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US oil inventories rose 1.3m barrels, WTI dives following broad based risk selloff

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    ActionForex.com
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    US commercial crude oil inventories rose 1.3m barrels in the week ending May 14, below expectation of 1.5m barrels. At 486m barrels, oil inventories are about 1% below the five year average for this time of year. Gasoline inventories dropped -2.0m barrels. Distillate dropped -2.3m barrels. Propane/propylene rose 0.4m barrels. Commercial petroleum inventories dropped -0.2m barrels.

    WTI crude oil drops sharply today, following broad based risk selloff. The current development suggest rejection by 67.83 high as expected. Rise from 57.31, the second leg of the consolidation pattern from 67.83, should have completed at 66.98. Deeper fall would now be seen to 60.62 support first. Break would target 57.31 support and possibly below. Tentatively, we’re looking for support from 38.2% retracement of 33.80 to 67.83 at 54.83 to complete the consolidation pattern.

    German ZEW jumped to 84.4, highest in two decades

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      ActionForex.com
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      Germany ZEW Economic Sentiment jumped to 84.4 in May, up from 70.7, well above expectation of 71.0. That’s the highest level since in two decades since 2000. Germany Current Situation index improved to -40.1, from -48.8, above expectation of -42.6. Eurozone Economic Sentiment rose to 84.0, up from 66.3, above expectation of 71.2. Eurozone Current Situation rose 14.1 pts to -51.4.

      “The slowing down of the third COVID-19 wave has made financial market experts even more optimistic. The ZEW Indicator of Economic Sentiment in the May survey has reached its highest level in more than 20 years. The assessment of the economic situation has also improved noticeably. The experts expect a significant economic upswing in the coming six months. The economic outlook for the euro area and the United States has improved considerably as well,” comments ZEW President Professor Achim Wambach on current expectations.

      Full release here.

      Eurozone CPI finalized at 5.9% yoy in Feb, EU at 6.2% yoy

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        ActionForex.com
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        Eurozone CPI was finalized at 5.9% yoy in February, up from January’s 5.1% yoy. The highest contribution to the annual euro area inflation rate came from energy (+3.12%), followed by services (+1.04%), food, alcohol & tobacco (+0.90%) and non-energy industrial goods (+0.81%).

        EU CPI was finalized at 6.2% yoy, up from January’s 5.6% yoy. The lowest annual rates were registered in Malta, France (both 4.2%), Portugal, Finland and Sweden (all 4.4%). The highest annual rates were recorded in Lithuania (14.0%), Estonia (11.6%) and Czechia (10.0%). Compared with January, annual inflation fell in two Member States and rose in twenty-five.

        Full release here.

        Eurozone PMI manufacturing finalized at record 62.9

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          ActionForex.com
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          Eurozone PMI Manufacturing was finalized at 62.9 in April, up from March’s 62.5, highest since record began in 1997. Markit noted considerable increases in out and new orders. But supply delivery times lengthened at unsurpassed rate, helping to driver rapid price increases.

          Looking at some countries, the Netherlands (67.2), Austria (64.7) and Italy (60.7) were at record highs. Readings for Germany (66.2), France (58.9) and Spain (57.7) were also strong.

          Chris Williamson, Chief Business Economist at IHS Markit said: “The consequence of demand running ahead of supply is higher prices being charged by manufacturers, which are now also rising at the fastest rate ever recorded by the survey. “The big uncertainty is how long these upward price pressures will persist for, and the extent to which these higher charges for goods and services will feed-though to consumers.”

          “Encouragement comes from the sharp increase in employment and investment in machinery and equipment signalled by the survey, which suggests firms are scaling up capacity to meet resurgent demand. This should help bring supply and demand more into line, taking some pressure off prices. But this will inevitably take time.”

          Full release here.

          SNB Jordan warns protectionism is damaging for everyone

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            ActionForex.com
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            SNB chairman Thomas Jordan warned of US protectionism in a radio interview today:-

            • “The risks have not materialised yet, but if international trade doesn’t function well, that is damaging for everyone,”
            • “Safe havens are sought when there are political uncertainties or big changes in the financial markets. This can be triggered by protectionism,”

            Japan PMI Manufacturing dropped to 49.5, further loss of momentum

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              ActionForex.com
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              Japan PMI Manufacturing dropped to 49.5 in June, down from 49.8, and missed expectation of 50.0. Markit noted there was the fastest drop in new orders since June 2016. However, there was resilient output trend as manufacturers reduce backlogs of work to greatest extent since January 2013.

              Commenting on the Japanese Manufacturing PMI survey data, Tim Moore, Associate Director at IHS Markit, which compiles the survey, said:

              “June survey data reveals a further loss of momentum across the manufacturing sector, as signalled by the headline PMI dropping to a three-month low. Softer demand in both domestic and international markets contributed to the sharpest fall in total new orders for three years. A soft patch for automotive demand and subdued client confidence in the wake of US-China trade frictions were often cited by survey respondents.

              “Disappointing sales volumes also led to the largest accumulation of finished goods inventories for over six-and-a-half years. At the same time, backlogs of work were depleted to the greatest extent since January 2013, which will likely act as an additional drag on production volumes in the months ahead.”

              Full release here.

              Fed chair Powell’s press conference live stream

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                US PCE inflation accelerated to 4.2% yoy in Jul, core PCE unchanged at 3.6% yoy

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                  ActionForex.com
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                  US personal income rose 1.1% or USD 225.9B in July, well above expectation of 0.2%. Spending rose 0.3% or USD 42.2B, slightly below expectation of 0.4%.

                  Headline PCE accelerated to 4.2% yoy, up from 4.0% yoy, above expectation of 3.5% yoy. Core PCE was unchanged at 3.6% yoy, matched expectations. Energy increased 23.6% yoy while food prices rose 2.4% yoy.

                  Full release here.

                  US consumer confidence dropped to 96.1, not foreseeing strength in economy next year

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                    ActionForex.com
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                    US Conference Board Consumer Confidence dropped to 96.1 in November, down from 101.4, missed expectation of 98.3. Present Situation Index dropped from 106.2 to 105.9. Expectations Index dropped notably from 98.2 to 89.5.

                    “Consumer confidence declined in November, after remaining virtually flat in October,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “Consumers’ assessment of present-day conditions held steady, though consumers noted a moderation in business conditions, suggesting growth has slowed in Q4. Heading into 2021, consumers do not foresee the economy, nor the labor market, gaining strength. In addition, the resurgence of COVID-19 is further increasing uncertainty and exacerbating concerns about the outlook.”

                    Full release here.

                    UK PMI manufacturing finalized at 47.8, business optimism slumped to a series-record low

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                      ActionForex.com
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                      UK PMI Manufacturing was finalized at 47.8 in March, down from February’s 48.0. Business optimism slumped to series-record low and supply chain disruption intensified.

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

                      “The latest survey numbers underscore how the global outbreak of COVID-19 is causing huge disruptions to production, demand and supply chains at UK manufacturers. Output and new orders fell at the fastest rates since mid- 2012, while supplier delivery times lengthened to the greatest extent in the 28-year survey history as shortages grew more widespread. The resulting job losses took the rate of decline in employment to its highest since July 2009.

                      “The effects were felt across most of manufacturing, with output falling sharply in all major sectors except food production and pharmaceuticals. The transport sector, which includes already-beleaguered car-makers, suffered the steepest downturn.

                      “With restrictions aimed at slowing the spread of the virus expected to stay in place for some time, expectations of further economic disruption and uncertainty meant business optimism slumped to a series-record low. However, on a slightly more positive note, manufacturers still expect to see output higher in one year’s time.”

                      Full release here.

                      BoE Vlieghe: Risk to monetary policy skew towards additional stimulus

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                        ActionForex.com
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                        BoE External MPC member Gertjan Vlieghe said in speech, even though “policy rates and long-term interest rates are very low… investment is weak, vacancies are low”. Risks to economic outlook are “skewed towards a longer period of labour market slack with weak inflationary pressure”.

                        Risks to monetary policy stance are therefore “skewed towards additional monetary stimulus.” Addition QE remain an “available policy tool”. But it’s “less potent now than in March, at the height of market disruption and uncertainty.”

                        Vlieghe said the MPC has also been discussing of the use of negative interest rates. “Growing empirical literature finds that the effect has generally been positive,” he added. “Negative rates have not been counterproductive to the aims of monetary policy. The question for the MPC is “whether there is any reason to think that the UK experience might be different”.

                        But his own view is “risk that negative rates end up being counterproductive to the aims of monetary policy is low.” Nevertheless, BoE is “not at a point yet when it can reach a conclusion on this issue.”

                        Full speech here.

                        Eurozone Sentix dropped to -16.8, cold shower after central bank easings

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                          ActionForex.com
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                          Eurozone Sentix Investor confidence dropped to -16.8, down from -11.1 and missed expectation of -13.0. That’s the lowest level since April 2013. Current Situation dropped from -9.5 to -15.5, 5th decline in a row, lowest since December 2014. Expectation index dropped from -12.8 to -18.0.

                          Sentix noted “there is no positive reaction to the central banks’ aid measures, and economic assessments are broadly negative in October”. The data have the effect of a “cold shower: there is no sign of a trend reversal, all subcomponents are in a descent.” “Particularly worrying is the dynamics of the deterioration of the situation, which signals a downward thrust of -6 points. Fears of recession are and remain immanent. The central bankers have not succeeded in breaking the downward spiral with the measures taken so far.”

                          Germany’s Overall Index dropped from -12.8 to -19.4, lowest since July 2009. German Current Situation dropped from -10.5 to -18.0, lowest since November 2009. German Expectations dropped from -15.0 to -20.8.

                          US Overall Index dropped from 5.5 to -4.1, turned negative and lowest since August 2012. US Current Situation dropped from 25.8 to 13.0, lowest since March 2013. US Expectations dropped from 013.0 to -19.8, lowest since January 2019.

                          Full release here.

                          Japan wholesale prices rose 6.3% yoy in Sep, highest in 13 years

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                            ActionForex.com
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                            Japan corporate goods price index, a PPI equivalent, rose 6.3% yoy in September, above expectation of 5.9% yoy. That’s also the highest level in 13 years. Yen based wholesale import prices rose a record 31.3% yoy. Petroleum and coal costs rose 32.4% yoy. Wood products spiked 48.3% yoy.

                            Some analysts noted that the surge in wholesale prices would be absorbed mainly by businesses, with little impact on consumers. But according to a BoJ survey published on Monday, 68.2% of Japanese households are expecting prices to rise a year from now, up from 66.8% three months ago. Median projection of inflation a year from now rose to 3.0%, up from June’s 2.0%.

                            Fed’s Waller seeks additional months to assess January CPI as speed bump or pothole

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                              ActionForex.com
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                              Fed Governor Christopher Waller advocated for Fed to “wait a little longer,” suggesting that “at least another couple more months” of economic data would be crucial before commencing any policy easing.

                              In a speech overnight, Waller expressed concerns regarding the recent high CPI inflation reading, describing it as potentially “a bump in the road” or a more serious indication that the significant progress made in controlling inflation over the past year could be “stalling.”

                              This uncertainty solidifies his viewpoint that a patient approach to policy adjustments is warranted, allowing more time to assess whether January data represents “a speed bump or a pothole”.

                              While Waller anticipates that it may become appropriate to begin easing monetary policy sometime within the year, he clarified that the timing and extent of policy adjustments would heavily rely on incoming economic data.

                              Full speech of Fed’s Waller here.

                              Australia’s GDP up 0.2% qoq in Q4, continuing consistent slowdown

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                                ActionForex.com
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                                Australia GDP grew 0.2% qoq in Q4, slightly below expectation of 0.3% qoq. On an annual basis, the economy expanded by 1.5% yoy.

                                The data indicates deceleration in economic momentum as the year progressed, with Katherine Keenan, the head of national accounts at ABS, noting a consistent slowdown across each quarter of 2023.

                                The main pillars supporting GDP growth were identified as government spending and private business investment. Government final consumption expenditure saw 0.6% qoq increase , while private business investment grew 0.7% qoq.

                                The significant contribution of net trade, which added 0.6 percentage points to the overall GDP growth, was largely attributed to a -3.4% qoq decrease in import.

                                Full Australia GDP release here.

                                Ireland reiterated no renegotiation stance on backstop and Brexit agreement

                                  By
                                  ActionForex.com
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                                  UK Prime Minister Boris Johnson and Irish Prime Minister Leo Varadkar are scheduled to meet in early September. But ahead of that, Varadkar’s spokesman clearly indicated there is no prospect of renegotiating the Irish backstop in Brexit withdrawal agreement. The spokesman noted that the discussions “would give both sides an opportunity to gain a better understanding of their respective positions. As has repeatedly been made clear, the withdrawal agreement and the backstop are not up for negotiation.”

                                  In the other hand, Johnson’s chief EU adviser, David Frost, is expected to visit Brussels again in the coming days. Previously, it’s reported that Frost has told EU of the new, central scenario of no-deal Brexit of Johnson. But that was denied by Downing Street. Johnson will also meet the European commission president, Jean-Claude Juncker, for the first time at a G7 meeting in Biarritz at the end of this month.

                                  Fed Harker: I’d like to get above 3%

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                                    ActionForex.com
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                                    Philadelphia Fed President Patrick Harker said interest rates should go above 3% by the end of the year. Then Fed would assess how much more tightening is needed to bring inflation down.

                                    “We don’t have to overreact in terms of the fed funds rate,” Harker said during a conference held by the regional Federal Reserve bank. “We need to get above neutral, again I’d like to get above three, but I don’t think you have to accelerate rapidly beyond that at this point until we get a better understanding of what exactly the quantitative tightening is doing.”

                                    US PCE core inflation slows to 2.6% as expected in May

                                      By
                                      ActionForex.com
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                                      In May, US PCE price index was flat mom, matched expectations. PCE core price index (excluding food and energy) rose 0.1% mom. Both matched expectations. Prices for goods fell -0.4% mom while prices for services rose 0.2% mom. Food prices rose 0.1% mom while energy prices fell -2.1% mom.

                                      From the same month one year ago, headline PCE price index slowed from 2.7% yoy to 2.6% yoy. PCE core price index slowed from 2.8% yoy to 2.6% yoy. Both matched expectations. Goods prices were down -0.1% yoy while services prices were up 3.9% yoy. Food prices were up 1.2% mom and energy prices were up 4.8% yoy.

                                      Also, personal income rose 0.5% mom or USD 114.1B, above expectation of 0.4% mom. Personal spending rose 0.2% mom or USD 47.8B, below expectation of 0.3% mom.

                                      Full US Personal Income and Outlays release here.

                                      Italy PM Conte: European Commission has no ground to question our forecasts, we’re not a problem to EU

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                                        ActionForex.com
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                                        Italian Prime Minister Giuseppe Conte issued a formal statement in response to European Commission’s new forecasts published today.

                                        Conte criticized that the 2019 growth forecasts for Italy “underestimate the positive impact of our economic maneuver and our structural reforms.” He emphasized that with the government’s estimate, growth will increase while debt and deficit will decrease. And there is “no grounds for questioning the validity and sustainability of our forecasts.”

                                        He also said “Italy is not at all a problem for the Eurozone and European Union, but rather will contribute to the growth of the whole continent.” And, the structural reforms will “give greater impetus to the growth compared to the EU Commission.”

                                        Conte’s full statement in Italian here.

                                        As a reminder, in EU’s warning letter dated October 10, European commission has already criticized that “the macroeconomic forecast underlying Italy’s budgetary plans has not been endorsed by the Parliamentary Budget Office (PBO), Italy’s independent fiscal monitoring institution. At first sight, this appears not to respect the explicit provision of Regulation 473/2013 (Article 4(4)) calling for the macroeconomic forecast to be produced or endorsed by an independent body.”

                                        BoJ Kuroda: Chinese economy to remain in doldrums in first half

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                                          ActionForex.com
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                                          BoJ Governor Haruhiko Kuroda told the parliament that China’s economy “slowed quite significantly in the latter half of last year”. And he predicts that it may “remain in the doldrums in the first half of this year.” Nevertheless, Kuroda expects Chinese even economy to “pick up thereafter, as authorities have taken fiscal and monetary stimulative action.”

                                          Domestically, Kuroda expected that the net burden on households from this year’s scheduled sales tax hike to be smaller than previous hike in 2014. And he added that BOJ will be watching the impact of the sales tax hike on the economy. The impact could change depending on consumer sentiment, job and income conditions at that time.

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