Tue, Jan 22, 2019 @ 10:57 GMT

Japan Suga: Returning to TPP is in the best interest of Japan and US

    Japan Chief Cabinet Secretary Yoshihide Suga insisted over the weekend that returning to the Trans-Pacific Partnership trade agreement is in the best interests of both Japan and the US. The comments came in before meeting of Economy Minister Toshimitsu Motegi and US Trade Representative Robert Lighthizer for bilateral trade later this month. And that’s a clear indication that Japan is not interested in bilateral trade deal that the US is keen on pursuing. Suga added that “Japan is not going to do anything with any country that harms the national interest.” And, “with FTA negotiations too, we’ll handle them in that way.”

    Finance Minister Taro Aso also said that “inward-looking policies would benefit no country.” And added that “excessive current account imbalances should be resolved through multilateral, not bilateral, framework. ” Also, “the matter should be dealt with through macroeconomic policy and a structural reform by rebalancing savings and investments, instead of imposing tariffs.”

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    Italy Salvini vows “we will not backtrack” as German-Italian spread stays above 300

      Italian Deputy Prime Minister, League leader Matteo Salvini insisted today that “we will not backtrack, we will not backtrack” referring to the 2019 budget deficit target. He blamed the volatility in the markets on speculators that are taking advantages. Salvini said “If one had evil thoughts, he would think there are people betting on the spread because they don’t want Italy to grow and create jobs”. And, “speculators acting like (George) Soros are betting on Italy’s collapse to buy at discount prices the healthy companies, and there are many of them, that have remained in this country.”

      Salvini also warned that credit agencies have to be fair on Italy. He said “I hope no one has prejudice toward this government, or strange intentions.” Moody’s is going to review Italy’s Baa2 rating, with negative outlook, by the end of October. S&P will also review the BBB with stable outlook rating on October 26.

      At the time of writing, Italian 10 year yield is up 0.1838 at 3.59. German 10 year bund yield is down -0.044 at 0.533. Spread is larger than the alarming 300 level.

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      Euro recovers as Five Star leader Di Maio said never sought to leave Euro

        Euro and Italian bonds are given a mild lift after Five Star leader Luigi Di Maio said the never sought to leave the Euro via facebook comments. He said that with the “Government of Change” they should be meeting with other EU countries to explain to the the “economic policy that has never foreseen the exit from the euro.” Meanwhile, he blamed the over 300 German Italian spread on the lack of prospects of the interim technocrat government.

        Separately, Bank of Italy Governor Ignazio Visco warned that Italy is just a few short steps away from “the very serious risk of losing the irreplaceable asset of trust”. He defended that Italy is “not constrained by the European rules but by economic logic” and there was no “shortcut” to lower the country’s debt.

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        Germany PMI hit 20-month low, slowdown continued

          Germany PMI manufacturing dropped to 56.8 in May, down from 58.1, missed expectation of 57.9. That’s the lowest in 15 months.

          PMI services dropped to 52.1, down from 53.0, missed expectation of 53.1. That’s a 20-month low.

          PMI composite dropped to 53.1, down from 54.6, hitting 20-month low.

          Comment from Phil Smith, Principal Economist at IHS Markit:

          “The flash PMI data indicate that the recent slowdown in Germany’s private sector continued into May. Business activity showed the weakest rise for over a year-and-a-half, and it was a case of slower growth across both the manufacturing and services segments of the economy.

          “There was some anecdotal evidence suggesting that the timing of public holidays during the month had led to workers taking days off to bridge the holidays and weekends. However, weaker order book growth and a further waning of business confidence point to the economy carrying a lot less underlying momentum than at the end of 2017.

          “Latest data meanwhile indicated an ill-timed resurgence in cost pressures faced by businesses, linked largely to rising oil prices. The recent cooling of demand has meant increased pressure on margins, with selling price inflation moving in the opposite direction to that of input costs.”

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          German Ifo dropped to 102.8, global uncertainty increasingly taking its toll

            German Ifo business climate dropped to 102.8 in October, down from 103.7, below expectation of 103.2. Current assessment gauge dropped to 105.9, down from 106.4 and missed expectation of 106.0. Expectations gauge dropped to 99.8, down from 101 and missed consensus of 100.3. Manufacturing, services and trade indices record decline in the month, but construction hit another record high.

            Ifo president Clemens Fuest noted in the release that “firms were less satisfied with their current business situation and less optimistic about the months ahead. Growing global uncertainty is increasingly taking its toll on the German economy.”

            Full release here.

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            Sterling tumbles as Brexit optimism put into question again

              Sterling tumbles today as Brexit optimism is put into question again. It’s reported that Brexit Minister Dominic Raab is not going to Brussels this week for the talk on Irish border. And, Prime Minister Theresa May’s office doesn’t expect a deal at the European Council next week.

              May’s spokesman is also quoted saying that the withdrawal deal with EU will not be agreed without securing a “precise future framework” on relationship. The spokesman also emphasized that there’s a difference between optimistic talk and getting an agreement. He urged EU to move it position.

              Separately, according to a document seen by Reuters, EU insisted that it’s own Irish border backstop proposal as “pragmatic” that “built on existing health checks on animals and agricultural goods between mainland Britain and Northern Ireland.

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              DOW breaks 25000, next is 25800

                DOW opens strongly higher today, riding on news regarding US-China trade negotiations. At the time of writing, it’s up over 1.3% and is back above 25000 handle. Rise from 23531.31 and that from 23344.52 is resuming. Solid support from 55 H EMA shows the underlying near term bullishness. However, there is no clear indication of larger up trend resumption yet. Thus, we’re treating the current rise as a leg inside the range pattern from 26616.71. The real hurdle to overcome is between 25800.35 resistance and 78.6% retracement of 26616.71 to 23360.29 at 25919.83. We’ll look for topping signal around there.

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                Lighthizer to lead US-China trade talk, strong sign of readiness for progress

                  The White House has confirmed that Trade Representative Robert Lighthizer will lead the new round of trade talks with China, taking over from Treasury Secretary Steven Mnuchin. This is an important indication that both sides (well mainly China), are ready to put promises into words and then actions. Lighthizer is the only one who knows how to work out a trade agreement. Without him, it’s just high level “talks”.

                  White House trade adviser Peter Navarro said that Lighthizer is “the toughest negotiator we’ve ever had at the USTR and he’s going to go chapter and verse and get tariffs down, non-tariff barriers down and end all these structural practices that prevent market access.”

                  Separately, White House economic advisor Larry Kudlow said China is going to work on the reforms promised “immediately”. Kudlow acknowledged that “The history here with China promises is not very good. And we know that.” However, Kudlow also said “President Xi has never been this involved”, which is a positive development to him. And he added, “we expect those tariffs to fall to zero.”

                  Kudlow, Mnuchin and Lighthizer held private meetings in Argentina with China’s Vice Premier Liu He. Kudlow said Liu promised that China will act quick on the commitments. And Kudlow added, “They cannot slow walk this, stall this, meander this. Their word: ‘immediately.'”

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                  Bundesbank: Germany just went through temporary period of weakness

                    Bundesbank’s monthly economic report noted that the economic growth in Germany remains fundamentally intact. Slowdown during the summer was mainly due to car makers. And, “as soon as the conversion problems in the automotive industry have been solved, the pace of macroeconomic expansion should pick up again significantly”

                    It also said “continued positive mood of businesses, which according to the Ifo Institute’s surveys has recently also improved in industry, points to a temporary period of weakness.”

                    Both Bundesbank and the Economy Ministry expect manufacturing to shift to a higher gear in the common months.

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                    Swiss government raised growth forecast after stronger than expected Q2 GDP

                      Swiss GDP grew faster than expected by 0.7% qoq in Q2, versus expectation of 0.5% qoq. The government also raised growth forecast for this year.

                      A government economist Ronald Indergand said that “for the year as a whole we could be looking at a growth rate much nearer to the 3 percent rate than 2 percent, which would be above the long-term average.”

                      In the prior forecast, the government projected Swiss GDP to grow 2.4% in 2018, comparing to 1.6% in 2017.

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                      RBA Lowe: Any increase in interest rates, they’re some time away

                        RBA Governor Philip Lowe delivered a speech titled “Productivity, Wages and Prosperity” today. There he pointed out that “over the past couple of years, output growth has been subdued, but employment growth has been strong.” And, it’s productivity that’s holding the economy back. Low pointed to strong employment growth in household services, but output per hour worked was only 4% higher than it was in 2010. In contrast, the output per hour worked was up 13% to 16% in other industry groups.

                        He urged “strong ongoing focus on training, education and the accumulation of human capital” to bring up the overall productivity. And he emphasized that “our national comparative advantage will increasingly be built on the quality of our ideas and our human capital.”

                        Regarding monetary policy, Lowe said the economy is “moving in the right direction” and the next move in interest rate will be “up, not down”. But, “the environment in which interest rates are increasing is also likely to be one in which people’s incomes are growing more quickly than they are now.”And, “any increase in interest rates, however, still looks to be some time away.”

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                        RBA minutes hint on prospect of dovish shift

                          Minutes of the December 4 RBA meeting maintained the same tone that “the next move in the cash rate was more likely to be an increase than a decrease”. But at the same time “there was no strong case for a near-term adjustment in monetary policy”.

                          For RBA, the “central scenario remained for steady growth in consumption, supported by continued strength in labour market conditions and a gradual pick-up in wages growth”. Also, “further falls in the unemployment rate were likely”. But it should be emphasized that was based on “expectation that the economy would continue to grow above trend”.

                          Also, the meeting took place before release of Q3 GDP, which showed merely 2.8%. That’s clearly lower than RBA’s own projection of 2.0%. And 2.8% could merely be described as being around trend, not above trend. Thus there is prospect of a dovish shift in RBA’s upcoming forecast in February Monetary Policy Statement.

                          Full RBA minutes here.

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                          ECB Mario Draghi’s introductory statement in press conference

                            One important point to note in the introductory statement is the revision in economic projections. ECB now projects annual GDP growth to be at 2.1% in 2018, that’s notable downward revision from March projection of 2.4%. For 2019 and 2020, GDP projections were kept unchanged at 1.9% and 1.7% respectively. On the other hand, HICP inflation is projected to be 1.7% in 2018, 2019 and 2020. That’s notably revised up from March projection of 1.4% in 2018, 1.4% in 2019 and 1.7% in 2020.

                            Below is the statement.

                            Mario Draghi, President of the ECB,
                            Luis de Guindos, Vice-President of the ECB,
                            Riga, 14 June 2018

                            INTRODUCTORY STATEMENT

                            Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. I would like to thank Deputy Governor Razmusa for her kind hospitality and express our special gratitude to her staff for the excellent organisation of today’s meeting of the Governing Council. We will now report on the outcome of our meeting.

                            Since the start of our asset purchase programme (APP) in January 2015, the Governing Council has made net asset purchases under the APP conditional on the extent of progress towards a sustained adjustment in the path of inflation to levels below, but close to, 2% in the medium term. Today, the Governing Council undertook a careful review of the progress made, also taking into account the latest Eurosystem staff macroeconomic projections, measures of price and wage pressures, and uncertainties surrounding the inflation outlook.

                            As a result of this assessment, the Governing Council concluded that progress towards a sustained adjustment in inflation has been substantial so far. With longer-term inflation expectations well anchored, the underlying strength of the euro area economy and the continuing ample degree of monetary accommodation provide grounds to be confident that the sustained convergence of inflation towards our aim will continue in the period ahead, and will be maintained even after a gradual winding-down of our net asset purchases.

                            Accordingly, the Governing Council today made the following decisions:

                            First, as regards non-standard monetary policy measures, we will continue to make net purchases under the APP at the current monthly pace of €30 billion until the end of September 2018. We anticipate that, after September 2018, subject to incoming data confirming our medium-term inflation outlook, we will reduce the monthly pace of the net asset purchases to €15 billion until the end of December 2018 and then end net purchases.

                            Second, we intend to maintain our policy of reinvesting the principal payments from maturing securities purchased under the APP for an extended period of time after the end of our net asset purchases, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.

                            Third, we decided to keep the key ECB interest rates unchanged and we expect them to remain at their present levels at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with our current expectations of a sustained adjustment path.

                            Today’s monetary policy decisions maintain the current ample degree of monetary accommodation that will ensure the continued sustained convergence of inflation towards levels that are below, but close to, 2% over the medium term. Significant monetary policy stimulus is still needed to support the further build-up of domestic price pressures and headline inflation developments over the medium term. This support will continue to be provided by the net asset purchases until the end of the year, by the sizeable stock of acquired assets and the associated reinvestments, and by our enhanced forward guidance on the key ECB interest rates. In any event, the Governing Council stands ready to adjust all of its instruments as appropriate to ensure that inflation continues to move towards the Governing Council’s inflation aim in a sustained manner.

                            Let me now explain our assessment in greater detail, starting with the economic analysis. Quarterly real GDP growth moderated to 0.4% in the first quarter of 2018, following growth of 0.7% in the previous quarters. This moderation reflects a pull-back from the very high levels of growth in 2017, compounded by an increase in uncertainty and some temporary and supply-side factors at both the domestic and the global level, as well as weaker impetus from external trade. The latest economic indicators and survey results are weaker, but remain consistent with ongoing solid and broad-based economic growth. Our monetary policy measures, which have facilitated the deleveraging process, continue to underpin domestic demand. Private consumption is supported by ongoing employment gains, which, in turn, partly reflect past labour market reforms, and by growing household wealth. Business investment is fostered by the favourable financing conditions, rising corporate profitability and solid demand. Housing investment remains robust. In addition, the broad-based expansion in global demand is expected to continue, thus providing impetus to euro area exports.

                            This assessment is broadly reflected in the June 2018 Eurosystem staff macroeconomic projections for the euro area. These projections foresee annual real GDP increasing by 2.1% in 2018, 1.9% in 2019 and 1.7% in 2020. Compared with the March 2018 ECB staff macroeconomic projections, the outlook for real GDP growth has been revised down for 2018 and remains unchanged for 2019 and 2020.

                            The risks surrounding the euro area growth outlook remain broadly balanced. Nevertheless, uncertainties related to global factors, including the threat of increased protectionism, have become more prominent. Moreover, the risk of persistent heightened financial market volatility warrants monitoring.

                            According to Eurostat’s flash estimate, euro area annual HICP inflation increased to 1.9% in May 2018, from 1.2% in April. This reflected higher contributions from energy, food and services price inflation. On the basis of current futures prices for oil, annual rates of headline inflation are likely to hover around the current level for the remainder of the year. While measures of underlying inflation remain generally muted, they have been increasing from earlier lows. Domestic cost pressures are strengthening amid high levels of capacity utilisation, tightening labour markets and rising wages. Uncertainty around the inflation outlook is receding. Looking ahead, underlying inflation is expected to pick up towards the end of the year and thereafter to increase gradually over the medium term, supported by our monetary policy measures, the continuing economic expansion, the corresponding absorption of economic slack and rising wage growth.

                            This assessment is also broadly reflected in the June 2018 Eurosystem staff macroeconomic projections for the euro area, which foresee annual HICP inflation at 1.7% in 2018, 2019 and 2020. Compared with the March 2018 ECB staff macroeconomic projections, the outlook for headline HICP inflation has been revised up notably for 2018 and 2019, mainly reflecting higher oil prices.

                            Turning to the monetary analysis, broad money (M3) growth stood at 3.9% in April 2018, after 3.7% in March and 4.3% in February. While the slower momentum in M3 dynamics over recent months mainly reflects the reduction in the monthly net asset purchases since the beginning of the year, M3 growth continues to be supported by the impact of the ECB’s monetary policy measures and the low opportunity cost of holding the most liquid deposits. Accordingly, the narrow monetary aggregate M1 remained the main contributor to broad money growth, although its annual growth rate has receded in recent months from the high rates previously observed.

                            The recovery in the growth of loans to the private sector observed since the beginning of 2014 is proceeding. The annual growth rate of loans to non-financial corporations stood at 3.3% in April 2018, unchanged from the previous month, and the annual growth rate of loans to households also remained stable, at 2.9%.

                            The pass-through of the monetary policy measures put in place since June 2014 continues to significantly support borrowing conditions for firms and households and credit flows across the euro area. This is also reflected in the results of the latest Survey on the Access to Finance of Enterprises in the euro area, which indicates that small and medium-sized enterprises in particular benefited from improved access to financing.

                            To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed that today’s monetary policy decisions will ensure the ample degree of monetary accommodation necessary for the continued sustained convergence of inflation towards levels that are below, but close to, 2% over the medium term.

                            In order to reap the full benefits from our monetary policy measures, other policy areas must contribute more decisively to raising the longer-term growth potential and reducing vulnerabilities. The implementation of structural reforms in euro area countries needs to be substantially stepped up to increase resilience, reduce structural unemployment and boost euro area productivity and growth potential. Regarding fiscal policies, the ongoing broad-based expansion calls for rebuilding fiscal buffers. This is particularly important in countries where government debt remains high. All countries would benefit from intensifying efforts towards achieving a more growth-friendly composition of public finances. A full, transparent and consistent implementation of the Stability and Growth Pact and of the macroeconomic imbalance procedure over time and across countries remains essential to increase the resilience of the euro area economy. Improving the functioning of Economic and Monetary Union remains a priority. The Governing Council urges specific and decisive steps to complete the banking union and the capital markets union.

                            We are now at your disposal for questions.

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                            WTI oil back above 60 as Saudi Arabia cuts oil exports starting Dec

                              WTI crude oil opened the week higher and is back above 60. Saudi Arabia announced during the weekend to cut oil exports by 500k bpd in December. Its Energy Minister Khalid Al-Falih said on Sunday that demand for Saudi oil is “tapering off” partly due to seasonal factors. And, he pledged that “we as responsible producers are going to work, and work hard, to balance the market within a reasonable corridor.”

                              The OPEC+ also said in a post-meeting statement that it might need new strategies onwards. It said “the committee reviewed current oil supply and demand fundamentals and noted that 2019 prospects point to higher supply growth than global requirements.” And, weaker global economic growth “could lead to widening the gap between supply and demand.”

                              WTI crude oil topped at 77.06 back in early October but then persistently dropped to as low as 59.37 last week. A key factor driving the free fall was the erratic sanction policy of the US on Iran. Trump initially insisted to restrict all Iranian exports to the world. But it turned out that waivers were granted to eight countries on oil trade with Iran, including Taiwan.

                              Technically, today’s recovery is so far not strong enough to warrant a change in near term down trend.

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                              USDJPY heading lower after Trump cancels summit with North Korean Kim

                                Stocks tumble sharply, while treasury yields dive as Trump announced to cancel the meeting with North Korean Leader Kim Jong Un in Singapore on June 12. At the time of writing, DOW is down -0.5%, at around 24770. Deeper fall could be seen but the key is whether near term support at around 24600 would hold. There is some distance to this level yet.

                                But 10 year yield is looking much worse. TNX opened the day at 3% and hit as long as 2.963 so far. There is some clear downside acceleration after Trump’s announcement through the White House. And the sharp fall in TNX drags USD/JPY to 109.10so far.

                                Below is the tweet from the White House regarding the cancellation.

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                                Eurozone PMI: Services improvement offsets manufacturing, points to 0.5% GDP growth in Q2

                                  Eurozone PMI manufacturing dropped to 55.0 in June, down from 55.5 and met expectation. PMI services rose to 55.0, up from 53.8 and beat expectation of 53.7. PMI composite rose to 54.8, up from 54.1 and beat expectation of 53.9. PMI composite is at a 2 month high while PMI services is at at 4-month high. However, PMI manufacturing is at an 18-month low. Overall, the data point to 0.5% GDP growth in Q2.

                                  Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

                                  “An improved service sector performance helped offset an increasing drag from the manufacturing sector in June, lifting Eurozone growth off the 18- month low seen in May. With growth kicking higher in June, the surveys are commensurate with GDP rising 0.5% in the second quarter.

                                  “Price pressures are also on the rise again, running close to seven-year highs. Increased oil and raw material prices are driving up costs, but wages are also lifting higher, in part reflecting tighter labour markets in some parts of the region. Service sector jobs are being created at the fastest rate seen over the past decade, underscoring the extent to which the job market is tightening.

                                  “However, the details of the survey warn against any complacency. The June uptick could be at least in part explained by business returning to normal after an unusually high number of public holidays in May, suggesting that the underlying trend remains one of slower growth. Business expectations are running at one-and-a-half year lows, and output continues to increase at a faster rate than incoming new orders, all of which suggests that output and employment growth could weaken again in July unless demand picks up again.

                                  “Manufacturing is looking especially prone to a further slowdown in coming months, with companies citing trade worries and political uncertainty as their biggest concerns. Sentiment about the year ahead in the factory sector has sunk to its lowest since 2015.

                                  “While the June upturn provides some hope that the weakening of official data earlier in the year may have overstated the region’s weakness, the risks remained tilted towards a further slowdown in the second half of the year.”

                                  Full release here.

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                                  UK PMI services rose to 55.1, Q2 rebound opens door for August BoE hike

                                    UK PMI services rose to 55.1 in June, up from 54.0 and beat expectation of 53.9. Markit noted “robust and accelerated upturn in business activity, with new work increased at fastest pace for 13 months. Input cost inflation also intensified.

                                    Chris Williamson, Chief Business Economist at IHS Markit, which compiles the survey:

                                    “Stronger growth of service sector activity adds to signs that the economy rebounded in the second quarter and opens the door for an August rate hike, especially when viewed alongside the news that inflationary pressures spiked higher.

                                    “The survey data indicate that the economy likely grew by 0.4% in the second quarter, up from 0.2% in the opening quarter of 2018. The sharp rise in business costs, linked to surging oil prices and the need to offer higher wages, suggests inflation will also pick up again from its current rate of 2.4%.

                                    “It remains encouraging yet also surprising that current business activity continues to show such resilience amid relatively moribund confidence regarding the year ahead outlook. The survey once again highlights how the business outlook remains clouded by widespread concerns about the impact of Brexit uncertainty in particular.

                                    “Such a divergence between current and expected future activity stokes worries that the upturn is being fueled by short-term spending, based on hopes that uncertainty will lift, and likely masks a lack of longer-term business investment.”

                                    Full UK PMI services release.

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                                    Bullish developments in GBPUSD and EURUSD after FOMC

                                      USD’s post FOMC selloff extends in Asia session, except versus AUD. Aussie pares back some gains after disappointment from its own employment data.

                                      For the week, USD remains the worst performing one, followed by JPY. GBP and CAD remain nearly equally strong.

                                      Two technical developments are worth noting after FOMC.

                                      Firstly GBP/USD has now surged past 1.4144 resistance. The development further solidify the case that correction from 1.4345 has completed at 1.3711, as supported by 55 day EMA. And it’s held above 1.3651 resistance turned support. That, thus, keep GBP/USD well supported in the healthy medium term up trend. Current rise should now extend to 1.4345 resistance technically. But of course, that will be subject to the outcome of today’s BoE rate decision. While there is practically no change for BoE to hike, any hawkish twist of the language, or votes for hike, could shoot GBP/USD up through 1.4345.

                                      Euro is actually the third strongest for the week, following Sterling and Canadian Dollar. EUR/USD’s breach of 1.2358 following FOMC also affirms the case that price action from 1.2455 are corrective. And the pattern could have completed at 1.2238 already. Further rise is now expected to 1.2445. Break will target 1.2555, the real key resistance level. So far, EUR/USD is also staying in healthy up trend as supported by rising 55 day EMA and above 1.2091 resistance turned support. Just that 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516 is an important hurdle to overcome.

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                                      UK PM May seeks to complete the blueprint on future relationship with Juncker

                                        UK Prime Minister Theresa May will meet European Commission President Jean-Claude Juncker today, with focus on the future relationship. Specifically, May seeks to complete a 20-page political blueprint document on future relationship with Juncker And hopefully, the blueprint could help May win back the support in the parliament on the Brexit withdrawal agrement.

                                        May also told the parliament today that “we continue to negotiate on that future relationship to get the good deal that we believe is right for the United Kingdom.”

                                        While May could have survived the leadership challenge by the embarrassed Jacob Rees-Mogg, the chance of getting the Brexit deal through the parliament is still slim. Another breakthrough is deadly needed.

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                                        Dollar falls as core CPI slowed more than expected, ignore strong job data

                                          Dollar suffers renewed sell after core consumer came in lower than expected. Headline CPI rose 0.2% mom, 2.7% yoy versus expectation of 0.1% mom, 2.7% yoy. That slowed from prior month’s 0.2% mom, 2.9% yoy. Core CPI rose 0.1% mom, 2.2%, missed expectation of 0.2% mom, 2.4% yoy. Also it missed expectation of 0.2% mom, 2.4% yoy.

                                          Job data was solid though. Initial jobless claims dropped -1k to 204k in the week ended September 8. That’s the new lowest since December 6 1969. Four-week moving average of initial claims dropped -2k to 208k, lowest since December 6, 1969. Continuing claims dropped -15k to 1.696m, lowest since December 1, 1973. Four week moving average of continuing claims dropped -8.25k to 1.71125m., lowest since November 24, 1973.

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