industrial goods rose 0.3% yoy (up from 0.3%).

                          Eurozone (EA19) unemployment rate was unchanged at 8.1% in September, matched expectations, staying as the lowest since November 2008. EU28 unemployment rate was unchanged at 6.7%, lowest since January 2000. Among EU member states, lowest unemployment rate is found in Czechia at 2.3%, then Germany and Poland at 3.4%. Highest unemployment rate is observed in Greece at 19.0%, then Spain at 14.9% and then Italy at 10.1%.

                          EUR/USD breached 1.1335 temporary low a hour ago. While there is no follow through selling yet, bias is tentatively on the downside for 1.1300 key support.

                          S&P 500 stays near term bullish after biggest rally since Jan

                            By
                            ActionForex.com
                            -

                            US stocks rallied strongly overnight, the DOW and S&P 500 recording their largest rallies since January, and NASDAQ since March. The turnaround in sentiment was driven by Meta’s impressive quarterly performance, which saw shares close up 14%. Additionally, weaker-than-expected Q1 GDP data fueled expectations that Fed is getting closer to ending its tightening cycle, providing ammunition for pessimists to call for a potential rate cut before year-end should the economy continue to deteriorate.

                            Technically, DOW, S&P 500, and NASDAQ all found robust support from their respective 55 D EMA this week. In the case of SPX, the development keeps the rally from 3808.83 alive. Near-term outlook remains bullish as long as 4049.35 support level holds. Break of 4195.44 resistance will confirm resumption of the overall rebound from 3491.58.

                            Meanwhile, a critical obstacle lies in the 4325.28 cluster resistance (61.8% retracement of 4818.62 to 3491.58 at 4311.69) for SPX. Sustained break of this cluster resistance will pave the way for further rally towards historical high of 4818.62. The market’s reaction to the 4300 handle will largely depend on next week’s FOMC rate decision and Chair Jerome Powell’s press conference.

                            US Mnuchin: If there is no trade deal with China, tariffs would go in place

                              By
                              ActionForex.com
                              -

                              US Treasury Secretary Steven Mnuchin told CNBC today that he expected President Donald Trump and Chinese President Xi Jinping will be able to finish the trade agreement during their anticipated meeting in Chile on November 16-17. He also echoed Trump’s comments last week and said recent round of discussions covered intellectual property rights, financial services including currency and foreign exchange, and “very significant structural issues” dealing with agriculture. Though, Mnuchin also warned, “I have every expectation if there’s not a deal those tariffs would go in place”, referring to the next round of tariffs scheduled to mid-December.

                              On the other hand, Chinese media sounded much less enthusiastic, as Trump. On Sunday, China Daily said, “while the negotiations do appear to have produced a fundamental understanding on the key issues and the broader benefits of friendly relations, the Champagne should probably be kept on ice, at least until the two presidents put pen to paper.” It also warned, “as based on its past practice, there is always the possibility that Washington may decide to cancel the deal if it thinks that doing so will better serve its interests.”

                              BoJ minutes showed concern of coronavirus resurgence

                                By
                                ActionForex.com
                                -

                                Minutes of BoJ’s July 14/15 meeting showed policymakers are concerned with resurgence of coronavirus in Japan. A few board members noted, “infection numbers are increasing at a faster pace globally, so we need to be on alert of the possibility of a re-insurgence including in Japan”. Another member warned, “if infection numbers rise again, the timing of an economic recovery will be delayed.”

                                Overall, members agreed “the economy, with economic activity resuming, was likely to improve gradually from the second half of this year; however, the pace of improvement was expected to be only moderate while the impact of COVID-19 remained worldwide.”

                                Full minutes here.

                                Incoming BoE Breeden sees relatively flat UK GDP growth next few years

                                  By
                                  ActionForex.com
                                  -

                                  Sarah Breeden, the incoming Deputy Governor for BoE, shared her economic forecast during a parliamentary Treasury Committee approval hearing today. She is slated to replace Jon Cunliffe as come November.

                                  Breeden conveyed her anticipation for the inflation rate to be near the 2% target within a span of two years, an outlook that is based on the premises outlined in BoE’s August forecast.

                                  Despite the somewhat optimistic perspective on inflation, Breeden aired her expectation of “relatively flat GDP in the UK over the next couple of year”.

                                  The expectation for a subdued GDP is rooted in the “impact of past increases in Bank Rate increasingly push down on demand, and supply remains very weak.”

                                  Breeden concurred with the MPC’s perspective that inflation risks pertaining to the August forecasts are “skewed to the upside”. She acknowledged that “second-round effects via price and wage setting are stronger than had previously been expected.” When it comes to growth and unemployment, Breeden sees a pathway filled with “balanced risks”, which could swing in either direction.

                                   

                                  Eurozone CPI finalized at 2.2% yoy in Jul, core CPI at 0.7% yoy

                                    By
                                    ActionForex.com
                                    -

                                    Eurozone CPI was finalized at 2.2% yoy in July 2021, up from June’s 1.9% yoy. Core CPI was finalized at 0.7% yoy. Highest contribution came from energy (+1.34%), followed by food, alcohol & tobacco (+0.35%), services (+0.31%) and non-energy industrial goods (+0.17%).

                                    EU CPI was finalized at 2.5%, up from 2.2% in June. The lowest annual rates were registered in Malta (0.3%), Greece (0.7%) and Italy (1.0%). The highest annual rates were recorded in Estonia (4.9%), Poland and Hungary (both 4.7%). Compared with June, annual inflation fell in nine Member States, remained stable in two and rose in sixteen.

                                    Full release here.

                                    Kudlow: China is increasingly isolated with a weak economy

                                      By
                                      ActionForex.com
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                                      White House’s National Economic Council head Larry Kudlow warned China that “they better not underestimate the president,” and Trump is “going to stand tough” on trade war.

                                      He added that “we are coming together with the European Union to make a deal with them, so we’ll have a united front against China and, I think, most of our trade team would tell you, we’re moving close on Mexico.” So, “China is increasingly isolated with a weak economy.”

                                      Regarding the trade negotiations with the EU, he said “we will have a number of announcements coming up, I hope, in the next thirty or so days with respect to transactions and market opening and increased investments with the European Union.”

                                      Oil prices surge as Saudi Arabia pledges additional production cut

                                        By
                                        ActionForex.com
                                        -

                                        Oil prices shot up in response to an announcement from Saudi Arabia, the world’s leading exporter, to slash production by an additional 1 million barrels per day starting in July. This voluntary reduction from the Saudis comes on the heels of an agreement by OPEC and their allies, including Russia, to curtail supply into 2024.

                                        Collectively referred to as OPEC+, this group accounts for approximately 40% of the world’s crude oil production. The group currently has cuts of 3.66 million barrels per day in place, which translates to about 3.6% of global demand.

                                        The latest move by Saudi Arabia may take many by surprise, given that the most recent adjustments to quotas were implemented just a month ago. Consequently, the oil market is poised to tighten even further in the second half of 2023.

                                        Technically speaking, however, WTI crude oil is just extending near term range trading. It’s currently struggling to break through 55 D EMA decisively. Rejection by 55 D EMA would set the stage for another fall through 64.19 low to resume the medium term down trend sooner rather than later. Even though sustained break of 55 D EMA could bring stronger rebound, 83.46 will still represent a significant medium term resistance to overcome.

                                        France GDP grew 0.5% qoq in Q2 on dynamism of exports

                                          By
                                          ActionForex.com
                                          -

                                          France GDP grew 0.5% qoq in Q2, better than expectation of 0.2% qoq.

                                          Foreign trade contributed to +0.4 points to GDP growth this quarter, after +0.1 points in the previous quarter. This large contribution is due to the dynamism of exports (+0.8% after +1.6% in Q1 2022), coupled with the decline of imports (-0.6% after +1.2%).

                                          The contribution of final domestic demand (excluding inventories) to GDP growth was null this quarter. Household consumption expenditure fell again, but more moderately than in the previous quarter (-0.2% after -1.3%). Gross fixed capital formation (GFCF) continued to grow at a rather vigorous pace (+0.5%, as in the previous quarter).

                                          Finally, the contribution of inventory changes to GDP growth was weakly positive this quarter (+0.1 points after +0.2 points in Q1).

                                          Full release here.

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