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Swiss GDP grew 1.7% qoq in Q3, more than 1% above pre-crisis level

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    ActionForex.com
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    Swiss GDP grew 1.7% qoq in Q3, following 1.8% qoq rise in Q2. Looking at some details, private consumption rose 2.7%. Government consumption dropped -1.5%. Equipment and software investment dropped 1.3%. Construction investment rose 0.1%. Exports of goods excluding valuables rose 2.3%. Exports of services dropped -2.2%. Import of goods rose 3.2%. Imports of services rose 2.9%.

    The FSO said, “Value added grew markedly in the affected service sectors as a result of the further relaxation GDP was more than 1% higher in the third quarter than the pre-crisis level seen in the fourth quarter of 2019.

    Full release here.

    Trump: Fed is a much bigger problem than China

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      ActionForex.com
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      Trump expressed his dissatisfaction on Fed Chair Jerome “Jay” Powell again yesterday. He told the Washington post that “So far, I’m not even a little bit happy with my selection of Jay. Not even a little bit.” He went further and said “Fed is a much bigger problem than China”.

      He added “and I’m not blaming anybody, but I’m just telling you I think that the Fed is way off-base with what they’re doing.” He pointed to China and Euro being “accommodative”. But “we’re not getting any accommodation”.

      Trump complained again that “I’m doing deals, and I’m not being accommodated by the Fed.” And, “they’re making a mistake because I have a gut, and my gut tells me more sometimes than anybody else’s brain can ever tell me.”

      Schnabel: ECB will continue to conduct PSPP and PEPP

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        ActionForex.com
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        In an interview published today, ECB Executive Board member Isabel Schnabel talked down German Constitutional Court ruling that the public sector purchase programme (PSPP) is partly unconstitutional. She noted that European Court of Just has “exclusive jurisdiction” over ECB and its actions. The PSPP was already ruled legal in 2018.

        Hence, “we will continue to conduct the PSPP and the pandemic emergency purchase programme (PEPP), as well as our other monetary policy measures, in line with our mandate.” She also emphasized that “the primacy of EU law is key for the functioning of the European Union.

        Turning to the economy, Schnabel said Eurozone is “indeed facing a very deep economic crisis, on top of a humanitarian crisis”. A “broad set of measures” was adopted by ECB including the new PEPP. “we stand ready to adjust the size and duration of the programme if needed”.

        German Ifo dropped to lowest since Dec 2014, economic situation remains weak

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          ActionForex.com
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          German Ifo Business Climate dropped to 98.5 in February, down from 99.3 and missed expectation of 98.9. That’s also the lowest level since December 2014, and the sixth decline in a row. Expectations index dropped to 93.8, down from 94.2 and missed consensus of 94.2. Current Assessment index also dropped to 103.4, down from 104.3 and missed expectation of 103.9.

          Clemens Fuest, President of ifo Institute said “these survey results as well as other indicators point to economic growth of 0.2 percent in the first quarter. The economic situation in Germany remains weak.”

          Full release here.

          UK May pledged change in Brexit approaches, oppose to second referendum

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            ActionForex.com
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            UK Prime Minister Theresa May’s statement on Brexit plan B yesterday was rather uninspiring. In short, she finally acknowledged the need to have in change in her approach and laid out three areas. Those include, being “more flexible, open and inclusive” in engaging the parliament, embedding the “the strongest possible protections on workers’ rights and the environment”. And finally, ensuring the “commitment to no hard border in Northern Ireland and Ireland”. They’re hardly anything new.

            Meanwhile, she continued to oppose to a second referendum as that would “damage social cohesion by undermining faith in our democracy.” And she doesn’t believe there is a majority for a second referendum. On Article 50 extension, she claimed that EU would not approve it unless UK had a plan for approving a deal. And the only way to avoid a no-deal Brexit would be to revoke Article 50.

            May will continue cross-party talks and provide further update next Tuesday.

            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.”

              German ZEW falls sharply to 4.1, financial market experts still uncertain

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                ActionForex.com
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                ZEW Economic Sentiment Index for Germany experienced a significant drop in April, falling from 13 to 4.1, well below the anticipated 15.1. This suggests that a considerable improvement in the economic situation is unlikely over the next six months. Although the Current Situation Index rose from -46.5 to -32.5, surpassing the forecast of -40.0, the overall economic situation remains relatively negative.

                Similarly, the Eurozone’s ZEW Economic Sentiment Index dipped from 10 to 6.4, underperforming the expected 11.2. However, the Current Situation Index increased by 14.4 points to -30.2.

                ZEW President Professor Achim Wambach stated that several factors negatively affect economic expectations, including experts’ anticipation of banks being more cautious with loans and the ongoing impact of high inflation rates and restrictive international monetary policies. Nevertheless, Wambach highlighted that the risk of an acute international financial market crisis appears to have been mitigated.

                Full Germany ZEW release here.

                 

                IMF Georgieva: Possible Fed rate cut in late 2024, but don’t hurry

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                  ActionForex.com
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                  In an interview with CNBC overnight, IMF Managing Director Kristalina Georgieva projected that by the end of the year, Fed would be positioned to lower interest rates. Nevertheless, She emphasized the importance of data-driven decisions, advising against premature action.

                  “We remain on our projection that we would see, by the end of the year, the Fed being in a position to take some action in a direction of bringing interest rates down,” adding, “But again, don’t hurry until the data tells you you can do it.”

                  Georgieva also highlighted reasons for optimism regarding the US economy’s future. She pointed out that the US is experiencing less upward pressure on labor costs compared to other regions, which helps in maintaining economic stability without the immediate threat of overheating.

                  Fed’s Barr: Rate cut decisions hinge on continued good data

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                    ActionForex.com
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                    In a speech overnight, Fed Vice Chair Michael Barr noted that the FOMC is “confident” that US is “on a path to 2% inflation”. However, Barr underscored the importance of seeing “continued good data” before initiating reduction in federal funds rate.

                    Reflecting on the latest consumer product index inflation report, he acknowledged the potential for a “bumpy” journey back to the target inflation rate, emphasizing the need for a “careful approach” in the current economic climate.

                    Full speech of Fed’s Barr here.

                    European update: Euro pressured by weak PMI, Aussie and Kiwi tumble as Chinese stocks dive

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                      ActionForex.com
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                      Euro, New Zealand and Australian Dollars are the weakest ones for today so far, for different reasons. Euro is clearly weighed down by weak PMI data. Eurozone PMI composite dropped to 47-month low of 52.4. Markit also suggested that the weakness in Q3 may not be a just a blip. And, risks to growth outlook have beome increasingly skewed to the downside. EUR/USD’s break of 1.1358 minor support would bring send the pair back to 1.1215 low next.

                      Aussie and Kiwi are, on the other hand, pressured by selloff in Chinese stocks. The China Shanghai SSE dropped -2.49% to 2579.48. Looking at the SSE daily chart, the rejection from 55 day EMA and medium term falling channel resistance could now set the stage for a retest on 2449.19 low at least.

                      Staying in the currency markets, for now, Yen and Dollar are the strongest ones.

                      BoJ Kuroda laid out options for additional easing if necessary

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                        ActionForex.com
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                        In the post meeting press conference, BoJ Governor Haruhiko Kuroda warned of downside risks to the economy “particularly via overseas economic developments”. He added, “if trade frictions persist, that could have a broad impact on Japanese and overseas economies.” Nevertheless, he also pointed to tankan survey and BoJ’s internal hearings, and noted “trade frictions on Japan’s economy is limited for now”. There is so far no change in the view that the economy is “expanding moderately”. Also, ” momentum for achieving our price target is sustained.”

                        Kuroda also sounded open to more easing and noted “If we think doing so would be necessary to sustain the momentum for achieving our price target, we will ease monetary policy further as appropriate.” The options for additional easing include cutting the short-term interest rate target, lowering the long-term yield target, ramping up asset buying and accelerating the pace of increase in base money.

                        ECB Draghi: Euro produced two decades of price stability

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                          ActionForex.com
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                          In a speech titled “20th anniversary of the euro”, ECB President Mario Draghi hailed that with the Single Market, ” we have a powerful engine of sustainable growth to underpin our living standards”. And the Euro has “safeguarded the integrity of the Single Market.”

                          In addition, he said euro has “produced two decades of price stability also in countries where this was a long lost memory.” And that “fostered people’s confidence”, with such ” firms invest and create new jobs.”

                          Draghi also said “today most challenges are global and can be addressed only together”. Such  “togetherness” magnifies the ability of individual countries to retain the sovereignty over the relevant matters. And, together “we have a voice in the regulation of international financial market”.

                          Draghi’s full speech.

                          Markets see 100% chance of another 50bps Fed cut this month, Dollar index eyeing 96.35 key support

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                            ActionForex.com
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                            Dollar’s decline against Euro and Yen are extending as markets increased bets on another deep interest rate cut by Fed on March 18. According to fed fund futures, there is now 100% chance of -50bps cut in federal funds rate to 0.50-0.75%, with 16.1% chance of even a -75bps cut to 0.25-0.50%.

                            Dollar index is now eyeing 96.35 key support. Decisive break there will confirm medium term topping at 99.91. In that case, we’d view fall from 99.91 as correcting the up trend from 88.25. Deeper fall should at least be seen to 38.2% retracement of 88.25 to 99.91 at 95.45, with prospect of hitting as low as 61.8% retracement at 92.70.

                            Australia AiG manufacturing dropped to 46.7, recovery prone to periodic setbacks

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                              ActionForex.com
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                              Australia AiG Performance of Manufacturing Index dropped to 46.7 in September, down from 49.3. Victoria reported the weakest result, down -6.4 to 37.6, due to stage four restrictions. But decline was also reported in New South Wales, down -6.7 to 44.3, and Queensland, down -3.8 to 43.3. Looking at some more details, production dropped -3.3 to 50.1. Employment dropped -2.5 to 47.7. New orders dropped -1.5 to 45.1. Exports dropped -5.7 to 46.5. Average wages rose 1.5 to 52.3.

                              Ai Group Chief Executive Innes Willox said: “The disappointing contraction of manufacturing and the slump in manufacturing employment in September is a timely reminder that recovery from the COVID-19 crisis, at least in its initial stages, will be tentative and prone to periodic setbacks… There is clearly a need for further fiscal stimulus in next week’s federal Budget to help rebuild the confidence that is needed to get businesses investing and households spending.”

                              Full release here.

                              Asian markets jump, Yen dives as China signals shift in monetary policy stance

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                                ActionForex.com
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                                Asian markets are staging a strong rebound today. At the time of writing, Chines Shanghai Composite is up 1.2%, Hong Kong HSI is up 1.15%, Singapore Strait Times is up 0.7%. Nikkei lags behind, though, and is up 0.14% only. Yen is sold off broadly.

                                A main trigger for the rebound is the shift in the policy stance of China’s central bank PBoC. The process of deleveraging could be slowed to ensure sufficient liquidity in the markets.

                                In the statement released after Q2 regular meeting, PBoC noted challenges and uncertainties in international developments. And it emphasized the need in “anticipation and forward-looking pre-adjustment fine-tuning” on monetary policy. While being neutral, monetary policy has to “maintain adequate liquidity, and guide the reasonable scale of monetary credit and social financing.”

                                Also, PBoC noted the need to use a variety of tools to “grasp the strength and rhythm of structural deleveraging”. The aims were to promote “promote stable and healthy economic development, stabilize market expectations, and guard against systemic financial risks.”

                                Full release (in simplified Chinese).

                                UK retail sales volumes rises 1.3% mom in Nov, sales value up 1.0% mom

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                                  ActionForex.com
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                                  UK retail sales volumes (quantity bought) rose 1.3% mom in November, well above expectation of 0.4% mom. Ex-automotive fuel sales values rose 1.3% mom. Over the year, sales volumes rose 0.1% yoy while ex-fuel sales volume rose 0.3% yoy.

                                  Sales value (amount spent) rose 1.0% mom, 3.8% yoy. Ex-fuel sales value rose 1.2% mom, 5.7% yoy.

                                  Full UK retail sales release here.

                                  Yuan hit fresh 2-yr low, shrugging PBoC actions

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                                    ActionForex.com
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                                    The People’s Bank of China announced yesterday to cut the foreign exchange reserve requirement ratio (RRR) to 6% from 8% beginning September 15. That is, the amount of foreign-exchange deposits banks need to set aside as reserves will be lowered, freeing up funds to buy Yuan.

                                    The move, together with a string of stronger-than expected exchange rate fixings, are seen as a strong signal on PBoC’s stance to at least slow Yuan’s depreciation. That came when Yuan hit fresh two-year low and with USD/CNH approaching psychological important 7 handle.

                                    But USD/CNH’s rally (Yuan’s depreciation) is continuing. There is no sign of topping in USD/CNH as long as 6.8877 support holds, technically. It’s still on track to 61.8% projection of 6.3057 to 6.8372 from 6.7159 at 7.0444.

                                    German ZEW dropped to -2.1, restrained economic growth for the next six months

                                      By
                                      ActionForex.com
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                                      German ZEW economic sentiment dropped to -2.1 in May, down from 3.1 and missed expectation of 5.0. It’s also well below long term average of 22.1. Current situation index, though, rose to 8.2, up from 5.5 and beat expectation of 6.0. Eurozone ZEW economic sentiment dropped to -1.6, down from 4.5 and missed expectation of 5.0. Current situation gauge rose 6.2 pts to 7.0.

                                      ZEW noted that “The development of production and exports in Germany as well as Eurostat’s most recent flash estimate of GDP growth in the euro area in the first quarter of 2019 give rise to the hope that the German economy, too, has grown more strongly than expected in the first quarter. ”

                                      ZEW President Achim Wambach said: “The decline in the ZEW Indicator of Economic Sentiment shows that the financial market experts continue to expect restrained economic growth in Germany for the next six months. The most recent escalation in the trade dispute between the USA and China again increases the uncertainty regarding German exports – a key factor for the growth of the gross domestic product”.

                                      Full release here.

                                      Eurozone CPI rises to 2.6% in May, CPI core up to 2.9%

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                                        ActionForex.com
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                                        Eurozone CPI accelerated from 2.4% yoy to 2.6% yoy in May, above expectation of 2.5% yoy. CPI core (ex-energy, food, alcohol & tobacco) also jumped from 2.7% yoy to 2.9% yoy, above expectation of 2.7% yoy.

                                        Looking at the main components, services is expected to have the highest annual rate in May (4.1%, compared with 3.7% in April), followed by food, alcohol & tobacco (2.6%, compared with 2.8% in April), non-energy industrial goods (0.8%, compared with 0.9% in April) and energy (0.3%, compared with -0.6% in April).

                                        Full Eurozone CPI flash release here.

                                        UK PMI manufacturing rose to 54.2, stocks at near record but positive impact likely short-lived

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                                          ActionForex.com
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                                          UK PMI manufacturing rose to 54.2 in December, up from 53.1 and beat expectation of 52.6. It’s also the highest level in six months. Markit also noted that “new order and new export order inflows strengthen”, and “stocks of purchases and finished goods rise sharply”.

                                          Rob Dobson, Director at IHS Markit, which compiles the survey:

                                          “December saw the UK PMI rise to a six-month high, following short-term boosts to inventory holdings and inflows of new business as companies stepped up their preparations for a potentially disruptive Brexit.

                                          “Stocks of purchases and finished goods both rose at near survey-record rates, while stock-piling by customers at home and abroad took new orders growth to a ten-month high. Any positive impact on the PMI is likely to be short-lived, however, as any gains in the near-term are reversed later in 2019 when safety stocks are eroded or become obsolete.

                                          “The trend in production volumes remained lacklustre despite the safety stock-building, with the latest survey consistent with a mild decrease in the official measure of manufacturing output over the final quarter. Uncertainties regarding Brexit disruption on supply chains and the exchange rate are also weighing on business confidence. Although manufacturers forecast growth over the coming year, confidence remains at a low ebb. Manufacturing will therefore be entering 2019 on a less than ideal footing with Brexit uncertainty having intensified considerably.”

                                          Full release here.

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