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US retail sales rose 0.7% mom in Jul, ex-auto sales up 1.0% mom

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    ActionForex.com
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    US retail sales rose 0.7% mom to USD 696.4B in July, above expectation of 0.4% mom. Ex-auto sales rose 1.0% mom to USD 562.8B, above expectation of 0.4% mom. Ex-gasoline sales rose 0.8% mom to USD 644.0B. Ex-auto, gasoline sales rose 1.0% mom to USD 510.5B.

    Total sales for May 2023 through July 2023 period were up 2.3% from the same period a year ago.

    Full US retail sales release here.

    Canada CPI rose to 3.3% yoy in Jul, up 0.6% mom

      By
      ActionForex.com
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      Canadian inflation, measured by CPI, accelerated in July, posting a 0.6% mom increase, doubling expected rise of 0.3% mom. This upward tick, a substantial leap from June’s 0.1% gain, was significantly influenced by higher travel tour prices.

      On a year-on-year basis, July’s CPI leapt from 2.8% yoy to 3.3% yoy , outpacing anticipated 3.0% yoy . A notable factor behind the rapid rise in the headline consumer inflation is base-year effect in gasoline prices. The previous year’s steep decline in gasoline prices for July 2022, which saw a -9.2% drop, has ceased to affect the current 12-month trajectory.

      Excluding gasoline, CPI rose 4.1% yoy, edging up from 4.0% yoy in June. Excluding energy, CPI decelerated to 4.2% yoy after 4.4% yoy increase in June.

      CPI median slowed from 3.9% yoy to 3.7% yoy, matched expectations. CPI trimmed down from 3.7% yoy to 3.6% yoy, above expectation of 3.5% yoy. CPI common also fell from 5.1% yoy to 4.8% yoy, below expectation of 5.0% yoy.


      Full Canada CPI release here.

      German ZEW rose to -12.3, but current situation dived

        By
        ActionForex.com
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        August’s ZEW Economic Sentiment Index for Germany showed an unexpected improvement, moving from -14.7 to -12.3, beating forecasted -15. However, the Current Situation index took a hit, declining sharply from -59.5 to -71.3—its lowest since October 2022 and below the predicted -63.

        Conversely, Eurozone’s ZEW Economic Sentiment took an optimistic turn, rising from -12.2 to -5.5, surpassing expected -12. Current Situation Index in the Eurozone also advanced, marking a rise of 2.3 points to -42.0.

        ZEW President Professor Achim Wambach commented on the mixed results, noting, “The ZEW Indicator of Economic Sentiment remains in negative territory” but added that there’s an anticipated “slight uptick in the economic situation by year-end.”

        However, he cautioned against over-optimism due to Germany’s worsening current economic assessment. Highlighting external influences, Wambach mentioned that the prevailing sentiment suggests no further “interest rate hikes in the eurozone and the United States.” He also pointed out a “significant increase” in US economic outlook, which positively impacts Germany’s prospects.

        Full German ZEW release here.

        UK payrolled employment rose 97k in Jul, unemployment rate at 4.2% in Jun

          By
          ActionForex.com
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          UK payrolled employment grew 97k, or 0.3% mom in July. June’s figure was revised from -9k decrease to 47k increase. Median monthly pay rose 7.8% yoy compare with July 2022, down from prior month’s 9.7% yoy. Claimant count rose 29.0k, above expectation of 19.6k.

          In the three months to June, unemployment rate rose to 4.2%, above expectation of 4.0%. That’s 0.3% higher than previous quarter. Employment rate rose 0.1% to 75.7%. Inactivity rate fell -0.1% to 20.9%. Average earnings including bonus rose 8.2% 3moy, above expectation of 7.3%. Average earnings excluding bonus rose 7.8% 3moy, above expectation of 7.4%.

          Full UK employment release here.

          RBA sees credible path back to inflation target with interest rate at present level

            By
            ActionForex.com
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            In the minutes from RBA’s August 1 meeting, board members weighed the decision between raising cash rate by 25bps or maintaining its unchanged.

            The board’s inclination to hold the rate steady was rooted in their belief that prior tightening measures were “working as intended.” Despite the full effects not yet being evident in the data, there were important signs, as “consumption had already slowed significantly”, “labour market might be at a turning point”, and “inflation was heading in the right direction”.

            The board observed a “credible path back to the inflation target with the cash rate staying at its present level.” This assessment seemed to be “broadly in line with the staff’s central forecasts.” Solidifying their position, members collectively agreed that the reasons to “leave the cash rate unchanged at this meeting was the stronger one.”

            Meanwhile, they also acknowledged that “further tightening of monetary policy might be required” to consistently meet inflation goals. Such decisions will be driven by data trends and ongoing risk assessments.

            Full RBA minutes here.

            China: Unexpected rate cut by PBOC aligns with disheartening July economic data

              By
              ActionForex.com
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              In an unexpected decision that took markets by surprise, PBoC announced a cut in key policy rates for the second time in a span of three months, just an hour before the release of July economic data that broadly fell short of market expectations.

              PBOC lowered the rate on its one-year medium-term lending facility loans – valued at CNY 401B – to financial institutions by 15bps to 2.50% from the previous 2.65%. This significant move indicates the possibility of a reduction in China’s benchmark loan prime rate in the upcoming week.

              A closer look at the economic metrics for July reveals concerns. Industrial production grew at 3.7% yoy, underperforming against the anticipated 4.3% yoy and marking a slowdown from the 4.4% yoy of the previous month. Similarly, retail sales saw increase of just 2.5% yoy, lagging behind projected 4.2% yoy and decelerating from 3.1% yoy. This rate marks the slowest growth pace in sales since the decline observed in December 2022. Furthermore, fixed asset investment growth, year-to-date year-on-year, was recorded at 3.4%, falling short of 3.8% expectation.

              Urban unemployment rate witnessed a slight increase, moving from 5.2% to 5.3%. Notably, NBS did not provide the usual age breakdown of unemployment figures. The spokesperson mentioned the suspension of youth unemployment data attributing it to societal and economic changes, and highlighted an ongoing reassessment of its data collection methodology. It’s worth noting that in June, the youth unemployment rate (for ages 16-24) reached a record high of 21.3%

              NBS also said in a statement, “We must intensify the role of macro policies in regulating the economy and make solid efforts to expand domestic demand, shore up confidence and prevent risks.”

              Japan’s Q2 GDP grew 6% annualized, external demand drives growth

                By
                ActionForex.com
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                Japan witnessed a stellar performance in its Q2 GDP, registering a growth of 1.5% Qoq, a figure that comfortably surpassed the anticipated 0.8% qoq rise. In annualized terms, growth clocked in at 6.0%, notably higher than expected 3.1%. This rapid expansion marked the quickest pace since the October-December period of 2020 and signifies the third consecutive quarterly growth.

                A significant driver of this growth was a 3.2% surge in exports during the quarter. The rejuvenation in external demand, particularly net exports, added a substantial 1.8% to the quarter’s growth. The auto exports sector reaped benefits from the alleviation of supply disruptions, while a consistent uptick in international tourists bolstered the economy. On the flip side, imports dipped by -4.3% as energy and COVID vaccine imports declined.

                A closer look at the domestic sector unveils a few challenges. Private consumption, a sector that constitutes over half of the economy, contracted by -0.5% on a quarterly basis. This resulted in domestic demand cutting -0.3% from growth. The mounting prices of regular commodities affected consumer spending negatively. Furthermore, sales of durable goods took a hit, which overshadowed the robust demand for services.

                In terms of capital investment, the growth remained tepid, registering just a 0.03% increase. However, it’s noteworthy that this was buoyed by spending related to software, marking its second successive quarter of rise.

                Chinese Yuan nosedives to year low amid deepening property sector concerns

                  By
                  ActionForex.com
                  -

                  The Chinese Yuan nosedived to its lowest mark this year, echoing growing anxieties that spread from the real estate domain to the financial sector. Fueling this downturn, JPMorgan Chase & Co. rang alarm bells today, highlighting heightened liquidity strains for debt-ridden developers and their non-bank stakeholders. This follows a notable hiccup by a subsidiary of Zhongzhi Enterprise Group Co., which stands among China’s premier private wealth management entities. The said unit stumbled in ensuring timely payments across multiple products.

                  These defaults in the trust sector could potentially trigger a detrimental cycle impacting the onshore debt of privately-owned enterprise developers. The escalating apprehensions regarding potential developer defaults have soured the investment climate. Consequently, trust entities may either find it challenging or may express reluctance in rolling over existing products tied to real estate.

                  USD/CNH’s break of 7.2853 resistance confirms resumption of whole rally from 6.6971 (Jan low). Purely technically speaking, current rise should target 7.3745 resistance first (2022 high), and then 61.8% projection of 6.8100 to 7.2853 from 7.1154 at 7.4091. However, market watchers are most intrigued by a looming question: When will China’s authoritative bodies intervene to arrest the Yuan’s descent?

                  Japan in Spotlight: Q2 GDP, Nikkei, and Yen dynamics garner attention

                    By
                    ActionForex.com
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                    Investor attention is set to pivot towards Japan’s Q2 GDP data in the upcoming Asian session. Preliminary forecasts project a qoq growth of 0.8%, translating to an annualized expansion of 3.1%. In today’s trading, Nikkei took a significant hit, sliding by -1.27% or -413.7 points, largely influenced by bearish sentiments rooted in China’s property sector. Meanwhile, Yen showed signs of wavering post an initial surge, setting the stage for a keen watch on its reaction, as well as Nikkei’s, to the impending GDP figures.

                    After some initial volatility following BoJ’s adjustment on YCC on July 28, Nikkei has weakened notably. Technically, it’s now pressing 55 D MEA and looks vulnerable to deeper decline. Nevertheless, Overall price actions from 33772.89 are just viewed as a corrective move to the long term up trend only, as also supported by the structure. Hence, even in case of a deeper pull back, strong support should be seen from 38.2% retracement of 25661.89 to 33772.89 to contain downside. Meanwhile, strong rebound from current level, would bring retest of 33772.89 high.

                    Meanwhile, Yen continued to weaken after brief post-BoJ spike, with USD/JPY breaking through 145 handle today. Market chatter suggests a potential pushback by Ministry of Finance in the 145-148 range, though tangible signs of intervention remain absent. Yet it’s a wait-and-watch game to discern if Japan would act beyond the 145 mark. Nevertheless, technically, 61.8% projection of 129.62 to 145.06 from 137.22 at 146.76 doe present a resistance to overcome.

                    NZD/USD under siege on domestic data and Asian market risks

                      By
                      ActionForex.com
                      -

                      NZD/USD is having a notable decline today, pressured by dismal services data from New Zealand and an escalating sense of risk aversion throughout Asian markets. This downtrend also sets a tense backdrop leading up to this week’s RBNZ rate decision, with the central bank widely anticipated to hold for the second consecutive month.

                      Last week’s break of 0.5984 support should confirm resumption of whole decline from 0.6537. Near term outlook in NZD/USD will stay bearish as long as 0.6117 resistance holds. Next target is 100% projection of 0.6537 to 0.5894 from 0.6410 at 0.5857.

                      For now, the structure of the decline from 0.6537 is still favoring that it’s a correction to rebound from 0.5511. Hence, strong support should emerge below 0.5857 to bring reversal. However, any downside acceleration below 0.5857 would raise the chance that it’s indeed resuming the larger down trend through 0.5511.

                      NZ BNZ services plunges down to 47.8, deepening contraction as activity dives

                        By
                        ActionForex.com
                        -

                        New Zealand’s service sector, as gauged by the BusinessNZ Performance of Services Index, experienced a marked decline in July, descending from 49.6 to a worrying 47.8. This latest reading is not only the lowest since January 2022 but also trails the long-term average of 53.5 significantly.

                        A detailed analysis of the index highlights concerning trends. The activity component has sharply dropped from 50.9 to 39.6, marking its worst performance since August 2021 and setting a gloomy record. Specifically, this month’s reading stands as the worst non-lockdown related reading on record since 2007. New orders within businesses have taken a substantial hit, plummeting from 50.4 to 43.8.

                        Meanwhile, employment showed a marginal decrease, moving from 49.1 to 49.0. On a brighter note, stocks or inventories observed an increase, jumping from 47.2 to 54.0, with supplier deliveries also ticking up from 51.0 to 52.1.

                        BusinessNZ’s Chief Executive, Kirk Hope, said. “The further fall into contraction during July also saw another lift in the proportion of negative comments,” he remarked, drawing attention to the sharp increase in negative feedback, which escalated to 67% from 55.6% in June and 49.4% in May.

                        Hope continued, “Overall, negative comments received were strongly dominated by a general downturn in the economic conditions/slowing economy, as well as ongoing increased costs.”

                        BNZ Senior Economist, Doug Steel, weighed in on the data, highlighting a distressing pattern. “The results all point to a sharp drop in demand in July, significantly accelerating the slowing trend that had been evident for many months,” he said.

                        Full NZ BNZ PSI release here.

                        US PPI up 0.3% mom in Jul, services rose 0.5% mom, goods rose 0.1% mom

                          By
                          ActionForex.com
                          -

                          US PPI for final demand rose 0.3% mom in July, above expectation of 0.2% mom. PPI services rose 0.5% mom while PPI goods edged up 0.1% mom. PPI ex-food, energy, and trade services rose 0.2% mom.

                          For the 12 months ended in July, PPI rose 0.8% yoy, above expectation of 0.7% yoy. PPI ex-foods, energy and trade services rose 2.7% yoy.

                          Full US PPI release here.

                          UK GDP rose 0.5% mom in Jun, up 0.2% qoq in Q2

                            By
                            ActionForex.com
                            -

                            UK GDP grew 0.5% mom in June, well above expectation of 0.2% mom. Production grew 1.8% mom. Services was up 0.2% mom. Construction also rose 1.6% mom.

                            For Q1, GDP grew 0.2% qoq, above expectation of 0.0% qoq. But the level of quarterly GDP was -0.2% below its pre-pandemic level in Q4 2019. Services grew 0.1% on the quarter. Production grew by 0.7% with 1.6% growth in manufacturing. Construction rose 0.3%.

                            The implied price of GDP rose by 2.1% in Q2, which was primarily driven by higher price pressures for household consumption (1.5%) and government consumption (3.1%).

                            Full UK monthly and quarterly GDP releases here.

                            RBA Lowe: Possible that some further tightening will be required

                              By
                              ActionForex.com
                              -

                              Addressing the House of Representatives Standing Committee on Economics today, outgoing RBA Governor, Philip Lowe Lowe stated that the purpose behind the pauses in July and August was “to provide time to assess the impact of the (rates) increases to date and the economic outlook and the associated risks.”

                              He reiterated that “it is possible that some further tightening of monetary policy will be required”. But the decision would be largely based on incoming data and the Board’s evolving analysis of economic forecast and potential risks.

                              Lowe expressed optimism about recent economic data, remarking, “It is encouraging that the recent data are consistent with inflation returning to target over the next couple of years.”

                              But he also pinpointed two risks that RBA is closely monitoring. “The first is the outlook for household consumption,” he said, attributing this concern to the myriad of factors currently influencing household finances and expenditures.

                              The second risk highlighted was the potential persistence of high services price inflation which could lead to “prolonging the period of inflation being above target.”

                              Lowe emphasized the RBA’s forecast, which assumes a resurgence in productivity rates, aligning with levels seen pre-pandemic. Such growth, he suggested, would help in moderating the unit labour costs and subsequently, inflation. Yet, he cautioned, “If this pick-up in productivity does not occur, all else constant, high inflation is likely to persist, which would be problematic.”

                              Full remarks of RBA Lowe here.

                              New Zealand BNZ manufacturing slumps to Post-GFC low in July

                                By
                                ActionForex.com
                                -

                                New Zealand’s BusinessNZ Performance of Manufacturing Index has experienced a drop in July, declining from 47.4 to 46.3. Digging into the details, there was a notable dip in Production, which plummeted from 47.3 to 42.9, and Employment wasn’t far behind, decreasing from 46.8 to 44.3. On a slightly brighter note, New Orders saw a modest increase, moving from 43.8 to 45.0, and Finished Stocks slightly ticked up from 52.3 to 52.6. However, Deliveries took a sharp hit, falling from 49.9 to 42.3.

                                Feedback from the manufacturing sector portrayed a gloomy picture. Negative comments in July stood at 72%, a slight decrease from June’s 74.5%, but higher than May’s 66.7% and April’s 70.3%. The core concerns cited by manufacturers revolved around general market uncertainty, escalating costs, and inclement weather affecting demand, particularly during July.

                                Catherine Beard, BusinessNZ’s Director of Advocacy, remarked on the PMI’s July figures, indicating that they “showed very little signs of potential improvements for the sector as a whole.” Echoing this sentiment, BNZ Senior Economist, Doug Steel, highlighted the gravity of the situation, noting that “the July result was the fifth consecutive monthly sub-50 reading and, outside of Covid lockdown periods, the lowest reading since the GFC days back in June 2009.”

                                Full NZ BNZ PMI release here.

                                Fed’s Daly on CPI: Not a Victory Yet

                                  By
                                  ActionForex.com
                                  -

                                  San Francisco Fed President, Mary Daly, offered a measured response to yesterday’s US CPI release, stating that while the figures “came in largely as expected, and that is good news,” it does not signify a comprehensive victory over the ongoing inflation challenges. “It is not a data point that says victory is ours,” Daly warned.

                                  Highlighting the nuanced nature of the current inflation landscape, Daly noted the decrease in goods inflation and indicated promising trends in housing. However, her main concern lies with core services inflation that excludes housing.

                                  Despite the general trend of receding inflation, core services inflation remains stubborn. Daly emphasized, “We do need to see that come back to prepandemic levels if we’re going to be confident that we can get to 2% on a sustainable basis.”

                                  Offering insight into Fed’s future strategy, Daly was cautious: “Whether we raise another time, or hold rates steady for a longer period — those things are yet to be determined.”

                                  She stressed the importance of upcoming data before Fed’s next meeting, suggesting it would play a critical role in shaping decisions. “It would be premature to project what I think would happen because there’s a lot of information coming in between now and our next meeting” in September, she added.

                                   

                                  US jobless claims rose to 248k, above expectations

                                    By
                                    ActionForex.com
                                    -

                                    US initial jobless claims rose 21k to 248k in the week ending August 5, above expectation of 230k. Four-week moving average of initial claims rose 3k to 228k.

                                    Continuing claims dropped -8k to 1684k in the week ending July 29. Four-week moving average of continuing claims dropped -9k to 1701k.

                                    Full US jobless claims release here.

                                    US CPI and core CPI rose 0.2% mom in Jul, matched expectations

                                      By
                                      ActionForex.com
                                      -

                                      US CPI and core CPI rose 0.2% mom in July, matched expectations. Food prices rose 0.2% mom,Energy prices rose 0.1% mom. The index for shelter was by far the largest contributor to the monthly all items increase, accounting for over 90 percent of the increase, with the index for motor vehicle insurance also contributing.

                                      For the 12 months, headline CPI rose slightly from 3.0% yoy to 3.2% yoy, below expectation of 3.3% yoy. Core CPI slowed slightly from 4.8% yoy to 4.7% yoy, below expectation of being unchanged. Food prices were up 4.9% yoy while energy prices were down -12.5% yoy.

                                      Full US CPI release here.

                                       

                                      US CPI awaited, NASDAQ heading lower to 55 D EMA

                                        By
                                        ActionForex.com
                                        -

                                        Markets await key US consumer inflation data scheduled for release today, with projections centered on a 0.2% mom uptick for both headline and core CPI. On a yoy basis, headline CPI is anticipated to climb from 3.0% to 3.3%, while core CPI is projected to remain steady at 4.8%.

                                        This anticipated rise in headline inflation, marking the first surge in over a year, can be attributed to unfavorable base effects and a moderate uptick in gas prices. Thus, this shouldn’t particularly alarm Fed officials.

                                        If the inflation figures align with expectations, the 0.2% monthly increase in both core CPI would be largely consistent with Fed’s 2% inflation target. Such a scenario would strengthen the case for Fed to pause again in its September meeting, adopting a wait-and-see approach.

                                        Following broad decline in US stocks, NASDAQ closed down -1.17% overnight. Current development suggests that a short term top at least formed at 14446.55. Deeper decline is expected to 55 D EMA (now at 13600.45).

                                        The grappling question is whether rise from 10088.82, as the second wave of the medium term corrective pattern from 16212.22, has run off its course. It just missed target of 161.8% projection of 10088.82 to 12269.55 from 10982.80 at 14511.22.

                                        Robust support from 55 D EMA would maintain near term bearishness for another rise through 14446.55 at a later stage. However, sustained break of this EMA would raise the chance of a bearish reversal. That is, the third leg of the medium term pattern has already started. NASDAQ would then test the second line of defense at 38.2% retracement of 10088.82 to 14446.55 at 12781.89 to determine its fate.

                                        Japan’s PPI slows down for seventh consecutive month

                                          By
                                          ActionForex.com
                                          -

                                          Japan’s PPI for July has once again reported a slowdown, decelerating from 4.3% yoy in the previous month to 3.6% yoy. However, this figure slightly surpassed market expectations, which anticipated a drop to 3.5% yoy. It’s worth noting that this marks the seventh consecutive month of decline for PPI, tracing back from its December peak of 10.6% yoy.

                                          Looking at some details, yen-denominated import prices saw a significant dip. The -14.1% yoy decline in July, a steeper fall than June’s -11.4% yoy, extends the negative trend to its fourth consecutive month.

                                          Simultaneously, yen-denominated export prices also demonstrated downward trends, slipping from a positive growth of 0.8% yoy in the preceding month to a negative -0.2% yoy in July.

                                          Full Japan PPI release here.

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