Australia house price dropped -2.4% qoq, -5.1% yoy in Q4

    Australia house price index dropped -2.4% qoq in Q4, deepened from Q3’s -1.5% qoq and missed expectation of -2.0% qoq. Sydney led the way by dropped -3.7% qoq, followed by Melbourne at -2.4%. Hobart (up 0.7%) and Adelaide (up 0.1%) bucked the trend.

    Through the year growth in residential property prices fell -5.1% yoy in the December quarter 2018. Falls were recorded in Sydney (-7.8 per cent), Melbourne (-6.4% yoy), Darwin (-3.5% yoy), Perth (-2.5% yoy) and Brisbane (-0.3% yoy).

    Chief Economist for the ABS, Bruce Hockman said: “While property prices are falling in most capital cities, a tightening in credit supply and reduced demand from investors and owner occupiers have had a more pronounced effect on the larger property markets of Sydney and Melbourne.”

    Full release here.

    German PMI manufacturing hits 30-month high, but services contract

      Germany PMI Manufacturing rose to 58.0 in October, up from 56.4, above expectation of 55.5. That’s also the highest level in 30 months. However, PMI Services dropped to 48.9, down from 50.6, missed expectation of 49.0. PMI Composite hit a 2-month low at 54.5, down from 54.7.

      Phil Smith, Associate Director at IHS Markit said: “Encouragingly, the German economy is showing a degree of resilience in the face of a second wave of coronavirus cases, October’s flash PMI data suggests. While some services firms in Germany have been hit by new restrictions and increased uncertainty around a ‘second wave’, the decline in service sector activity has so far been quite limited, whilst at the same time the country’s economic performance is being buoyed by a strong showing from manufacturing.”

      Full release here.

      Japan reported strong industrial production and retail sales growth

        Japan reported strong industrial production growth of 4.5% mom in February, surpassing expectations of 2.8% mom growth. The seasonally adjusted production index for the manufacturing and mining sectors reached 94.8, with the industry ministry predicting a 2.3% mom increase in March and a 4.4% mom advance in April.

        Retail sales also exceeded expectations, rising 6.6% yoy compared to the anticipated 5.9% yoy. However, the unemployment rate increased from 2.4% to 2.6%, higher than the expected 2.4%.

        Inflation in Tokyo experienced a slight decline, with the March CPI dropping from 3.4% yoy to 3.3% yoy, still above the expected 2.7% yoy. The core CPI (excluding fresh food) eased from 3.3% yoy to 3.2% yoy, meeting expectations. Meanwhile, the core-core CPI (excluding fresh food and energy) rose from 3.2% yoy to 3.4% yoy, surpassing the anticipated 3.3% yoy.

        China trade surplus narrowed to USD 46.4B in June as imports jumped more than exports

          In June, in USD term, China’s total trade rose 1.5% yoy to USD 380.7B. Exports rose 0.5% yoy to USD 213.6B. Imports rose 2.7% yoy to USD 167.2B. Trade surplus narrowed to USD 46.4B, down from May’s USD 62.9B.

          From January to June, total trade dropped -6.6% ytd yoy to USD 2029.7B. Exports dropped -6.2% ytd yoy to USD 1098.8B. Imports dropped -7.1% ytd yoy to USD 931.0B. Trade surplus came in at USD 167.8B year-to-June.

          From January to June, with EU, total trade dropped -4.9% ytd yoy to USD 284.2B. Exports dropped -1.5% ytd yoy to USD 172.3B. Imports dropped -9.6% ytd yoy to USD 111.9B.

          From January to June, with US, total trade dropped -9.7% ytd yoy to USD 234.0B. Exports dropped -11.1% ytd yoy to USD 177.6B. Imports dropped -4.8% ytd yoy to USD 56.4B.

          US initial jobless claims dropped to 229k, slightly below expectations

            US initial jobless claims dropped -3k to 229k in the week ending June 11, slightly better than expectation of 230k. Four-week moving average of initial claims rose 3k to 219k.

            Continuing claims rose 3k to 1312k in the week ending June 4. Four-week moving average of continuing claims dropped slightly by -750 to 1317.5k, lowest since January 10, 1970, when it was 1311k.

            Full release here.

            UK Gfk consumer confidence dropped to -14, slightly depressed end of year

              UK Gfk consumer confidence dropped from -14 to -15 in December. Personal financial situation over the next 12 months dropped from 2 to 1. General economic situation over the next 12 months dropped from -23 to -24. Major purchase index also dropped from -3 to -6.

              Joe Staton, Client Strategy Director, GfK says: “News about the Omicron variant could not have arrived at a worse time for festive celebrations… We end 2021 on a slightly depressed note and it looks like it will be a bleak midwinter for UK consumer confidence possibly with new COVID curbs and little likelihood of any real uplift in the first months of 2022.”

              Full release here.

              WTI continues up trend on supply cut and recovery hope, on track to 58.26

                WTI crude oil’s up trend continues and hits as high as 57.37 so far. Oil is now back at pre-pandemic level, partly supported by Saudi Arabia’s move on extra supply cuts in February and March. Traders are also betting on a strong recovery ahead with mass vaccine rolls out.

                WTI is on track to 100% projection of 47.24 to 53.92 from 51.58 at 58.26. Reaction to this projection level will indicate the underlying momentum for further upside acceleration. Sustained break would likely bring even quicker rally to 161.8% projection at 62.38.

                Break of 56.38 minor support will bring some consolidations. But wouldn’t be any change in the up trend as long as 53.92 resistance turned support holds.

                Australia employment grew 70.7k in Mar, hours worked back at pre-pandemic level

                  Australia employment grew 70.7k in March, double of expectation of 35.0k. However, growth was mainly driven by part-time jobs, which increased 91.5k to 4.20m. Full-time jobs contracted by -20.8k to 8.87m. Unemployment rate dropped to 5.6%, down from 5.8%, better than expectation of 5.7%. participation rate rose 0.2% to 66.3%, a record high. Monthly hours worked rose 2.2% mom or 38m hours, back to pre-pandemic levels.

                  Full release here.

                  Into US session: Euro broadly higher followed by Yen, Dollar pressured

                    Entering into US session, Euro is so far the strongest one for today, followed by Yen and the Sterling. On the other hand, Dollar, Australian and New Zealand are the weakest. But overall, the forex markets are generally in consolidative mode, without a committed direction. Stock markets in Asia and Europe are also mixed.

                    Improvements in Eurozone Sentix Investor Confidence seems to be taken well by traders. But the dark spot is that growth engine Germany lags far behind. There is no news on any kind of breakthrough regarding Brexit. It’s generally expected that EU won’t reject another extension, but would likely grant a long one. Economic calendar is relatively light today and tomorrow. Wednesday will be the key with ECB and FOMC minutes featured.

                    In Europe, currently:

                    • FTSE is up 0.11%.
                    • DAX is down -0.26%.
                    • CAC is up 0.12%.
                    • German 10-year yield is down -0.0073 at 0.003, still positive.

                    Earlier in Asia:

                    • Nikkei dropped -0.21%.
                    • Hong Kong HSI rose 0.47%.
                    • China Shanghai SSE dropped -0.05%.
                    • Singapore Strait Times dropped -0.22%.
                    • Japan 10-year JGB yield dropped -0.017 to -0.046.

                    RBA SoMP: 2022 GDP forecasts downgraded to 4.5%, CPI raised to 6%

                      In the Statement on Monetary Policy, RBA reiterated that a further lift in interest rates is required over the period ahead. Also, the Board will continue to closely monitor the incoming information and evolving balance of risks as it assesses the timing and extent of future interest rate increases

                      In the new economic projections:

                      • 2022 GDP growth forecast was downgraded from 5.50% to 4.50%.
                      • 2023 GDP growth was upgraded from 2.50% to 2.75%.
                      • 2022 year-end headline CPI forecast was raised form 3.25% to 6%.
                      • 2023 year-end CPI headline forecast was raised from 2.75% to 3.25%.
                      • 2022 year-end trimmed mean CPI was raised from 2.75% to 4.75%.
                      • 2023 year-end trimmed mean CPI was raised from 2.75% to 3.25%.
                      • 2022 year-end unemployment rate was unchanged at 3.75%.
                      • 2023 year-end unemployment rate was us lower from 3.75% to 3.50%.

                      Full SoMP here.

                      Sterling recovers as Johnson pledges to get Brexit done

                        Sterling recovers mildly after UK Prime Minister Boris Johnson’s fresh Brexit promise. Launching his election manifesto in the central English town of Telford, he said “Get Brexit done and we shall see a pent up tidal wave of investment into this country. Get Brexit done and we can focus our hearts and our minds on the priorities of the British people.”

                        UK is heading to snap election on December 12, Johnson is targeting to bring the Brexit deal back to the parliament before Christmas. He also pledged, “we will not extend the implementation period beyond December 2020”.

                        How to benefit when BTC price goes down?

                          Intro

                          It is no secret that Bitcoin is volatile, as all cryptocurrencies are! The trick is, knowing when prices will move and what to do when the inevitable movement comes. Sounds simple, right?

                          There are many investors out there that have heavily backed Bitcoin and expect the price to keep rising. But what if the value of a coin was not reaching the heights you expected to? Is this something to be overly concerned about?

                          Since Bitcoin’s arrival on the global stage, it has experienced many highs and lows. Massive swings which happen regularly which can last days, span a few hours or move big, without warning, in the space of a few minutes.

                          This article will explore why Bitcoin moves in the way it does and we will also look at how we can benefit from a downward price movement on the original, world-famous, digital asset.

                          At CryptoRocket (www.cryptorocket.com) you can trade over 30 digital assets including the following Bitcoin pairs:

                          BTC/USD, BCH/BTC, ETH/BTC, LTC/BTC, NEO/BTC, XMR/BTC, ZEC/BTC

                          Volatility

                          Volatility can be described as something liable to change drastically, quickly and without warning. This description is accurate when we are putting the definition next to Bitcoin.

                          Traditional stock volatility is measured by the volatility index which was created by the Chicago Board Options Exchange in 1993. Also known as the VIX, what it does is represents a real-time market index showing the expected next 30 day movements with a focus on how volatile a stock might be. A useful tool for stock traders….

                          Bitcoin does not have such a tool for Crypto investors to make use of. What we do know however is that Bitcoin is volatile and can move up to ten times as much as USD in a single trading day.

                          So why is Bitcoin so volatile and what are the reasons behind it?

                          One of the key reasons is that, although, in its 10th year, it is still relatively new technology. With new technology, new consumers need to get to grips with it and understand what the product is and how it functions. There are people out there, dare I say the older generation who can be more resistant to change when it comes to technology. This is evident when you look at statistics in supermarkets and which age groups are more willing to use self-checkout technology when purchasing their goods.

                          People need time to adjust and adapt to change. Some people take longer than others, but in terms of how long currency and cold hard cash has been around, Bitcoin is still a new product and some people will need a little more encouragement to use technology as opposed to cash and banks.

                          Bitcoin price is heavily affected by the news and media, especially when it comes to geopolitical events. In times of crisis within a country, new Bitcoin investors can surge within that country. This is especially true when examining the Cypriot banking crisis in 2013. The EU bailed out Cypriot banks but this came with terms and conditions. The cost of bailout was around the $20Billion mark yet the EU would only give Cyprus $13Billion. This meant that Cyprus would have to raise the further $7Billion themselves and they realized this by levying a tax on deposits.

                          The tax was 6.75 percent from insured deposits of €100,000 or less, and 9.9 percent from uninsured amounts above €100,000. What this tax achieved was massive distrust in the banks from Cypriots and many Russians who live in Cyprus. The distrust in banks made trust in decentralized currency flourish. Bitcoin prices spiked thanks to this bailout.

                          Many celebrities who have spoken out against Bitcoin and as influential people, this can truly have a knock-on effect on the value of a coin. Also, major incidents such as the closure of Silk Road harmed the price of Bitcoin. The FBI and Interpol shut down Silk Road in 2013 resulting in a life sentence for creator Ross Ulbricht. Many Bitcoin users lost trust in Bitcoin at this time and looked to sell as governments use rhetoric to suggest making Bitcoin follow some sort of compliance and regulation.

                          Strategies to capitalize in downward movements and how to benefit

                          As prices can rise, they can also crash and as investors, it is important to understand why and how we can manage this effectively. In 2018, the price of Bitcoin collapsed 61% – from an $8,300 high to $3,200 low in just six months showing just how much price can swing in a short period.

                          There are a few things that can be done to capitalize on Bitcoin value taking a downward turn.

                          For a start, a holder could straight up sell their Bitcoin and then buy again when the price reaches a severe low. Or low enough in the consumers’ opinion to make it worth buying before making an upturn.

                          Traders can take advantage of a Bitcoin downturn by ‘going short’ or selling Bitcoin, staking money that Bitcoin will have a downward price movement – often referred to as profitable shorting.

                          Users can also use margin trading or trading with leverage to further inflate profits. Leverage allows the ‘average trader’ to get involved in potentially high-profit trades without having to invest vast swathes of capital.

                          In today’s modern trading world, thanks to high leveraged trading, more people than ever can speculate on markets with relatively low capital with the potential for high returns.

                          It is advised that before trading with high leverage to investigate further and develop a trading strategy. Where can you do this you might ask? Many brokers in the marketplace offer a free to use ‘demo account’ for traders to perfect a strategy, get used to the available instruments and become accustomed to the MT4 trading platform.

                          Start trading with CryptoRocket (www.cryptorocket.com) and benefit from a downward movement by using a max leverage of 1:100 for your favorite Cryptocurrency pairs with over 30 on offer including BTC/USD.

                          Review the performance of other Cryptocurrencies to give yourself an idea of how the market is behaving and where Crypto investors are putting their money.

                          Use a range of analysis to help form an overview of what is happening in the market. Draw on various types of media including social media, follow influencers in the Bitcoin world such as the Winklevoss twins. However, be wary when sourcing your information. John McAfee recently claimed that Bitcoin HAS to reach the million-dollar mark by the end of 2020. Recently he claimed this was a PR stunt – proving it is vital to collect your information from a range of sources. Bitcoin price today is at $8,745.56 a long way to go to a million in 11 months!

                          Conclusion

                          We have learned that Bitcoin is undoubtedly volatile and prices can and do take downturns. But it is not all doom and gloom. If you are holding onto Bitcoin, don’t stress too much about a negative price movement, instead, harness that energy and trade short to protect your investment!

                          Bill Gates once said that if he could find an easy way to short Bitcoin, he would do. This was highlighted by one of the Winklevoss twins on Twitter. Guess what, Bill? You can short Bitcoin at CryptoRocket (www.cryptorocket.com). What’s more, they will be there for you 24/7 to assist you with all your account set up to get you started on your shorting adventure!

                          Good luck!

                          Gold and silver retreats after initial spike, consolidation but no correction yet

                            Both gold and silver spiked higher today but retreated sharply since then, apparently on profit taking. The consolidations are set for some consolidations. But there is no evidence for a deeper pull-back yet.

                            Gold reaches new record high of 1981.16 but it’s now back below 1940. 100% projection of 1451.16 to 1747.75 from 1670.66 at 1967.25 is already met. Some consolidations is likely considering overbought condition, as seen in daily MACD. But recent up trend would resume sooner rather than later as long as 1899.51 support holds, which is close to 1900 handle. We’d maintain that 261.8% projection of 1046.37 to 1375.17 from 1160.17 at 2020.96 is the key resistance which might trigger a deeper correction.

                            Silver also in steep retreat as spiking to 26.20. The risk of a deeper correction in higher in Silver as it just breached a long term fibonacci resistance level. That is 38.2% retracement of 49.78 to 11.25 at 25.96. Nevertheless, break of 22.24 support is still need to indicate short term topping first. Otherwise, recent rally is still in favor to resume sooner rather than later.

                            Oil inventories dropped -3.1m barrels, WTI steady

                              US commercial crude oil inventories dropped -3.1m barrels in the week ending July 12, less than expectation of -3.1m barrels. At 455.9m barrels, crude oil inventories are about 4% above the five year average for this time of year.

                              WTI crude oil has little reaction to the release. It was shot higher to 60.93 last week, mainly due to selloff in Dollar. WTI failed to sustain above 61.8% retracement of 66.49 to 50.64 at 60.34 as expected and dropped sharply lower from there. Focus is now on 56.05 support. We don’t expect a break there yet and more range trading is likely between 56.05 and 60.93. Nevertheless, firm break of 56.05 will indicate completion of rise from 50.64 and should pave the way to retest this low.

                              Juncker and Tusk: EU commits in solemn manner to avoid triggering Irish backstop

                                European Commission President Jean-Claude Juncker and European Council President Donald Tusk sent a joint letter to UK Prime Minister Theresa May. That’s for hoping to provide the "assurances" to help May get the agreed Brexit deal through the UK Parliament tomorrow.

                                In short, Juncker and Tusk pledged to try to reach the agreement regarding post-Brexit EU-UK relationship by the end of next year so as to avoid using the Irish backstop. They also emphasized that a commitment to speedy trade deal made by EU leaders had “legal value” which committed the Union “in the most solemn manner”.

                                If the target date couldn’t be met, UK will have an option to extend a status-quo transition period, also for avoiding to trigger the backstop. They also pledged that “If the backstop were nevertheless to be triggered, it would only apply temporarily, unless and until it is superseded by a subsequent agreement that ensures that a hard border is avoided.” 

                                Below is the full letter:

                                Dear Prime Minister,

                                Thank you for your letter of 14 January 2019.

                                As you are well aware, we regret but respect the decision of the United Kingdom to leave the European Union. We also consider that Brexit is a source of uncertainty and disruption. In these challenging times, we therefore share with you the determination to create as much certainty and clarity as possible for citizens and companies in a situation where a Member State leaves the European Union after more than four decades of closest economic and political integration. That is why the Withdrawal Agreement that you and the Leaders of the 27 EU Member States agreed after long negotiations is so important. It represents a fair compromise and aims to ensure an orderly withdrawal of the United Kingdom from the European Union, thereby limiting the negative consequences of Brexit. That is also why we wish to establish as close as possible a relationship with the United Kingdom in the future, building on the Political Declaration, which the Leaders of the 27 EU Member States agreed with you. It is also why we want negotiations to this effect to start as soon as possible after the withdrawal of the United Kingdom from the European Union.

                                As you know, we are not in a position to agree to anything that changes or is inconsistent with the Withdrawal Agreement, but against this background, and in order to facilitate the next steps of the process, we are happy to confirm, on behalf of the two EU Institutions we represent, our understanding of the following points within our respective fields of responsibility.

                                A. As regards the President of the European Council:

                                On the 13 December, the European Council (Article 50) decided on a number of additional assurances, in particular as regards its firm commitment to work speedily on a subsequent agreement that establishes by 31 December 2020 alternative arrangements, so that the backstop will not need to be triggered.

                                The European Council also said that, if the backstop were nevertheless to be triggered, it would only apply temporarily, unless and until it is superseded by a subsequent agreement that ensures that a hard border is avoided, and that the European Union, in such a case, would use its best endeavors to negotiate and conclude expeditiously a subsequent agreement that would replace the backstop, and would expect the same of the United Kingdom, so that the backstop would only be in place for as long as strictly necessary.

                                In this context, it can be stated that European Council conclusions have a legal value in the Union commensurate to the authority of the European Council under the Treaties to define directions and priorities for the European Union at the highest level and, in the specific context of withdrawal, to establish, in the form of guidelines, its framework. They may commit the European Union in the most solemn manner. European Council conclusions therefore constitute part of the context in which an international agreement, such as the Withdrawal Agreement, will be interpreted.

                                As for the link between the Withdrawal Agreement and the Political Declaration, to which you make reference in your letter, it can be made clear that these two documents, while being of a different nature, are part of the same negotiated package. In order to underline the close relationship between the two texts, they can be published side by side in the Official Journal in a manner reflecting the link between the two as provided for in Article 50 of the Treaty on European Union (TEU).

                                B. As regards the President of the European Commission:

                                The Political Declaration agreed at the November Special European Council (Article 50) describes a future relationship of unprecedented depth and breadth, reflecting the continuing strength of our shared values and interests. The Withdrawal Agreement and the Political Declaration represent a fair balance of European Union and United Kingdom interests. They will ensure a smooth withdrawal and a strong future relationship in the interests of all our citizens.

                                As the European Council has already stated, it will embark on preparations for a future partnership with the United Kingdom immediately after signature of the Withdrawal Agreement. As regards the European Commission, we will set up the negotiating structure for these negotiations directly after signature to ensure that formal negotiations can start as soon as possible after the withdrawal of the United Kingdom, having in mind the shared ambition of the European Union and the United Kingdom to have the future relationship in place by the end of the transition. Should national ratifications be pending at that moment, the Commission is ready to propose provisional application of relevant parts of the future relationship, in line with the legal frameworks that apply and existing practice. The Commission is also ready to engage with you on a work program as soon as the United Kingdom Parliament has signaled its agreement in principle to the Withdrawal Agreement and the European Parliament has approved it.

                                There is an important link between the Withdrawal Agreement and the Political Declaration, reflecting Article 50 of the Treaty on European Union. As stated in Article 184 of the Withdrawal Agreement and reflected also in Paragraph 138 of the Political Declaration, the European Union and the United Kingdom have committed to use best endeavors, in good faith and in full respect of their respective legal orders, to take necessary steps to negotiate expeditiously the agreements governing their future relationship referred to in the Political Declaration.

                                In light of your letter, the European Commission would like to make the following clarifications with regard to the backstop:

                                The Withdrawal Agreement including the Protocol on Ireland/Northern Ireland embodies the shared commitment by the European Union and the United Kingdom to address the unique circumstances on the island of Ireland as part of ensuring the orderly withdrawal of the United Kingdom from the European Union. The Commission can confirm that, just like the United Kingdom, the European Union does not wish to see the backstop enter into force. Were it to do so, it would represent a suboptimal trading arrangement for both sides. The Commission can also confirm the European Union’s determination to replace the backstop solution on Northern Ireland by a subsequent agreement that would ensure the absence of a hard border on the island of Ireland on a permanent footing.

                                The European Commission can also confirm our shared understanding that the Withdrawal Agreement and the Protocol on Ireland/Northern Ireland:

                                – Do not affect or supersede the provisions of the Good Friday or Belfast Agreement of 10 April 1998 in any way whatsoever; they do not alter in any way the arrangements under Strand II of the 1998 Agreement in particular, whereby areas of North-South cooperation in areas within their respective competences are matters for the Northern Ireland Executive and Government of Ireland to determine;

                                – Do not extend regulatory alignment with European Union law in Northern Ireland beyond what is strictly necessary to avoid a hard border on the island of Ireland and protect the 1998 Agreement; the Withdrawal Agreement is also clear that any new act that the European Union proposes should be added to the Protocol will require the agreement of the United Kingdom in the Joint Committee;

                                – Do not prevent the United Kingdom from facilitating, as part of its delegation, the participation of Northern Ireland Executive representatives in the Joint Committee, the Committee on issues related to the implementation of the Protocol on Ireland/Northern Ireland, or the joint consultative working group, in matters pertaining directly to Northern Ireland.

                                The European Commission also shares your intentions for the future relationship to be in place as quickly as possible. Given our joint commitment to using best endeavors to conclude before the end of 2020 a subsequent agreement, which supersedes the Protocol in whole or in part, the Commission is determined to give priority in our work program to the discussion of proposals that might replace the backstop with alternative arrangements. In this context, facilitative arrangements and technologies will be considered. Any arrangements which supersede the Protocol are not required to replicate its provisions in any respect, provided that the underlying objectives continue to be met.

                                Should the parties need more time to negotiate the subsequent agreement, they could decide to extend the transition period, as foreseen in the Withdrawal Agreement. In that case, the Commission is committed to redouble its efforts and expects the same redoubled efforts from your negotiators, with the aim of concluding a subsequent agreement very rapidly. Were the backstop to enter into force in whole or in part, it is intended to apply only temporarily, unless and until it is superseded by a subsequent agreement. The Commission is committed to providing the necessary political impetus and resources to help achieving the objective of making this period as short as possible. To this end, following the withdrawal of the United Kingdom, and until a subsequent agreement is concluded, the Commission will support making best use of the high level conference foreseen in the Political Declaration to meet at least every six months to take stock of progress and agree the appropriate actions to move forward.

                                Finally, in response to your concern about the timetable, we would like to make it clear that both of us will be prepared to sign the Withdrawal Agreement as soon as the meaningful vote has passed in the United Kingdom Parliament. This will allow preparations for the future partnership with the United Kingdom immediately thereafter to ensure that negotiations can start as soon as possible after the withdrawal of the United Kingdom from the European Union.

                                Yours sincerely,

                                Donald Tusk, Jean-Claude Juncker

                                Eurozone economic sentiment indicator rose to 114.0 in Feb, EU rose to 112.8

                                  Eurozone Economist Sentiment Indicator rose from 112.7 to 114.0 in February. Industry confidence rose from 13.9 to 14.0. Services confidence rose from 9.1 to 13.0. Consumer confidence rose from -8.5 to -8.8. Retail trade confidence rose from 3.7 to 5.4. Employment Expectation Indicator rose from 112.7 to 116.2, highest since May 2000.

                                  EU Economic Sentiment Indicator rose from 111.6 to 112.8. Employment Expectation Indicator rose from 113.4 to 115.8, an all time high. Amongst the largest EU economies, the ESI improved in Spain (+2.4), France (+1.9), Germany (+1.2) and Italy (+1.0), whereas it weakened in the Netherlands and Poland (both -1.7).

                                   

                                  Full release here.

                                  BoE Bailey: Labor force shrinkage the major risk to UK inflation

                                    BoE Governor Andrew Bailey told a parliamentary committee yesterday that inflation could fall back substantially this year. Still, there are risks from labor shortage and China.

                                    “The biggest single reason inflation has risen to that level is the war in Ukraine. It is also the most likely reason that we’re going to see a rapid fall in inflation in the year ahead, because we are not seeing energy prices rising further. In fact, they’re coming down,” he said.

                                    “Going forwards, the major risk to inflation coming down in the way that it will is the supply side,” Bailey said. “In this country particularly the question of the shrinkage of the labor force,” which has pushed up wages.

                                    “First of all in the economic outlook it think it’s quite likely we will see a negative impact in the short run in China from what’s going on at the moment from the release of the Covid restrictions and the impact that’s having,” Bailey said. “I’m not sure that would be very long lasting.”

                                    FOMC minutes: A few participants favored 50bps hike

                                      Minutes of January 31–February 1 FOMC meeting reveal that “almost all participants agreed that it was appropriate to raise the target range for the federal funds rate 25 basis points at this meeting.”

                                      “Many of these participants observed that a further slowing in the pace of rate increases would better allow them to assess the economy’s progress… as they determine the extent of future policy tightening that will be required.”

                                      Yet, “a few participants stated that they favored raising the target range for the federal funds rate 50 basis points at this meeting or that they could have supported raising the target by that amount.”

                                      Full minutes here.

                                      While there are more speculations regarding a revert to 50bps at March meeting, 25bps is still the majority of bets. For now, fed fund futures are pricing in 76% chance of another 25bps hike in March, and just 24% for 50bps.

                                       

                                      GBP/CHF breaking down after PMI shocker

                                        Sterling tumbles broadly after the shockingly poor PMI services reading. GBP/CHF is finally accelerating down as the downtrend from 1.3070 extends. Near term outlook will now remain bearish as long as 1.2222 resistance holds. Next target is 61.8% retracement of 1.1107 to 1.3070 at 1.1857.

                                        It’s too early to exclude the case that fall from 1.307 is merely a corrective mode. However, the multiple rejection by 55 week EMA is clearly a bearish sign. Sustained break of 1.1857 would set up even deeper decline back to 1.1107 (2020 low).

                                        Australia expects resource and energy export earnings to make successive records this year and next

                                          Australia’s Department of Industry, Science and Resources said in a new quarterly report that resources and energy exports earnings are expected deliver two successive record years in 2021-2022 and 2022-2023, before falling slightly in 2023-24 to a third highest ever figure.

                                          Resources and energy export earnings are estimated to be at AUD 405B in 2021-22, AUD 419B in 2022-23, and then notably lower at AUD 338B in 2023-24. The growth was mainly driven by higher prices as volume would remain below 2019-20 high throughout the forecast period.

                                          Full report here.