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US consumer confidence rose to 109.7, highest since Jan 2022

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    US Conference Board Consumer Confidence rose from 102.5 to 109.7 in June, well above expectation of 103.6. Present Situation Index rose from 148.9 to 155.3. Expectations Index jumped from 71.5 to 79.3, but remained below 80 which was associated with a recession within the next year.

    “Consumer confidence improved in June to its highest level since January 2022, reflecting improved current conditions and a pop in expectations,” said Dana Peterson, Chief Economist at The Conference Board.

    “Assessments of the present situation rose in June on sunnier views of both business and employment conditions.”

    “Although the Expectations Index remained a hair below the threshold signaling recession ahead, a new measure found considerably fewer consumers now expect a recession in the next 12 months compared to May.”

    Full US consumer confidence release here.

    UK CPI slowed to 6.8% in Jul, services inflation hit highest since 1992

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      July saw a marked deceleration in UK’s CPI, falling from 7.9% yoy to 6.8% yoy , precisely in line with market expectations. Core CPI, which strips out variables like energy, food, alcohol, and tobacco, stood unchanged at 6.9% yoy, above the expected 6.8%.

      CPI figures pertaining to goods showed a noticeable slowdown, dropping from 8.5% yoy to 6.1% yoy. On the flip side, CPI services ramped up from 7.2% yoy to 7.4% yoy , registering its peak since the staggering 9.5% yoy rate observed in March 1992.

      On a month-to-month analysis for July, CPI receded by -0.4%, a figure slightly above than forecasted decline of -0.5%. Core CPI saw a monthly rise of 0.3% mom. While the CPI for goods plunged by -1.7% mom. , services CPI exhibited an increase, registering growth of 1.0% mom. .

      Office for National Statistics remarked, “The slowdown in the annual CPI rate into July 2023 was driven by downward contributions to change from 8 of the 12 divisions.”

      Notably, housing and household services emerged as the primary sectors applying downward pressure. Expanding on this, ONS stated, “Within this division, the downward effect came mainly from gas and electricity.”

      Full UK CPI release here.

      Yen weakens further after BoJ Ueda’s dovish press conference

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        Japanese Yen’s decline gained momentum following dovish comments by Bank of Japan (BoJ) Governor Kazuo Ueda in the post-meeting press conference. Ueda reaffirmed the central bank’s readiness to take “additional easing steps if necessary,” highlighting the “extremely high” level of uncertainty surrounding the economy.

        Addressing the possibility of a policy adjustment in January meeting, Ueda downplayed the likelihood of an abrupt rate hike, stating, “I don’t think the chance is high for us to say abruptly that we will hike rates at a subsequent meeting.” He also mentioned that “we won’t see much new data” to come before the meeting, except branch managers’ meeting which will provide insights into regional economies.

        Ueda spoke about various policy scenarios under consideration, recognizing the high degree of uncertainty in current economic forecasts. He noted the difficulty in outlining a clear exit strategy from the ultra-loose monetary policy due to the unpredictability of achieving sustainable and stable inflation at the target level. Ueda assured that once the BoJ foresees conditions aligning with their targets, more information will be disclosed.

        ECB Lagarde: Higher energy prices to go out in first part of 22

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          In an online seminar hosted by ECB yesterday, President Christine Lagarde noted that “how long how those bottlenecks will take to be resolved” is one of the question marks. She expected the impact of higher energy prices to “go out in the first part of ’22”. Also, “the last of the uncertainties that we have to account for…is potential new waves of a pandemic that would be vaccine-resistant.”

          BoE Governor Andrew Bailey said, “I expect us to be back to the pre-pandemic level in the early part of next year, possibly a month or two later than we thought we would be at the start of August.”

          Some analysts took a message from September MPC minutes that BOE could raise interest rate in November, while the asset purchase program is still in its final stages. Bailey declined to comment directly. But he noted, “the preferred tool will always be rates because we understand the effect of rates in the monetary policy transmission mechanism. But that’s not to pre-judge what we will decide in November,”

          BoJ Governor Haruhiko Kuroda maintained said, “whatever fiscal, regulatory or any other policies the new government pursues, the BOJ will continue to maintain extremely accommodative monetary policy in order to achieve its 2% price stability target as soon as possible.”

          “In coming years, we must achieve our 2% price stability target. That is true. But at this moment, (achieving) economic recovery and faster growth are the most important challenges faced by us,” Kuroda said.

          Pound rally extends as UK seals Brexit deal on financial services with EU

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            Pound rallies further today on more positive Brexit news. The Times reported that a tentative deal is agreed between UK and the EU on all aspects of a future partnership on services. Most importantly, that would grant access of EU markets to for British financial services companies. Prime Minister Theresa May’s senior advisor Oliver Robbins is handling the negotiations in Brussels and is expected to complete it within three weeks.

            The news came on top of reports that Brexit Minister Dominic Raab told MPs in a letter dated October 24 that November 21 is the date to conclude the Brexit negotiation. The letter was published on the Commons Brexit committee yesterday. But three hours after that, Raab’s office, Department for Exiting the European Union, backtracked and said there was “There is no set date for the negotiations to conclude. The 21st November was the date offered by the Chair of the Select Committee for the Secretary of State to give evidence.”

            Germany PMI manufacturing surged to 3-yr high at 60.6, services dropped to 45.9

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              Germany PMI Manufacturing surged to 60.6, up from 57.1, well above expectation of 56.5. That’s also the highest level in 36 months. PMI services, dropped to 45.9, down from 46.7, slightly below expectation of 46.5. PMI Composite rose to 51.3, up from 50.8, a 2-month high.

              Phil Smith, Associate Director at IHS Markit said: “February’s flash PMI results point to ongoing resilience in the German economy midway through the opening quarter, despite the country remaining under strict lockdown measures. Ongoing weakness in services, where large parts of the sector remain either closed or disrupted by virus containment measures, continues to be counterbalanced by strong, export-driven growth across manufacturing.

              “It was encouraging to see manufacturing regain momentum in February after a slight setback in growth at the start of the year. Furthermore, the strong performance comes amid a backdrop of increasing supply-side pressures, with February’s survey showing record reports of delivery delays and sharply rising input prices. Manufacturers seem to be weathering the storm so far, but there is the potential for some near-term disruption should the situation worsen and firms find themselves short of raw materials and components.”

              Full release here.

              SNB’s Jordan: New shocks can occur any time

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                Speaking at SNB’s annual shareholder meeting, President Thomas Jordan highlighted the achievement in lowering inflation to below 2%, a milestone that enabled the bank to implement a rate cut last month.

                Despite this progress, Jordan emphasized the continuing high levels of uncertainty in the global economic environment, acknowledging the potential for new shocks at any time.

                “In the current environment, uncertainty remains elevated, and new shocks can occur at any time,” he noted. “We will therefore monitor the ongoing development of inflation closely and adjust our monetary policy again if necessary.”

                 

                UK Johnson welcomes the UK/EU Agreement as new starting point

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                  UK Prime Minister Boris Johnson spoke to European Council Charles Michel today. He tweeted afterwards, “I welcomed the importance of the UK/EU Agreement as a new starting point for our relationship, between sovereign equals.”

                  “We looked forward to the formal ratification of the agreement and to working together on shared priorities, such as tackling climate change,” he added.

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                  Germany’s Ifo business climate dips to 86.4, economy remains weak

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                    Germany’s Ifo Business Climate fell from 87.3 to 86.4 in December, below expectation of 87.8. Current Assessment index fell from 89.4 to 88.5, below expectation of 89.5. Expectations index fell from 85.2 to 84.3, below expectation of 85.8.

                    By sector, manufacturing fell from -13.8 to -17.2. Services rose from -2.5 to -1.7. Trade fell from -22.2 to -26.6. Construction fell from -29.5 to -33.1.

                    The Ifo Institute’s statement encapsulates the current sentiment, noting that “companies were less satisfied with their current business” and expressing a more skeptical view of the first half of 2024. The acknowledgment that “the German economy remains weak as the year draws to a close” is telling of the challenges facing Europe’s largest economy.

                    Full German Ifo business climate release here.

                    Fed George not inclined to dismiss inflation signals

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                      ActionForex.com
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                      Kansas City Fed President Esther George said she’s “not inclined to dismiss today’s pricing signals or to be overly reliant on historical relationships and dynamics in judging the outlook for inflation.” But she didn’t explicitly indicated whether she’s ready to adjust monetary policy for now.

                      “The structure of the economy changes over time, and it will be important to adapt to new circumstances rather than adhere to a rigid formulation of policy reactions,” she said. “With a tremendous amount of fiscal stimulus flowing through the economy, the landscape could unfold quite differently than the one that shaped the thinking”.

                      EU: US tariffs inflict unnecessary economic damage on both sides of the Atlantic

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                        ActionForex.com
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                        In response to new tariff intention of the US, EU warned in a statement that “it creates uncertainty for companies and inflicts unnecessary economic damage on both sides of the Atlantic.”

                        “By potentially targeting new products, the US is increasing this damaging impact due to the cost of new disruptions to supply chains for the products potentially subject to new duties.” “This is particularly the case as companies are now trying to overcome the economic difficulties in the aftermath of the Covid-19 crisis.”

                        USTR announced earlier this week a list of 30 product lines that could be subjected to new tariffs. The news items, equivalent to around USD 3.1B of imports from EU annually, could be hit will tariffs of as much as 100%.

                        Fed’s Bowman cites multiple risks to inflation, rules out rate cuts for now

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                          ActionForex.com
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                          In a speech overnight, Fed Governor Michelle Bowman reiterated that Fed is “still not yet at the point where it is appropriate to lower the policy rate.” She emphasized that several upside risks to inflation persist, making it premature to consider rate cuts.

                          Bowman highlighted several concerns impacting inflation. She noted that further improvements on the supply side are unlikely, and geopolitical developments could disrupt global supply chains, adding to inflationary pressures. Additionally, loosening in financial conditions might increase demand, potentially stalling disinflation progress. Furthermore, increased immigration and continued labor market tightness could lead to persistently high core services inflation.

                          Bowman stressed that monetary policy is “not on a preset course.” She remains willing to raise interest rates if incoming data suggest that progress on inflation has stalled or reversed.

                          Full speech of Fed’s Bowman here.

                          BoC Rogers: We need a period of lower growth to balance things out

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                            BoC Senior Deputy Governor Carolyn Rogers said yesterday, “our primary focus will be to judge how monetary policy is working to slow demand, how fast supply challenges are resolved, and most importantly, how both inflation and inflation expectations respond.”

                            “Because we are in a period of excess demand, we need a period of lower growth to balance things out and bring demand back in line with supply,” Rogers said.

                            “By front-loading interest rates now, we’re trying to avoid the need for even higher rates down the road and a more pronounced slowing of the economy,” she said.

                            Eurozone PPI at 0.2% mom, -9.4% yoy in Nov, matches expectations

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                              Eurozone PPI came in at 0.2% mom, -9.4% yoy in November, matched expectations. For the month, industrial producer prices increased by 1.0% mom in the energy sector and by 0.1% mom for durable consumer goods, while prices remained stable for capital goods, and prices decreased by -0.1% mom for non-durable consumer goods and by -0.3% mom for intermediate goods. Prices in total industry excluding energy decreased by -0.2% mom.

                              EU PPI was at 0.2% mom, -8.7% yoy. The biggest monthly increases in industrial producer prices were observed in Ireland (+4.9%), Italy (+2.2%) and the Netherlands (+0.7%), while the largest decreases were recorded in Luxembourg (-3.7%), Latvia (-2.7%) and Greece (-1.9%).

                              Full Eurozone PPI release here.

                              Bitcoin and ethereum in free fall again on Celsius Network news

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                                Cryptocurrencies were in free fall again on news that Celsius Network, one of the biggest crypto lenders, paused withdrawals, swaps and transfers on its platform. In the background, bitcoin and ethereum were already under pressure last week, as risk-off sentiments intensified after data showed reacceleration in consumer inflation in the US.

                                The breach of 25083 support in bitcoin suggests that medium term down trend is ready to resume. 20k handle is the next target but in could indeed fall to as low as61.8% projection of 48226 to 25083 from 32686 at 15258. Overall outlook will stays bearish as long as 32368 resistance holds, even in case of strong recovery.

                                Ethereum is also extending the down trend from 4863. 1000 handle is the next target but it could fall to as low as 100% projection of 4683 to 2157 from 3577 at 870. Outlook will stay bearish as long as 1674 support turned resistance holds, in case of recovery.

                                US durable goods orders rose 0.4% in Apr, ex-transport orders up 0.3%

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                                  US durable goods orders rose 0.4% mom to USD 265.3B in April, below expectation of 0.6% mom. Ex-transport orders rose 0.3% mom, below expectation of 0.6% mom. Ex-defense orders rose 0.3% mom. Transportation equipment, rose 0.6% mom to USD 86.7B.

                                  Full release here.

                                  Germany Q1 GDP contraction finalized at -1.8% qoq, still down -5% from pre-pandemic level

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                                    ActionForex.com
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                                    Germany Q1 GDP contraction was finalized at -1.8% qoq. It’s down -3.4% yoy on price-adjusted bases, down -3.1% yoy on price- and calendar-adjusted bases. Comparing prepandemic level in Q4 2019, GDP was still down -5.0%.

                                    Looking at some details, household final consumption expenditure was down -9.1% yoy. Gross fixed capital formation did not contribute to year-on-year growth. Fixed capital formation in machinery and equipment dropped -0.7% yoy, and in construction by -1.6% yoy. Government final consumption rose 2.5% yoy. Exports of goods and services dropped -0.6% yoy. Total imports dropped -3.0% yoy.

                                    All sectors were down on a year earlier. In particular, services dropped -13.9% yoy. Gross value of manufacturing was still down -1.2% yoy despite improvement in the second half. Information and communications was the only sector that saw noticeable growth of 0.7% yoy.

                                    Full release here.

                                    UK May requested to lay out timetable to leave if no Brexit deal is approved

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                                      In UK, it’s reported that Conservative backbench 1922 Committee rejected a proposal for chance in party rules to allow an early vote of no confidence in Prime Minister Theresa May. However, Committee chairman Graham Brady also requested May to set out a timetable for her departure in the event of a Brexit deal not being passed. This is on top of May’s promise that she would go after the Brexit deal is passed.

                                      Separately, Cabinet Minister David Lidington, said that the government wants to get the thrice-defeated Brexit deal through the parliament before the new European Union parliament opens in July. But the timing will depend on negotiation with the opposition Labour Party. Meanwhile, Commons Leader Andrea Leadsom announced the business for next week. No items regarding Brexit is included.

                                      ECB Visco : Will asset hot to adjust policy instruments in the coming weeks

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                                        ActionForex.com
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                                        ECB Governing Council member Ignazio Visco said the central bank “will need to adopt further expansionary measures if the euro zone economy does not pick up.” And, “in the coming weeks the ECB will continue to assess how to adjust the instruments at its disposal”. This is in-line with market expectations that ECB is ready ramp up monetary stimulus either on July 25 or later in September.

                                        Being Governor of Bank of Italy too, Visco expected the Italian economy to grow just 0.1% this year, marginally below the government’s 0.2% official forecast. Though, he also expected growth to pickup to just slightly below 1% in 2020 and 2021. He urged the government to adopt “prudent” budget deficit targets for the coming years. But he also welcomed recent fall in Italian yields, after EU averted the Excessive Deficit Procedure on the country.

                                        RBA minutes: Finely balanced arguments for hold and hike

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                                          Minutes from RBA’s June 6 monetary policy meeting reveal an active debate over whether to hold or raise the cash rate by 25bps.

                                          As stated in the minutes, “Members recognised the strength of both sets of arguments, concluding that the arguments were finely balanced.” However, they ultimately determined that a rate increase was the stronger course of action at this meeting.

                                          Recent data indicating that inflation risks had begun tilting to the upside were a key influence on the board’s decision. As they noted, “Given this shift and the already drawn-out return of inflation to target, the Board judged that a further increase in interest rates was warranted.”

                                          Such a move would bolster confidence that inflation would indeed return to the target range “over the period ahead”, they reasoned.

                                          At the meeting, RBA raised cash rate target by 25bps to 4.10%.

                                          Full RBA minutes here.

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