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Action Insight: Special Reports

Action Insight is the most popular section of the site, read by traders around the world. Our team of analysts work around the clock, analyzing the markets from technical and fundamental perspectives in providing the reports in this section to you.



China's Manufacturing Sector Contracted Further In April Print E-mail
Special Reports | Written by ActionForex.com | Apr 24 15 06:30 GMT
Flash China Manufacturing PMI by HSBC fell to a 12-month low of 49.2 in April from 49.6 in March. The 'output' index slipped -0.9 point to 50.4, the lowest level in 3 months whilst 'new orders' dropped to a one-year low of 49.2 from March's 49.8. 'Output prices' and 'input prices' also accelerated the decline and increased the concerns over deflation. The report raised the downside risks to Chiba's growth and suggested more easing measures are warranted.
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SNB Added More Accounts To Negative Rates Print E-mail
Special Reports | Written by ActionForex.com | Apr 23 15 05:44 GMT
The SNB announced that it would eliminate some groups of sight deposit account holders from the exemption from negative interest, i .e. more accounts would be subject to negative interest rates. As noted in the statement negative interest will now also apply to the sight deposit accounts held at the SNB by enterprises associated with the Confederation, including PUBLICA, the pension fund of the Confederation. The affected account holders will be accorded the minimum exemption threshold of CHF 10M, to which negative interest does not apply. The only sight deposit accounts to be exempt from negative interest will be those of the central Federal Administration and the compensation funds for old age and survivors' insurance, disability insurance and the fund for loss of earned income (AHV/AVS; IV/AI; EO/APG). We believed the move signals that SNB is not satisfied with existing monetary policy in driving capital away from Swiss franc. CHF depreciated against EUR and the USD after the announcement.
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BOE Sounded More Hawkish in April Print E-mail
Special Reports | Written by ActionForex.com | Apr 22 15 11:31 GMT
British pound rose against US dollar and euro, after the BOE minutes unveiled that policymakers voted unanimously in April to keep the Bank rate unchanged at 0.5% and the asset-purchase program at 375b pound. The minutes also suggested that all members agreed that it was appropriate to leave the monetary policy unchanged at the meeting, although 2 members regarded the decision as 'finely balanced'. Besides suggesting the rate path expected by the market was too flat, the BOE also noted that inflation expectations had shown signs of stabilization after recent weakening and judged that the low rate of inflation would not lead to delays in households spending. Overall, the tone of the minutes was viewed as rather hawkish.
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Dovish RBA Signaled Further Rate Cut, Concerned About Housing Price And Leverage Print E-mail
Special Reports | Written by ActionForex.com | Apr 21 15 10:45 GMT
The RBA minutes for the April meeting delivered a rather dovish tone as policymakers discussed about further rate cut although they are awaiting more data to confirm such a need. Regarding the decision to keep the cash rate at 2.25%, the central bank noted that, 'taking all these factors into account, the Board judged that it was appropriate to hold interest rates steady for the time being'. The RBA remained concerned about the housing market and high household leverage. Despite depreciation in the Australian dollar, the central bank expected further decline in the currency. We expect another rate cut of +25 bps in May.
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BOC Less Dovish About Inflation Print E-mail
Special Reports | Written by ActionForex.com | Apr 16 15 05:54 GMT
The BOC left its target for the overnight rate unchanged at 0.75% for the 3rd consecutive month. Correspondingly, the Bank Rate stayed at 1% and the deposit rate at 0.5%. Yet, it sent a less dovish message this month by revising higher the inflation forecasts, despite downward revisions of 1Q15 and FY 2015 growth forecasts. On net, the central bank noted that risks to inflation are 'roughly balanced'. We retain the view that the monetary policy would stay unchanged for the rest of the year.
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ECB: QE Remains in Progress until Sustained Adjustment of Inflation Seen Print E-mail
Special Reports | Written by ActionForex.com | Apr 16 15 05:53 GMT
The ECB left the policy rates unchanged in April and reaffirmed that the asset purchase program would continue through September 2016 and at least until "we see a sustained adjustment of the path of inflation consistent" with the 2% ECB medium-term target. While acknowledging improvement in the financial conditions following implementation of the QE program, President Mario Draghi stressed that risks are skewed to the downside despite gradual rebalancing. Against this backdrop, any speculation about earlier tapering is 'premature'. Draghi also confirmed that the deposit rate would not be cut further below the current -20 bps. At the press conference, the president also indicated that concerns about bond scarcity are exaggerated and answered questions related to Greece's bailout.
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China's GDP Grew +7% in First Quarter, Aggressive Easing Needed to Meet Full Year Target Print E-mail
Special Reports | Written by ActionForex.com | Apr 15 15 05:02 GMT
The latest series of data reaffirms that the growth momentum in China has deteriorated. The closely watched GDP growth slowed to +7% y/y in 1Q15, the slowest pace since 4Q09 and down from +7.3% in the prior quarter. Whilst this came in line with expectations, the government would have to accelerate monetary easing so as to achieve its +7% full year growth target. Other economic data also pointed to moderation in growth momentum. Retail sales expanded +10.2% y/yin March of the year, down from expectations of +10.8% and +10.7% in the first 2 months. Industrial production slowed sharply to +5.6% y/y in March, from January and February's combined +6.8% gain. Growth in FAI decelerated to +13.5% y/y in the first 3 months of the year March, compared with +13.9% in January and February's combined, as pressured by the slumped in housing market and overcapacity in related sectors.
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FOMC Minutes Show Policymakers Divided In Rate Hike Timing Print E-mail
Special Reports | Written by ActionForex.com | Apr 09 15 04:34 GMT
The FOMC minutes for the March meeting revealed policymakers were split in the timing of rate hike. As mentioned in the minutes, 'several' members were anticipating raising rates in June, while a 'couple' preferred to wait until 2016. On economic developments, the central bank attributed the weaker than expected growth in 1Q15 to transitory factors, including adverse weather and the West Coast port strike. They also cited factors such as lower energy sector activity and reduced state and local government revenues in places where energy sector activity plays an important role. The members revised down the medium-term growth outlook, with stronger dollar the key factor. Despite the downward revision, the FOMC judged that the progress made, particularly in lowering unemployment, should warrant the removal of forward policy rate guidance indicating that 'the Committee would be patient in beginning to normalize the stance of monetary policy'.
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BOE To Stand On Sideline, Vigilant On Exchange Rate Print E-mail
Special Reports | Written by ActionForex.com | Apr 08 15 09:30 GMT
The BOE would most likely leave its monetary policy unchanged, with the Bank rate at 0.50% and asset purchases at 375B pound. As such, there would be no statement and voting result (we expect 9-0 vote) released until a few weeks later. In the February minutes, policymakers warned of pound's strength, suggesting that ECB's extended QE and UK's stronger growth outlook, when compared with the Eurozone, might lead the pound to go further higher. We believe exchange rate would remain the focus of the discussion.
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RBA Left Policy Rate At 2.25%, Hinted On Further Cut Print E-mail
Special Reports | Written by ActionForex.com | Apr 07 15 06:51 GMT
The RBA kept the cash rate unchanged at 2.25% in April as depreciation in Australian dollar, expansion in credit growth, improvement loans to business and low inflation have supported economic growth. However, the central bank signaled another cut is around the corner so as to 'foster sustainable growth in demand and inflation consistent with the target'. Aussie soared following the announcement as futures market had forecast further reduction though analysts’ forecasts had been mixed.
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Japan's Quarterly Tankan Survey Reveals Cautiousness In Businesses Print E-mail
Special Reports | Written by ActionForex.com | Apr 01 15 11:36 GMT
The latest Tankan survey covering the period of February 25 to March 31 depicted a mixed outlook for Japan's economy. Recovery in business conditions for large manufacturers was unexpectedly slow with business conditions DI large manufacturers staying at +12 compared with market expectations of an improvement to +14. Sentiment in non-manufacturing industries, including real estate, retail, and services for individuals, showed improvement with large non-manufacturer DI rising to +19 from +17 in December. Construction sentiment stayed unchanged from the previous survey with DI remaining at +36, the highest level for all industries. The recovery of business conditions for export-related manufacturing flagged whilst sentiment was upbeat in domestic-demand industries. Sentiment in smaller companies was also mixed with non-manufacturing industries showing more confidence. Among smaller companies, the DI fell to +1 from +4 for manufacturers, but improved modestly to +3 from +1 for non-manufacturers.
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Bearish Zhou Stimulated Easing Speculations Print E-mail
Special Reports | Written by ActionForex.com | Mar 31 15 05:15 GMT
Following last week's disappointing data release, PBOC Governor Zhou Xiaochuan noted said in the Boao Forum for Asia over the weekend that China's economic growth has slowed 'a bit' too much and called to vigilance over emergence of deflation. He warned that 'China's inflation is also declining, so we need to be vigilant to see if the disinflation trend will continue, and if deflation will happen or not'. These comments raised hopes that the Chinese government would adopt more easing measures soon. Just 2 days after Zhou's comments, the PBOC announced to cut the minimum down payment for certain buyers of a second home to 40%, from 60% previously. We expect policy makers to ease further in coming months, adopting rate cuts and reduction in reserve requirement ratio (RRR) to lower funding costs. There would also be potential relaxation in property policy implementation in 2Q15 to facilitate a stable environment for structural adjustments.
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Aussie Remains Bearish amidst Soft Macroeconomic Outlook Print E-mail
Special Reports | Written by ActionForex.com | Mar 26 15 12:33 GMT
Similar to other higher-yield currencies, Australian dollar rebounded against the US dollar last week, upon receiving a dovish FOMC statement. AUDUSD has indeed attempted to test 0.8, a level not seen since late January earlier this week. Despite the recovery, we remain bearish over AUD as the macroeconomic outlook of Australia appears to be more and more challenging in coming months. Commodities prices continue to find their bottoms and the situation is exacerbated by the slowdown in Chinese economic growth. The struggle to transition from the mining-led growth to other activities appears tough with business and consumer confidence still lacking. These should put further downside risks to Australia's budget.
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Record Low UK Inflation Fueled Deflationary Risk Print E-mail
Special Reports | Written by ActionForex.com | Mar 25 15 03:35 GMT
Headline CPI in the UK fell to 0% y/y in February, down from +0.3% in January to the lowest level on record. As the reading was more than 1% below BOE’s +2% target for a 4th straigth month, Governor Mark Carney would have to write another letter of explanation to Chancellor of the Exchequer George Osborne. Core inflation fell -0.2% from January to +1.2%. While the headline reading came in weaker than market expectations, it was in line with BOE’s forecast. As the March minutes stated, 'Bank staff’s central expectation was for CPI inflation to fall to around zero in the February data and remain around that rate for several months'. Therefore, we do not see the February data would have any impact on the central bank’s monetary stance.
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SNB Kept Rates Negative, Warned of High CHF and Downgraded Growth Outlook Print E-mail
Special Reports | Written by ActionForex.com | Mar 19 15 11:39 GMT
The SNB left the sight deposit interest rate unchanged at -0.75% in March. The target range for the three-month Libor also stayed at -1.25 to -0.25%. The central bank warned of the "significantly overvalued" franc, suggesting "the conditions for the Swiss economy have become more difficult", with "the new exchange-rate situation" (SNB removed the 1.2 EURCHF floor in January). It re-affirmed that intervention on the currency market remains active if necessary, "in order to influence monetary conditions". Policymakers also revised lower the growth and inflation outlook. Indeed, President Thomas Jordan warned that there could be one or more quarters of economic contraction. According to him, "a noticeable weakening in the economy may be expected, particularly in the first half of the year". Swiss franc fell against the US dollar after the announcement while EURCHF continued to trade above 1.5.
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Fed Lost 'Patience', Yet Softer Outlook Suggests Rate Hike Unlikely in April and June Print E-mail
Special Reports | Written by ActionForex.com | Mar 19 15 01:47 GMT
The Fed removed the 'patient' language in the March FOMC meeting statement. However, downward revision of the economic assessment has made the overall message more dovish than expected. The Fed noted that economic growth to have 'moderated somewhat', compared with January's 'economic activity has been expanding at a solid pace', with weakening of exports growth as part of the factors causing the moderation. It was also unveiled in the staff economic projection that both GDP growth and core inflation forecasts were revised downward for 2015 and 2016. Note, in the reduction in the long-run unemployment forecast, that the Fed now sees no inflationary pressure on the economy even if the unemployment rate falls to as low as 5%. On the rate hike schedule, the Fed noted explicitly that there would be no rate hike in April. While Chair Janet Yellen stated that she could not 'rule out' a rate hike in June, the tone of the statement and the downgrade of economic projections suggested that the first rate hike would come in September the earliest, rather than June.
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BOE Cautions: Policy Divergence Would Send EURGBP Further Lower Print E-mail
Special Reports | Written by ActionForex.com | Mar 18 15 11:12 GMT
The BOE minutes for the March meeting showed that members voted unanimously to keep the Bank rate at a record low of 0.5% and maintain the asset purchase program at 375B pound. The minutes suggested that 2 members saw the decision as 'finely balanced' but there was no repeat of 1 member staying that the monetary policy could be loosened. Policymakers cautioned over the strength of the pound, noting that extended QE in the ECB and the stronger growth outlook in the UK, when compared with the Eurozone, might lead the pound to go further higher. GBPUSD plunged to a new 4.5 year- low after the minutes, as well as a disappointing employment report.
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FOMC Expected to Remove Patience Language, a Step Forward to Tightening Print E-mail
Special Reports | Written by ActionForex.com | Mar 17 15 11:44 GMT
The focus of this week's FOMC's meeting hinges the forward guidance. In particular, the market would closely watch whether the sentence that "based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy" would be removed. This act would send a strong signal that the Fed might begin tightening in coming months (market expectations are June or September. As it is widely anticipated that this language would be removed, the updates of the staff economic projection as well as Chair Janet Yellen's comments on the press conference would also be the key. Downgrade of growth outlook should offset hawkishness of removal of the patience language and weigh on the US dollar.
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RBA To Cut Rates Further Although Housing Prices Threat Remains Print E-mail
Special Reports | Written by ActionForex.com | Mar 17 15 03:23 GMT
Australian dollar dropped as the RBA sounded dovish in the minutes for the March meeting. It suggested that further rate cuts are warranted but policymakers preferred to see more economic data before implementation. Specifically, the central bank was concerned of the inflating housing market and a rate cut might exacerbate the situation. Yet, the sentence, 'On the basis of the current forecasts for growth and inflation, members were of the view that a case to ease monetary policy further might emerge', signaled that further easing would still be likely.
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Aggressive Easing Needed As Chinese Data Surprised To The Downside Print E-mail
Special Reports | Written by ActionForex.com | Mar 12 15 02:25 GMT
The latest set of Chinese macroeconomic data sent further evidence of slowdown in the world's second largest economy.. Growth in industrial production fell to the Lehman crisis level. Meanwhile, domestic demand remained weak, despite a rebound in exports during in January -February. The downside surprises have led analysts to revise lower their GDP growth forecasts. For instance, Barclays Capital now expects full-year China GDP to growth by +6.8% , compared with government's target of +7% while Deutsche Bank has decided to retain its forecast of +6.8% growth in 1H15. We expect the PBOC to accelerate monetary easing in coming months as fragile industrial production and fixed asset investment should be alarming to the government.
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