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Oil price in range ahead of pivotal OPEC meeting

    By
    ActionForex.com
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    WTI oil price is staying in range between 63.6/66.9 as markets await the pivotal meeting in Austria. Delegations of OPEC and non-OPEC oil producing countries are meeting today in Vienna. The producers are trying to reach a consensus on easing the output cap, that is raising production, to cool oil prices.

    Saudi Arabia’s Energy Minister Khalid Al-Falih, the defacto leader of OPEC, said yesterday that he was “optimistic” on a deal as there was a “spirit of cooperation” among the group. And they would discuss how to raise production by around 1 million barrels per day.

    The United Arab Emirates’ minister of energy and industry, and OPEC president, Suhail Al- Mazrouei emphasized that OPEC is “not a political organization” but a “commercial organization”. Iraq’s Oil Minister Jabbar Ali al-Luaibi also said he’s “confident that we will reach some sort of agreement”.

    However, Iran, Iraq and Venezuela are known to oppose the relaxation of production cut. Iranian Oil Minister Bijan Zanganeh said he doubted OPEC could reach a deal this week and he was feeling “very good” about the current production levels.

    Russian Energy Minister Alexander Novak warned that “Oil demand usually grows at the steepest pace in the third quarter … We could face a deficit if we don’t take measures.” And, “this could lead to market overheating.” Russia is pushing up to 1.5 million barrels per day of output raise, OPEC and non-OPEC countries together.

    Full program of the meeting.

    US ISM manufacturing dropped to 46.9, corresponds to -0.6% GDP annualized GDP contraction

      By
      ActionForex.com
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      US ISM Manufacturing PMI dropped from 47.1 to 46.9 in May, below expectation of 47.0. Looking at some details, new orders dropped from 45.7 to 42.6. Production rose from 48.9 to 51.1. Employment rose from 50.2 to 51.4. Prices dropped sharply from 53.2 to 44.2.

      ISM said: ” “This is the seventh month of contraction and continuation of a downward trend that began in June 2022. That trend is reflected in the Manufacturing PMI’s 12-month average falling to 49.4 percent.”

      “The past relationship between the Manufacturing PMI and the overall economy indicates that the May reading (46.9 percent) corresponds to a change of minus-0.6 percent in real gross domestic product (GDP) on an annualized basis.”

      Full US ISM manufacturing release here.

      New Zealand’s goods exports reach record high in may, trade surplus exceeds expectations

        By
        ActionForex.com
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        New Zealand’s goods exports rose by 2.9% yoy to NZD 7.2B in May, marking the first time that monthly exports have surpassed the NZD 7B mark. Goods imports also saw a slight increase, rising by 0.6% yoy to NZD 7.0B. This resulted in a trade surplus of NZD 204m, exceeding the expected NZD 155m.

        Breaking down the top monthly export movements by country, New Zealand saw mixed results. Exports to China fell by -12% yoy, and exports to Australia dropped by -3.8% yoy. In contrast, exports to the US surged by 33% yoy, while exports to the EU and Japan rose by 2.8% yoy and 12% yoy, respectively.

        On the import side, imports from China increased by 2.6% yoy, while imports from the EU decreased by -1.8% yoy. Imports from Australia -4.7% yoy, whereas imports from the US and South Korea rose by 1.6% yoy and 5.8% yoy, respectively.

        Full NZ trade balance release here.

        US Q3 GDP grew 2.1%, revised up from 1.9%

          By
          ActionForex.com
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          According to the second estimate, US GDP grew 2.1% annualized, revised up from first estimate of 1.9%. With the second estimate for the third quarter, upward revisions to private inventory investment, nonresidential fixed investment, and personal consumption expenditures (PCE) were partially offset by a downward revision to state and local government spending.

          Full release here.

          German retail sales dropped -0.6% mom in May, 10-year bund yield hits new record low

            By
            ActionForex.com
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            German retail sales dropped -0.6% mom in May, well below expectation of 0.5% mom. Compared with 2018, for the first fives months of the year, retail sales rose 2.8% in real terms. The weak data dampened hope that domestic demand could offset the drag from global trade on the export-led economy. Euro is steady after the release. But German 10-year bund yield is extending recent record run, hitting as low as -0.362 so far today.

            Full release here.

            Into European Session: Falling yields support Yen and Swiss, Aussie tumbles again

              By
              ActionForex.com
              -

              Entering into European session, Australian Dollar is the weakest one for today. RBA revealed new economic projections that indicate slow rise in inflation and unemployment rate. Also, it reiterated the stance that the chance for a hike or cut next is evenly balanced. Canadian Dollar is the second weakest as WTI crude oil dips below 52.5. The Loonie will look into job data to be released later today. Sterling’s post BoE rebound lost steam and is now the third weakest.

              Yen and Swiss Franc are strong on risk aversion. Investors are apparently troubled by news that Trump is not going to meet Chinese Xi to seal the trade deal this month. New Zealand Dollar is also strong today but it’s just recovering yesterday’s steep post-job data selloff. Dollar is mixed for now.

              For the week, Dollar is overwhelmingly the strongest one, trading above prior week’s high against all but Yen. Yen is the second strongest, followed by Swiss Franc. Falling global treasury yields and mild risk aversion are support these two safe-haven currencies. Commodity currencies are weakest, led by Australian Dollar.

              In Asia:

              • Nikkei closed down -2.01%.
              • Hong Kong HSI is back from holiday and is down -0.22%.
              • China is still on holiday.
              • Singapore Strait Times is down -0.10%.
              • Japan 10-year JGB yield is down -0.0227 at -0.031.

              Overnight:

              • DOW dropped -0.87%.
              • S&P 500 dropped -0.94%.
              • NASDAQ dropped -1.18%.
              • 10-year yield dropped -0.050 to 2.652, back below 2.7% handle.
              • 30-year yield dropped -0.045 to 2.993, lost 3.0% handle.

              US consumer confidence falls to 106.7, three-month rise interrupted

                By
                ActionForex.com
                -

                US Conference Board Consumer Confidence fell from 110.9 to 106.7 in February, below expectation of 114.9. Present Situation Index fell from 154.9 to 147.2. Expectation Index fell from 81.5 to 79.8.

                “The decline in consumer confidence in February interrupted a three-month rise, reflecting persistent uncertainty about the US economy,” said Dana Peterson, Chief Economist at The Conference Board.

                Full US Consumer Confidence release here.

                Japan PMI manufacturing unchanged at 48.9, services rose to 52.4

                  By
                  ActionForex.com
                  -

                  Japan PMI Manufacturing was unchanged at 48.9 in January, below expectation of 49.4. PMI Services rose from 51.5 to 52.4. PMI Composite rose form 49.7 to 50.8.

                  Laura Denman, Economist at S&P Global Market Intelligence, said: “Japan’s private sector kicked off 2023 on a more positive note, as signalled by activity returning to growth territory in January. However, similar to trends recorded over much of the past six months, a divergence between the manufacturing and services sectors has remained.

                  Full release here.

                  US ADP jobs grew 247k only, recovery showed signs of slowing

                    By
                    ActionForex.com
                    -

                    US ADP private employment grew 247k only in April, well below expectation of 370k. By company size, small businesses lost -120k jobs. Medium businesses added 46k jobs. Large businesses added 321k jobs. By sector goods-producing jobs grew 46k. Service-providing jobs grew 202k.

                    “In April, the labor market recovery showed signs of slowing as the economy approaches full employment,” said Nela Richardson, chief economist, ADP. “While hiring demand remains strong, labor supply shortages caused job gains to soften for both goods producers and services providers. As the labor market tightens, small companies, with fewer than 50 employees, struggle with competition for wages amid increased costs.”

                    Full release here.

                    New Zealand goods exports dropped -8.5% yoy in Feb, imports down -1.1% yoy

                      By
                      ActionForex.com
                      -

                      New Zealand goods exports dropped -8.5% yoy in February to NZD 4.5B. Imports dropped -1.1% yoy to NZD 4.3B. Monthly trade surplus came in at NZD 181m, turned from January’s NZD -647m deficit, largely matched expectations.

                      Exports to China was up NZD 369m, but down to other major trading partners including US, EU, Australia and japan. Imports from China, Australia and Japan were up, but down from EU and US.

                      Full release here.

                      New Zealand unemployment rate surged to 5.3%, most people unemployed in 8 years

                        By
                        ActionForex.com
                        -

                        New Zealand unemployment rate jumped to 5.3% in Q3, up from Q2’s 4.0%, but was slightly better than expectation of 5.4%.The 1.3% jump was the biggest quarterly increase on record. Labor force participation rate rose 0.2% to 70.1%. Employment dropped -0.8% over the quarter, matched expectations. 37k more New Zealanders were unemployed, bringing the total to 151k, highest in eight years.

                        “We are continuing to see the economic effects of COVID-19, and its associated border and business closures,” labour market and household statistics senior manager Sean Broughton said. “Last quarter’s low unemployment rate of 4.0 percent was explained in part by people’s inability to be ‘actively seeking’ and available for work during the national lockdown that was in place for much of the quarter. This quarter’s increase in unemployment reflects a return to more normal job-hunting be ha vi ours.”

                        Full release here.

                        Eurozone CPI slows to 2.9% yoy, lowest since Jul 2021

                          By
                          ActionForex.com
                          -

                          Eurozone CPI cooled off further in October, decelerating from 4.3% yoy to 2.9% yoy. This slowdown in inflation was more pronounced than market predictions, which had forecasted a rate of 3.1% yoy. Notably, this is the most muted inflation pace the region has experienced since July 2021.

                          Excluding volatile components in energy, food, alcohol, and tobacco, core CPI experienced a deceleration from 4.5% yoy to 4.2% yoy, hitting its lowest mark since July 2022, and meeting the predictions set by market experts.

                          Breaking down the main components of inflation, food, alcohol, and tobacco observed the most significant annual inflation rate for October, registering 7.5% compared to 8.8% in September. Services prices recorded a marginal decline, moving from 4.7% in September to 4.6% in October. Non-energy industrial goods also experienced a slowdown, with prices rising 3.5% in October compared to 4.1% in the preceding month.

                          However, the most dramatic shift was observed in the energy component. Prices in this segment plummeted to -11.1% in October from -4.6% in September, reflecting the volatile nature of global energy markets.

                          Full Eurozone CPI release here.

                          Into US session: Markets shrug new tariffs, await US CPI and Canada jobs

                            By
                            ActionForex.com
                            -

                            Entering into US session, the forex markets are generally staying in very tight range. Risk aversion somewhat receded today even though Trump maintained his hard line on trade negotiations with China. He indicated there is no rush for a deal now that the new rounds of tariffs took effect today. And the US an even use newly collected tariffs to buy their own agricultural products to send to poor countries for humanitarian aids. Let’s see if he will deliver what he claims.

                            For now, Dollar is the weakest one for today, followed by Yen and then Canadian. Euro is the strongest one, followed by Swiss franc and then Kiwi. The Pound gets no support from solid 0.5% Q1 GDP growth in UK. Dollar and Loonie will look into US CPI and Canadian job data for the next move.

                            In Europe, currently:

                            • FTSE is up 0.39%.
                            • DAX is up 0.80%.
                            • CAC is up 0.50%.
                            • German 10-year yield s up 0.008 at -0.039, staying negative.

                            Earlier in Asia:

                            • Nikkei dropped -0.27%.
                            • Hong Kong HSI rose 0.84%.
                            • China Shanghai SSE rose 0.31%.
                            • Singapore Strait Times rose 0.12%.
                            • Japan 10-year JGB yield rose 0.0019 to -0.044.

                            Australia NAB business confidence dropped to 0, conditions dropped to 22

                              By
                              ActionForex.com
                              -

                              Australia NAB Business Confidence dropped from 5 to 0 in October. Business Conditions dropped slightly from 23 to 22. Trading conditions dropped from 37 to 31. Profitability conditions rose from 21 to 22. Employment conditions dropped from 17 to 14.

                              NAB Chief Economist Alan Oster said, “Conditions remained strong in October with demand still very elevated and profitability holding up… Despite the strength in conditions, confidence has been falling for several months as headwinds have weighed on the outlook for the global economy and Australia.”

                              Full release here.

                              Hong Kong stocks in free fall on fear of more regulatory crackdown

                                By
                                ActionForex.com
                                -

                                While US stocks were strong, Asian markets are trading notably lower today, as led by the free fall in Hong Kong. Selloff in Chinese tech stocks intensified after the Chinese government announced a step up in oversight on Chinese stocks listing in the US. The announcement came just after the surprised crackdown on ride-hailing giant Didi, days after it’s mega IPO last week.

                                At the time of writing, HSI is down -2.5%. Considering the downside momentum, the break of 38.2.% retracement of 21139.26 to 31183.35 at 27346.50 is starting to make outlook bearish. Focus is now on 26782.61 resistance turned support. Sustained break there will suggest that whole rise from 21139.26 has completed at 31183.35 in a corrective three-wave structure. That would at least open up a bearish case for 61.8% retracement at 24976.10 and below.

                                Fed’s Waller: Not much progress on inflation, my job is not done

                                  By
                                  ActionForex.com
                                  -

                                  In a speech, Fed Governor Christopher Waller expressed concern over the persistently high inflation rates and emphasized the need for the continuation of tighter monetary policies.

                                  Waller stated, “Whether you measure inflation using the CPI or the Fed’s preferred measure of personal consumption expenditures, it is still much too high and so my job is not done.”

                                  “I interpret these data as indicating that we haven’t made much progress on our inflation goal, which leaves me at about the same place on the economic outlook that I was at the last FOMC meeting, and on the same path for monetary policy,” he added.

                                  His outlook remains consistent with the stance from the last FOMC meeting, indicating a steadfast commitment to tightening monetary policy. He emphasized that “the labor market continues to be strong and quite tight, and inflation is far above target, so monetary policy needs to be tightened further.”

                                  The Fed Governor also emphasized that, given the current circumstances, “monetary policy will need to remain tight for a substantial period of time, and longer than markets anticipate.”

                                  Full speech of Fed Waller here.

                                  Fed Barkin expects inflation to come down, but not immediately, not suddenly, and not predictably

                                    By
                                    ActionForex.com
                                    -

                                    Richmond Fed President Thomas Barkin said yesterday, “I definitely see signs of softening” in the economy, with evidence “most pronounced in lower income households”.

                                    “I expect inflation to come down but not immediately, not suddenly, and not predictably,” he said. “My expectations are it will be a slower path rather than an immediate path down to 2%.”

                                    Barkin also said he’s open to a 50bps or 75bps hike in July. “I am one of the guys who like the option value of deciding the week of the meeting as opposed to two weeks before the meeting. But I thought Jay’s (Fed Chair Jerome Powell) guidance the last time was very sound,” he added.

                                    Japan’s PMI manufacturing finalized at 48.0, depressed economy and escalating cost pressures

                                      By
                                      ActionForex.com
                                      -

                                      Japan’s PMI Manufacturing was finalized at 48.0 in January, a minimal increase from December’s 47.9, yet still indicative of ongoing challenges in the sector.

                                      According to S&P Global, this figure represents a “modest deterioration” in the health of the manufacturing sector, marking a “sustained downturn” at the start of the year.

                                      Usamah Bhatti of S&P Global Market Intelligence highlights the “depressed economic conditions” both domestically and globally as significant contributors to the sector’s struggles. The data also shows notable declines in both output and new orders, with the latter experiencing a particularly sharp drop.

                                      Manufacturers in Japan are also facing heightened pressures related to costs and supply. The cost burdens have been rising sharply, driven by increased prices of raw materials, labor, and fuel.

                                      Additionally, supplier performance has deteriorated significantly, marked as the worst in three months. Issues such as delivery and logistical delays have been frequently mentioned, with some attributing these challenges to the ongoing disruption in the Red Sea.

                                      Full Japan PMI manufacturing release here.

                                      Japan PMI manufacturing rose to 53.1, export sales rose for the first time since May

                                        By
                                        ActionForex.com
                                        -

                                        Japan PMI manufacturing rose to 53.1 in October, up from 52.5 and beat expectation of 52.6. Markit noted that “growth of key macroeconomic variables (output, new orders and employment) all accelerate”, and “rates of input cost and output price inflation both quicken to multi-year highs.”

                                        Commenting on the Japanese Manufacturing PMI survey data, Joe Hayes, Economist at IHS Markit, which compiles the survey, said:

                                        “Following a rather disappointing slew of PMI data over the third quarter, Japan’s manufacturing sector looks set to start Q4 on a more upbeat note. The latest survey indicated stronger expansions in all the key barometers of macroeconomic health, with output, new order and employment growth quickening since September. Furthermore, export sales rose for the first time since May, despite several respondents highlighting problems arising from global trade tensions.

                                        “That said, next month’s data will be important to assess whether the latest growth rebound is a transitory response to weakness resulting from recent natural disasters.”

                                        Full release here.

                                        Minneapolis Fed Kashkari doubts long term impact of tax cut

                                          By
                                          ActionForex.com
                                          -

                                          Minneapolis Fed President Neel Kashkari expressed his doubts on the long term effect of Trump’s USD 1.5T package of corporate and individual tax cuts. In an event at African Development Center of Minnesota, he said “we know if you cut taxes on the margin that should boost economic growth in the short term.” However, “the question is when that short term is over, does it actually lead to longer-term, higher sustained economic growth? That’s unclear right now.”

                                          He also points to the information he got from businesses. Kashkari said while business leaders “are more optimistic than I had expected,” they are also saying that lower tax rates have not led them to make new investments, at least not yet. He added “I am asking businesses ‘are you actually investing more?’ And so far the answer that I’ve heard is ‘we’re waiting to see.'”

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