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US initial jobless claims dropped to 212k, below expectation of 216k

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    ActionForex.com
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    US initial jobless claims dropped -6k to 212k in the week ending October 19, below expectation of 216k. Four-week moving average of initial claims dropped -0.75k to 215k. Continuing claims dropped -1k to 1.682m in the week ending October 12. Four-week moving average of continuing claims rose 6.5k to 1.677m.

    Full release here.

    Bundesbank Nagel: Further significant rate steps after Mar, steeper balance sheet reduction in Jul

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      ActionForex.com
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      Bundesbank President Joachim Nagel said in a speech today, “the interest rate step announced (by ECB) for March will not be the last.”

      “Further significant interest rate steps might even be necessary afterwards, too,” he added.

      Regarding the timing of a rate cut, Nagel said, the impact of tightening has to be reflected in underlying inflation. Until that is the case, interest rate cuts are a non-starter.”

      Nagel also said with the current pace of balance sheet reduction at EUR 15B a month, it will take too long to make a significant reduction. “I am therefore in favour of taking a steeper path of reduction starting in July in light of experience gained up to that point,” he said.

      Regarding the economy, “although there could be a gradual pick-up in the second quarter, there is still no sign of any major improvement for now,” Nagel said. “Our experts are not expecting there to be a visible economic recovery until the second half of the year.”

      Downside risks for NFP, yet market impact may be fleeting

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        ActionForex.com
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        Today, the financial markets are keenly focused on US Non-Farm Payrolls data, which is expected to show growth of 170k jobs in August. While unemployment rate is anticipated to remain steady at 3.50%, average hourly earnings are projected to grow by 0.3% mom. However, related data paint a murkier picture, suggesting that risks could be skewed to the downside for the NFP report. Yet, it’s unsure if the impact on the markets would last long.

        Earlier this week, ADP private job growth came in at 177k, slightly missing expectations and dampening the overall employment outlook. Moreover, JOLTS data showed that job openings have plummeted to their lowest level since March 2021, and consumer confidence took a significant hit, dropping from 114.0 to 106.1. The employment components of ISM Manufacturing and Non-Manufacturing reports are not yet available, leaving a gap in the data to fully assess labor market conditions.

        Traders have been notably indecisive recently. While it is almost certain that Fed will pause its tightening this month, the likelihood of a rate hike by year’s end seems to be teetering around 50% mark. Market participants are unlikely to get more clarity until the Fed releases its new economic projections and dot plot on September 20, alongside the rate decision.

        As for Dollar Index, it’s clearly losing upside momentum as seen in D MACD. While another rise cannot be ruled out as long as 102.84 support holds, strong resistance is likely at 38.2% retracement of 144.77 to 99.57 at 105.37 to limit upside. Break of 102.84 will argue that the corrective rally from 99.57 has completed earlier then expected.

        Eurozone’s PPI at 0.5% mom, -12.4% yoy in Sep

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          ActionForex.com
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          Eurozone PPI came in at 0.5% mom, -12.4% yoy in September, versus expectation of 0.3% mom, -12.5% yoy. For the month, Industrial producer prices increased by 2.2% in the energy sector, while prices remained stable for capital goods and for durable consumer goods, and prices decreased by 0.2% for both intermediate goods and non-durable consumer goods. Prices in total industry excluding energy decreased by 0.1%.

          EU PPI came in at -0.6% mom, -11.2% yoy. The biggest monthly increases in industrial producer prices were observed in Luxembourg (+28.5%), Romania (+2.6%) and Bulgaria (+2.1%), while the largest decreases were recorded in Finland (-0.9%), Cyprus and Poland (both -0.3%) and Germany (-0.2%).

          Full Eurozone PPI release here.

          IMF lowered China growth forecast on trade tensions, but no additional policy stimulus needed yet

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            ActionForex.com
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            IMF lowered growth forecast for China in 2019 to 6.2% (down from 6.3%). For 2020, growth forecast was cut to 6.0% (down from 6.1%). The IMF’s First Deputy Managing Director, David Lipton, noted that the economy stabilized in early 2019 reflecting a wide range of policy support. However, “renewed trade tensions” is a “significant course of uncertainty” that weighs on sentiment.

            However, IMF noted that “policy stimulus announced so far is sufficient to stabilize growth in 2019/20 despite the recent US tariff hike. ” And “no additional policy easing is needed” for the moment, provided there are no further increases in tariffs or a significant slowdown in growth. However, if trade tensions escalate further, “some additional policy easing would be warranted.

            Full statement here.

            Germany ZEW dropped to 63.3, but current situation soared to 21.9

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              ActionForex.com
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              Germany ZEW Economic Sentiment tumbled to 63.3 in July, down from 79.8, below expectation of 75.4. Though, Current Situation index jumped to 21.9, up from -9.1, above expectation of 5.0. Eurozone ZEW Economic Sentiment also dropped to 61.2, down from 81.3, below expectation of 84.4. Eurozone Current Situation rose 30.4 pts to 6.0.

              “The economic development continues to normalise. In the meantime, the situation indicator for Germany has clearly overcome the coronavirus-related decline. Although the ZEW Indicator of Economic Sentiment has once again fallen significantly, it is still at a very high level. The financial market experts therefore expect the overall economic situation to be extraordinarily positive in the coming six months,” comments ZEW President Professor Achim Wambach on current expectations.

              Full release here.

              New Zealand employment dropped -0.2% qoq in Q1, NZD dips

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                ActionForex.com
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                New Zealand Dollar drops notably today after weaker than expected job data. Employment contracted -0.2% qoq in Q1, below expectation of 0.5% qoq growth. Unemployment rate dropped to 4.2%, down from 4.3% and matched expectations. But labor force participation rate dropped -0.5% to 70.4%. Labor cost index rose 0.3% qoq, below expectation of 0.5% qoq.

                Today’s data shouldn’t change RBNZ’s view that New Zealand is current staying at maximum sustainable employment. The reduced momentum in job growth and sluggish wage would provide little support to the already low inflation reading. Weak CPI is a key factor around the case of RBNZ rate cut in near term, probably in May, but the meeting remains live.

                Full release here.

                While NZD/USD dipped notably today, it’s staying in range above 0.6580 temporary low. More sideway trading remains in favor. But upside should be limited by 0.6718 resistance. Break of 0.6580 will target 0.6551 support next.

                UK Q3 GDP growth fastest since 2016, but September weakness clouds

                  By
                  ActionForex.com
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                  UK Q3 GDP growth accelerated to 0.6% qoq, matched market expectations. That’s also the fastest rate since Q4 2016.

                  Head of National Accounts Rob Kent-Smith noted that “The economy saw a strong summer, although longer-term economic growth remained subdued. There are some signs of weakness in September with slowing retail sales and a fall-back in domestic car purchases. However, car manufacture for export grew across the quarter, boosting factory output. Meanwhile, imports of cars dropped substantially helping to improve Britain’s trade balance.”

                  However, it should be noted that the rolling three month growth rate slowed from 0.7% in both May-Jul and Jun-Aug periods. This is in line with the above comment that there were some weakness in September. Indeed, monthly GDP growth in September was at 0.0% mom, missed expectation of 0.1% mom.

                  Full GDP release here.

                  Also released from UK

                  • Trade deficit narrowed to GBP -9.7B in September versus expectation of GBP -11.4B.
                  • Industrial production rose 0.0% mom, 0.0% yoy in September versus expectation of 0.1% mom, 0.5% yoy.
                  • Manufacturing production rose 0.2% mom, 0.5% yoy versus expectation of 0.1% mom 0.4% yoy.
                  • Construction output rose 1.7% mom in September versus expectation of 0.2% mom.

                  Overall, Sterling turns a bit weaker after the batch of data release.

                  Australia Westpac leading index dropped to 0.58 in May

                    By
                    ActionForex.com
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                    Australia Westpac leading index dropped from 1.09% to 0.58% in May, still indicating above trend growth for 2022. Westpac said, “the components of the Index are indicating an important emerging theme around Australia’s growth prospects – a significant shock to consumer confidence.”

                    On RBA policy, Westpac expects the central bank to hike a further 50bps in July. It assessed that at 1.35% after the hike, interest rate is still below the neutral setting. Given the tight labor market and rising inflation, further monetary tightening can be expected through 2022.

                    Full release here.

                    Australia retail sales rose 1.4% in Oct, Victoria led on reopening

                      By
                      ActionForex.com
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                      Australia retail sales rose 1.4% mom to AUD 29.6B in October, above expectation of 0.5% mom. Comparing to October 2019, sales rose 7.1% yoy.

                      Victoria (5.1%) led state and territory rises, and there were also rises for New South Wales (0.7%), Western Australia (1.0 %), and South Australia (0.6%). Queensland (-0.5%), Tasmania (-1.4%), the Northern Territory (-0.6%) fell, while the Australian Capital Territory (-0.1%) was relatively unchanged.

                      Full release here.

                      EUR/CHF upside breakout, a look at GBP/CHF and CHF/JPY too

                        By
                        ActionForex.com
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                        EUR/CHF’s rise from 1.0503 resumes by breaking through 1.1096 resistance, and hits as high as 1.1118 so far. Further rally should now be seen to 100% projection of 1.0503 to 1.0915 from 1.0737 at 1.1149. Sustained break there will indicate upside acceleration and carries larger bullish implications. Next target will be 161.8% projection at 1.1404.

                        Now, a focus will be on GBP/CHF to gauge the general selling pressure on Swiss Franc. Break of 1.2893 will resume the larger rise from 1.1102, Next target will be 1.3310 resistance, and probably further to 161.8% projection of 1.1102 to 1.2259 from 1.1683 at 1.3555.

                        CHF/JPY is another cross to look at. Firm break of 116.20 support will argue that whole rise from 106.71has completed at 118.84. Deeper fall would be seen back to 113.73 support first.

                        German Gfk consumer sentiment dropped to -8.1, expectations of easing inflation shattered

                          By
                          ActionForex.com
                          -

                          Germany Gfk consumer sentiment for March dropped from -6.7 to -8.1, below expectation of -6.2. In February, economic expectations rose from 22.8 to 24.1. Income expectations dropped from 16.9 to 3.9, lowest since January 2021. Propensity to buy dropped from 5.2 to 1.4.

                          “Above all, expectations of a significant easing in price trends at the beginning of the year have been shattered for the time being, as inflation rates continue to hover at a high level,” explains Rolf Bürkl, GfK consumer expert.

                          “Nevertheless, the outlook for the coming months is quite positive: Only recently it was decided to lift profound pandemic restrictions. This gives cause for hope that consumer spending will also return as a result. If this were to be supported by moderate price inflation, consumer sentiment could finally recover in the long term as well.”

                          Full release here.

                          Australia NAB business condition hit record high, but RBA could delay rate hike to 2019

                            By
                            ActionForex.com
                            -

                            Australia NAB business condition rebounded notably from 15 to 21 in April. That’s also a rerecord high since the survey started in March 1997. Business confidence also rebounded from 8 to 10.

                            Quote from the release by Alan Oster, NAB Group Chief Economist:

                            • “The record high in the business conditions index in the April Survey simply reinforces what has been evident since the middle of last year, that business activity in Australia is robust.”
                            • “Conditions increased in all industries except for manufacturing and retail and, in trend terms, are strongest in mining.
                            • “Of some concern is that retail conditions turned negative for the first time this year”
                            • “On a more positive note, concerns that retail weakness might be spreading to retail & personal services have been alleviated by a significant improvement in conditions in that industry over the last two months, particularly in April.”
                            • “The improvement in the employment index was particularly welcome in the light of the ABS reporting a slowdown in jobs growth in recent months. Historically, the NAB Survey does a good job at looking through short-term cycles in the ABS data and so we think the labour market continues to improve.”
                            • “While forward orders fell, on a trend basis they increased and point to a positive outlook for the non-mining economy, including employment and investment growth.”
                            • “The Survey results for March are consistent with our outlook for the Australian economy. The strength in business conditions and leading indicators suggest economic growth will strengthen and that over-time we should see strong jobs growth and falls in the unemployment rate. Falling unemployment should eventually translate into upwards pressure on private sector wages, at which point the RBA will be in a position to start increasing the current emergency low policy rate. Our current call is for the first move by the RBA to be late this year, but as hard evidence of a firming in wages growth is yet to appear in the data, and unemployment for the moment stuck at around 5.5%, the risk is that any action by the RBA will be delayed into 2019”

                            Full release here

                            US initial jobless claims rose to 239k, continuing claims dropped to 1.56m

                              By
                              ActionForex.com
                              -

                              US initial jobless claims rose 23k to 230k in the week ending January 8, above expectation of 213k. Four-week moving average rose 6k to 211k.

                              Continuing claims dropped -194k to 1559k in the week ending January 1, lowest since June 2 1973. Four-week moving averages of continuing claims dropped -77k to 1722k, lowest since March 7, 2020.

                              Full release here.

                              EU warned auto tariffs could cost USD13-14B in US GDP

                                By
                                ActionForex.com
                                -

                                According to a report by POLITICO, European Commission sent a 11-page document to the US Commerce Department’s Bureau of Industry and Security on Friday. It warned that tariffs on European cars will be “harmful first and foremost for the US economy.” And, the impact of such tariffs on US GDP would be “in the order of 13-14 billion USD.” Additionally, the “current account balance of the US would be not affected positively.”

                                The document also pointed out that European carmakers contributed to production of 2.9m cars in 2017, around 26% of US production. And, production of EU-owned American car companies amounts to 16% of national production, or 1.8m vehicles. In addition to that, “EU companies based in the US export a significant part of their production, thus contributing substantially to improving the US trade balance, which is a priority of the administration.”

                                Also, “around 60 percent of automobiles produced in the US by companies with exclusive EU ownership are exported to third countries, including the EU. Measures harming these companies would be self-defeating and would weaken the US economy.”

                                Japan continues trade deficit streak for the 16th month

                                  By
                                  ActionForex.com
                                  -

                                  Japan export rose 20.0% yoy to JPY 8838B in November, a record high, led by cars autos and mining machinery shipment to the US. Imports rose 30.3% yoy to JPY 10865B, also a record high, as led by imports of crude oil, coal and LNG.

                                  Trade deficit came in at JPY -2.03T. That the 16th straight month of trade deficit, and the fourth month in a row at the JPY 2T level.

                                  In seasonally adjusted term, exports dropped -1.4% mom to JPY 8787B. Imports dropped -5.3%mom to JPY 10520B. Trade deficit narrowed to JPY -1.73T, versus expectation of JPY -1.24T.

                                  China said it won’t devaluate Yuan to stimulate exports, but how about intervention to halt Yuan’s fall?

                                    By
                                    ActionForex.com
                                    -

                                    China Foreign Ministry spokesman Geng Shuang said in a regular press briefing today that “China does not intend to stimulate exports through the currency competitive devaluation” and added that’s China’s consistent position. He went further to emphasize that the “RMB exchange rate is mainly determined by the market supply and demand.” And for now, “China’s economic fundamentals continue to improve, providing strong support for the RMB exchange rate to remain basically stable.”

                                    However, Geng didn’t directly say China has not intervene in the markets. It’s suspected that a state own-bank has stepped in last Friday selling US Dollar to halt the decline of the yuan when USD/CNY (on shore yuan) breached the government’s red line of 6.8. US Treasury Steven Mnuchin said last Friday that the US will monitor if China has manipulate the Yuan exchange rate. Mnuchin has to deliver his promise and come out to warn China for not intervening in the markets again, and just let Yuan falls against Dollar, if he didn’t lie.

                                    ECB Kazaks: There are some decimals upside in inflation outlook

                                      By
                                      ActionForex.com
                                      -

                                      ECB Governing Council member Martins Kazaks said, “if Covid does not surprise on the negative side, there is some upside for the inflation outlook over the medium term.” But he added, “I am talking about decimals here.”

                                      “There is perhaps some upside for those numbers to be revised up in the following forecasting rounds,” Kazaks said. “I agree with the current outlook, but I would say that the balance of risks for inflation are somewhat on the upside.”

                                      “We hear some anecdotal evidence that there could be some wage pressures down the road, but we have not seen that yet in the data,” he said. “There is no reason to expect that inflation would be permanently very hot. If at some point inflation will be significantly higher than our strategy and monetary-policy mandate, then of course we will know how to react.”

                                      Japan PMI manufacturing finalized at 41.9, suggests output dropped -15% annualized

                                        By
                                        ActionForex.com
                                        -

                                        Japan PMI Manufacturing was finalized at 41.9 in April, down from March’s 44.8, hitting an eleven-year low. Markit said plummeting demand led to further sharp production cutbacks. Supply chain disruptions intensified as coronavirus pandemic continued. Manufacturing employment fell at strongest rate since mid-2009.

                                        Joe Hayes, Economist at IHS Markit, said: “Based on comparisons with official statistics, the latest survey data suggest manufacturing output declined by approximately 15% on an annual basis in April… The latest figures show that until we’re past the peak of the COVID-19 pandemic and export demand can begin its slow recovery, a sizeable chunk of Japan’s manufacturing economy is set to remain effectively shut down.”

                                        Full release here.

                                        Fed Evans: Policy will stay accommodative after interest rate liftoff

                                          By
                                          ActionForex.com
                                          -

                                          Chicago Fed President Charles Evans said there is no “strict numerical formula” to determine the time of “liftoff” of interest rate, and “how long to keep policy accommodative after liftoff”. He added that the work on inflation is “unlikely to be complete when we first begin to raise rates”. That means, Fed will “maintain accommodative monetary conditions until our inflation averaging goal is met”. Even though,

                                          Evans also said Fed has the “capacity to do more asset purchases” but he currently doesn’t see the need. At some point, Fed will need to give explicit guidance on future pace or type of asset purchases. Nevertheless, “that’s not where we are, and it’s probably going to be the Spring until I have a better sense”

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