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US PCE inflation rose to 6.8% yoy, core CPI rose to 4.8% yoy

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    ActionForex.com
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    US personal spending rose 0.6% mom or USD 133.5B in June, above expectation of 0.5% mom. Personal spending rose 1.1% mom or USD 181.1B, above expectation of 0.9% mom. The rise in spending reflected USD 94.9B increase in goods and USD 86.2B in services.

    Headline PCE price index accelerated from 6.3% yoy to 6.8% yoy, above expectation of 6.7% yoy. That’s also the highest level since January 1982. Core PCE price index also rose from 4.7% yoy to 4.8% yoy, above expectation of 4.7% yoy.

    Full release here.

    RBA moves to AUD 4B per week bond purchase, until at least mid-Nov

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      ActionForex.com
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      RBA decided to keep cash rate target at 0.10% as widely expected. The central bank will continue with bond purchase program after the current one ends in September. But the purchase target will be changed to AUD 4B per week, until at least mid-November. April 2024 bond is kept as the bond for yield target at 0.10%.

      The central bank said the expectation that condition for rate hike “will not be met before 2024”. This could be seen as slightly more optimism than “this is unlikely to be until 2024 at the earliest.” Still, “meeting it will require the labour market to be tight enough to generate wages growth that is materially higher than it is currently.”

      Full statement here.

      Eurozone economic sentiment dropped to -0.2, business climate unchanged at 0.69

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        ActionForex.com
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        Eurozone Economic Sentiment Indicator dropped -0.2 to 106.1 in February, slightly above expectation of 106.0. The broadly unchanged reading resulted from “weaker industry and construction confidence in combination with more upbeat signals from the services sector, as well as, to a lesser extent, retail trade and consumers”. Meanwhile the ESI dropped in Franc (-0.9%) and Italy (-1.6), practically flat in Germany (-0.1) and Spain (0.0), but improved in the Netherlands (+3.0).

        Eurozone Business Climate Indicator is flat at 0.69 in February, slightly above expectation of 0.67. Eurostats noted “Managers’ production expectations, as well as their assessments of the stocks of finished products, overall- and export order books clouded over. Meanwhile, the appraisals of past production rebounded from last month’s sharp drop.”

        RBNZ keeps OCR at 0.25%, launches new stimulus with FLP

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          ActionForex.com
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          RBNZ decided to keep the Official Cash Rate unchanged at 0.25% today while the Large Scale Asset Purchase Programme will continue, up to NZD 100B. The central bank introduced additional stimulus through a Funding for Lending Programme, commencing December, to lower banks’ funding costs and lower interest rates.

          RBNZ also “reaffirmed that an FLP, a lower or negative OCR, purchases of foreign assets, and interest rate swaps remain under consideration.” The banking system is also “on track to be operationally ready for negative interest rates by year end.”.

          Full statement here.

          China lowers tariffs on 859 imports types to below MFN rates

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            ActionForex.com
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            China’s Ministry of Finance announced to cut import tariffs for range of products starting January 1. A total of 859 product types will enjoy provisional import tariffs lower than the Most-Favored-Nation (MFN) rates charged in 2020. The move aimed at meeting specific domestic demands but not totally related to US-China trade deal. The MOF also said that Goods from New Zealand, Peru, Costa Rica, Switzerland, Iceland, Singapore, Australia, South Korea, Georgia, Chile and Pakistan will have even lower levies under the re-negotiated free trade agreements with China.

            In particular, tariffs for frozen pork will be lowered from the MFN rate of 12% to 8%. Also, rate for frozen avocado will be lowered from MFN rate from 30% to 7%. Tariffs for some asthma and diabetes medications will be set at zero. Import tariffs on multi-component semiconductors will be cut to zero.

            Bitcoin trading sideway, risk still on the downside

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              ActionForex.com
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              Bitcoin stabilized after hitting 33000 and turned sideway. But risk is still staying heavily on the downside with 39636 support turned resistance intact. Current down trend from 68986 could extend with another falling leg, towards 29261 support, which is close to 30k psychological level too. We’d look for bottoming signal around there.

              Meanwhile, on the upside, firm break of 39639 will argue that bitcoin has bottomed earlier than expected and bring rebound back towards 55 day EMA (now at 44839). Failure to defend 30k handle will indicate that the larger down trend is still in force for 100% projection of 68986 to 41908 from 52101 at 25023.

              NASDAQ poised for deeper correction

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                ActionForex.com
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                US stocks ended mixed overnight, driven primarily by disparate earnings results. DOW registered its first 9-day rally since 2017, gaining 0.47%, largely boosted by better-than-expected earnings results from pharmaceutical giant Johnson & Johnson. On the other hand, the tech-heavy NASDAQ slipped -2.05% due to disappointing results from streaming giant Netflix and electric carmaker Tesla.

                The notable pullback in NASDAQ suggests that US stock markets could be broadly transitioning into a consolidation phase. This shift happens in anticipation of the FOMC rate decision scheduled for next week, followed by crucial employment data in the subsequent week.

                From a technical perspective, NASDAQ could be bracing for a deeper correction, given that it was already close to 161.8% projection of 10088.82 to 12269.55 from 10982.80 at 14511.22. Break of 13864.06 resistance turned support would likely trigger deeper fall to 55 D EMA (now at 13306.68).

                Should this scenario transpire, it should confirm a near term shift in risk sentiment, potentially providing a boost to Dollar and extending its current rebound.

                US building permits permits rose to 1.76m, housing starts dropped to 1.57m

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                  ActionForex.com
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                  US building permits rose 0.3% mom to 1760k in April, slightly below expectation of 1770k. Housing starts dropped -9.5% mom to 1569k, well below expectation of 1710k.

                  Full release here.

                  Eurozone CPI down to 2.8%, core falls to 3.3%, both above expectations

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                    ActionForex.com
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                    Eurozone CPI slowed from 2.9% yoy to 2.8% yoy in January, above expectation of 2.7% yoy. CPI core (excluding energy, food, alcohol & tobacco) slowed from 3.4% yoy to 3.3% yoy, above expectation of 3.2% yoy.

                    Looking at the main components, food, alcohol & tobacco is expected to have the highest annual rate in January (5.7%, compared with 6.1% in December), followed by services (4.0%, stable compared with December), non-energy industrial goods (2.0%, compared with 2.5% in December) and energy (-6.3%, compared with -6.7% in December).

                    Full Eurozone CPI release here.

                    China trade surplus widened to USD 51B, both imports and exports declined

                      By
                      ActionForex.com
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                      In June, in USD terms, US imports dropped -7.3% yoy to USD 16.19B. Exports dropped -1.3% yoy to 21.28B. Both import and exports were worse than expectation of -4.6% yoy and -0.6% yoy respectively. Trade surplus came in at USD 51.0B above expectation of USD 45.2B.

                      The results clearly showed some impacts in trade after US imposition on higher tariffs on USD 200B of Chinese goods came into effect. But so far, there was no notably improvement in US-China trade balance. US trade deficit with China came in at USD -140.5B in the first half, worse than USD -133.8B in first half of 2018.

                      Here are some details:

                      From Jan to Jun, with US:

                      • Total trade dropped -14.2% yoy to USD 258.3B.
                      • Exports dropped -8.1% yoy to USD 199.4B.
                      • Imports dropped -29.9% yoy to USD 58.9B.
                      • Trade surplus was at USD 140.5B.

                      From Jan to Jun, with EU:

                      • Total trade rose 4.9% yoy to USD 338.0B.
                      • Exports rose 6.0% yoy to USD 202.8B.
                      • Imports rose 3.3% yoy to 135.2B.
                      • Trade surplus was at USD 67.6B

                      From Jan to Jun, with AU:

                      • Total trade rose 6.3% yoy to 78.7B.
                      • Exports rose 2.0% to USD 22.1B.
                      • Imports rose 8.1% to USD 56.7B.
                      • Trade deficit was at USD -34.6B.

                      US PMI composite fell to 50.4, near stagnation

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                        ActionForex.com
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                        US PMI Manufacturing fell form 49.0 to 47.0 in August. PMI Services fell from 52.3 to 51.0. PMI Composite fell from 52.0 to 50.4.

                        Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:

                        “A near-stalling of business activity in August raises doubts over the strength of US economic growth in the third quarter. The survey shows that the service sector-led acceleration of growth in the second quarter has faded, accompanied by a further fall in factory output.

                        “Companies report that demand is looking increasingly lethargic in the face of high prices and rising interest rates. A resultant fall in new orders received by firms in August could tip output into contraction in September as firms adjust operating capacity in line with the deteriorating demand environment. Hiring could likewise soon turn into job shedding in the coming months after a near-stagnation of employment in August.

                        “Rising wage pressures as well as increased energy prices have meanwhile pushed input cost inflation higher, which will raise concerns over the stickiness of consumer price inflation in the months ahead. One upside is that weak demand is starting to limit pricing power, which should help keep a lid on inflation around the 3% mark.”

                        Full US PMI release here.

                        US PCE inflation slowed to 6.3% yoy, core PCE down to 4.9% yoy

                          By
                          ActionForex.com
                          -

                          US personal income rose 0.5% mom, or USD 89.3B, in April, below expectation of 0.6% mom. Personal spending rose 0.9% mom, or USD 152.3B, above expectation of 0.7% mom.

                          Headline PCE price index slowed from 6.6% yoy to 6.3% yoy, below expectation of 6.6% yoy. Core PCE price index slowed from 5.2% yoy to 4.9% yoy, matched expectations. Energy prices rose 30.4% yoy while food prices rose 10.0% yoy.

                          Full release here.

                          Fed removes QE limits, launches new program to support businesses

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                            ActionForex.com
                            -

                            Fed announced a new round of aggressive measures to support the US economy against coronavirus pandemic impacts. In particular, Fed will purchase bonds to keep borrowing costs low without specifying a limit. There will also be programs to ensure credit flows into businesses and governments.

                            Fed said it will buy treasuries and agency mortgage-backed securities “in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.” Last week, Fed said it would by at least USD 500B of treasuries and USD 200B of agency MBS.

                            Additionally, Fed will support “the flow of credit to employers, consumers and businesses by establishing new programs that, taken together, will provide up to $300 billion in new financing.”

                            Full statement here.

                            Japan’s CPI core slows to 2.5% yoy, but services inflation hit three-decade high

                              By
                              ActionForex.com
                              -

                              Japan’s core CPI, which excludes fresh food, decreased from 2.9% yoy to 2.5% yoy in November, marking the lowest level since July 2022. Despite this deceleration, inflation remains above BoJ’s target of 2% for the twentieth consecutive month, indicating persistent inflationary pressures.

                              All-items CPI also experienced a slowdown, dropping from 3.3% yoy to 2.8% yoy. Additionally, core-core CPI, which excludes both fresh food and energy, showed a slight decrease from 4.0% yoy to 3.8% yoy.

                              Notably, goods inflation saw a significant reduction, declining from 4.4% yoy to 3.3% yoy. In contrast, service inflation showed an acceleration, rising from 2.1% yoy to 2.3% yoy. This increase in service inflation is the sharpest in three decades, dating back to October 1993, if the effects of past consumption tax hikes are excluded.

                              Energy prices, a key factor in inflation calculations, dropped by -10.1% yoy. Japanese government’s subsidies to reduce fuel costs played a role in tempering inflation rates. Without these subsidies, core CPI would have seen an increase of around 3%, according to the ministry.

                              AUDUSD spikes lower after Australia CPI miss, but quickly recovered

                                By
                                ActionForex.com
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                                Australia CPI was unchanged at 1.9% yoy in Q1, below expectation of 2.0%. RBA trimmed mean CPI rose to 1.9% yoy, up from 1.8% yoy and beat expectation of 1.8% yoy. RBA weighted median CPI was unchanged at 2.0% yoy, beat expectation of 1.9% yoy.

                                The Australian Bureau of Statistics noted in the  release that “while the annual CPI rose 1.9 per cent, most East Coast cities have continued to experience annual inflation above 2.0 per cent, due in part to the strength in prices related to Housing and Food. Softer economic conditions in Darwin and Perth have resulted in annual inflation remaining subdued at 1.1 and 0.9 per cent respectively.”

                                AUD/USD spiked lower to 0.7576 after the release but quickly recovered. Firstly, the decline is a bit stretched after AUD/USD fell for three days. Secondly, the CPI data just affirmed the case that RBA is in no rush to raise interest rate. For now, AUD/USD is on track for 0.7500 key support level in near term.

                                Canada employment grew 104k in Dec, unemployment rate down to 5%

                                  By
                                  ActionForex.com
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                                  Canada employment grew strongly by 104k in December, well above expectation of 5.5k. Total employment also surpassed prior peak in May.

                                  Unemployment rate dropped from 5.1% to 5.0%, below expectation of 5.2%, just above record low of 4.9% reached in June and July. Participation rate rose 0.2% to 65.0%.

                                  Full release here.

                                  China’s NBS PMI manufacturing falls slightly to 49.1, Caixin manufacturing rises to 50.9

                                    By
                                    ActionForex.com
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                                    China’s manufacturing sector continued its contraction for the fifth consecutive month in February, with official NBS PMI decreasing slightly from 49.2 to 49.1, matched expectations.

                                    New orders subindex remained steady at 49, indicating stagnant demand. New export orders fell further from 47.2 to 46.3, reflecting ongoing pressures on the export front.

                                    NBS PMI Non-Manufacturing rose from 50.7 to 51.4 , surpassing the anticipated 50.8. PMI Composite remained unchanged at 50.9.

                                    In parallel, Caixin PMI Manufacturing, which focuses more on small and medium-sized enterprises, edged up from 50.8 to 50.9 , slightly above expectations of 50.7.

                                    Caixin noted sustained increase in output and new orders, with firms expressing improved business optimism for the second consecutive month. Additionally, input cost inflation declined to a seven-month low, while selling prices fell.

                                    Full China Caixin PMI manufacturing release here.

                                    Australia Westpac consumer confidence dropped -5.2% on concerns around Melbourne lockdown

                                      By
                                      ActionForex.com
                                      -

                                      Australia Westpac consumer confidence dropped -5.2% to 107.2 in June. The index has now fallen by -9.7% over the last two months. Westpac said the latest fall is “almost certainly due to concerns around the two-week lockdown in Melbourne.” There was a fall of -7.5% in Victoria, -4% in Queensland, -9% in Western Australia, and -10.9% in South Australia. New South Wales dropped only -1.1%.

                                      Westpac expects RBA to decide against extending the Yield Curve Targeting from April 2024 bond to November 2024 bond. Also, RBA could announce a more flexible approach to QE, with a weekly target of AUD 5B.

                                      Full release here.

                                      BoJ Minutes: Appropriate to persistently continue with powerful monetary easing

                                        By
                                        ActionForex.com
                                        -

                                        In the minutes of July policy meeting, BoJ maintained that “economy was likely to continue on an “expanding trend” throughout the projection period through fiscal 2021, despite being affected by the slowdown in overseas economies. Exports were projected to “show some weakness” but would stay on a “moderate increasing trend”. The “continued relatively weak developments in prices” was largely affected by “deeply entrenched mindset and behavior based on the assumption that wages and prices would not increase easily”. Members still believed that CPI was “likely to increase gradually toward 2 percent”.

                                        Four risks were outlined on economic outlook: (1) developments in overseas economies; (2) the effects of the scheduled consumption tax hike; (3) firms’ and households’ medium- to long-term growth expectations; and (4) fiscal sustainability in the medium to long term. Also downside risks from overseas were “significant”: (1) the consequences of protectionist moves — including the U.S.-China trade friction — and their effects, as well as (2) developments in the Chinese economy, including the effects of the aforementioned factor and (3) the possibility that the progress in adjustments in the global cycle for IT-related goods might take longer than expected.

                                        On monetary policy, most members recognized that downside risks warranted attention. And, “it was appropriate to persistently continue with the current powerful monetary easing as the momentum toward achieving 2 percent inflation was being maintained with the output gap remaining positive”.

                                        Full minutes here.

                                        Fed chair Jerome Powell press conference live stream

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