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US CPI accelerated to 2.6% yoy, core CPI up to 1.6% yoy

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    ActionForex.com
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    US CPI rose 0.6% mom in March, above expectation of 0.5% mom. That’s the highest 1-month increase since August 2012. Core CPI, all items less food and energy, rose 0.3% mom, above expectation of 0.2% mom.

    Annually, headline CPI accelerated to 2.6% yoy, up from 1.7% yoy, above expectation of 2.5% yoy. Core CPI accelerated to 1.6% yoy, up from 1.3% yoy, matched expectations.

    Full release here.

    German ZEW economic sentiment jumped to -10.6 as considerable fears diminished somewhat

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      ActionForex.com
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      German ZEW Economic Sentiment improved to -10.6 in September, up from -13.7 and beat expectation of -13.4. Current Situation index rose to 76.0, up from 72.6, above expectation of 72.3. Eurozone ZEW Economic Sentiment rose to -7.2, up from -11.1, beat expectation of -14.9. Current Situation index rose 1.7 pts to 31.7.

      ZEW President Professor Achim Wambach noted in the release that “during the survey period, the currency crises in Turkey and Argentina intensified, while German industrial production and incoming orders were surprisingly low in July.” However, “despite these unfavourable circumstances, economic expectations for Germany improved slightly.” And “the considerable fears displayed by the survey participants regarding the economic development have diminished somewhat, which may in part be attributable to the new trade agreement between the USA and Mexico”.

      Full release here.

      Also from Eurozone, employment rose 0.4% qoq, 1.5% yoy in Q2 versus expectation of 0.4% qoq, 1.4% yoy.

      US PMI composite rose to 50.2, welcome steadying of business activity

        By
        ActionForex.com
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        US PMI Manufacturing rose from 46.9 to 47.8 in February. PMI Services rose from 46.8 to 50.5, an 8-month high. PMI Composite rose from 46.8 to 50.2, also an 8-month high.

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

        “February is seeing a welcome steadying of business activity after seven months of decline. Despite headwinds from higher interest rates and the cost of living squeeze, the business mood has brightened amid signs that inflation has peaked and recession risks have faded. At the same time, supply constraints have alleviated to the extent that delivery times for inputs into factories are improving at a rate not seen since 2009.

        “However, there are some caveats to the good news. The upturn is being driven by the services sector, which in part reflects unseasonably warm weather, and although the manufacturing survey data are showing signs of improvement, the factory sector remains in contraction and focused on inventory reduction.

        “Furthermore, the improved supply situation has taken price pressures out of manufacturing supply chains, but the survey data underscore how the upward driving force on inflation has now shifted to wages amid the tight labor market. By potentially stoking concerns over a wage-price spiral, accelerating service sector price growth will add to calls for higher interest rates, which could in turn subdue the nascent expansion.”

        Full release here.

        AUD stays firm as employment data miss is not a disaster

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          ActionForex.com
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          AUD is not too bothered by the weaker than expected headline job data from Australia. 4.9k jobs were added in March, below expectation of 20.3k. Full time jobs dropped by 19.9k to 8.51m while part time jobs rose 24.8k to 3.9m. Total employment was at 12.484m.

          Prior month’s figure was revised down from 17.5k to -6.3k. February now had the first monthly drop in employment since September 2016. The record streak of consecutive monthly job growth has shorted to 16 months.

          Seasonally adjusted unemployment rate was unchanged at 5.5%, after downward revision in February’s figure from 5.6% to 5.5%. However, labor force participation rate rose to 65.7%, sitting at a record high in since the series began back in 1978.

          The figures just showed that growth in the Australian labor market is slowing after a very strong period since late 2016. .

          AUD quickly regained some strength after initial dip as markets realized that the data is not a disaster.

          China Caixin PMI manufacturing rose to 50.6, supply strains became the paramount factor

            By
            ActionForex.com
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            China Caixin PMI Manufacturing rose to 50.6 in October, up from 50.0, above expectation of 50.6. Caixin noted total new work had the strongest increase in four months. Production fell modestly amid rising costs and reduced power supply. Average lead times rose at fastest rate since March 2020.

            Wang Zhe, Senior Economist at Caixin Insight Group said: “To sum up, manufacturing recovered slightly in October from the previous month. But downward pressure on economic growth continued. We noticed that the pandemic’s impact on manufacturing faded from late September to mid-October as the number of new Covid-19 cases dropped, which boosted demand.

            “However, supply strains became the paramount factor affecting the economy. Shortages of raw materials and soaring commodity prices, combined with electricity supply problems, created strong constraints for manufacturers and disrupted supply chains. Input costs for manufacturers have risen much faster than output prices for several months, putting a lot of pressure on downstream enterprises.”

            Full release here.

            China Caixin PMI manufacturing rose to 50.1, but sector under double pressure

              By
              ActionForex.com
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              China Caixin PMI manufacturing rose to 50.1 in March, up from 40.3, above expectation of 45.8. However, demand conditions remained fragile, as highlighted by a second monthly fall in total new business. A number of panel members also mentioned delay or cancellation in orders. New export work declined solidly sue to global spread of coronavirus. Employment data also signalled further headcounts reduction.

              Dr. Zhengsheng Zhong, Chairman and Chief Economist at CEBM Group said: “To sum up, the manufacturing sector was under double pressure in March: business resumption was insufficient; and worsening external demand and soft domestic consumer demand restricted production from expanding further. Whereas, business confidence was still high and the job market basically returned to the pre-epidemic level, laying a positive foundation for the economy’s rapid recovery after the epidemic.”

              Full release here.

              New Zealand CPI rose 0.5% qoq on transport costs, NZD recovers mildly

                By
                ActionForex.com
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                New Zealand CPI slowed to 0.5% qoq in Q4, down from 0.7% qoq, but beat expectation of 0.4% qoq. Annually, CPI accelerated to 1.9% yoy, up from 1.5% yoy, but missed expectation of 2.2% yoy. Transport cost was a main driver of quarterly inflation pickup, rose 2.1%. Recreation and culture rose 1.6%. Housing and household utilities rose 0.5%. On the other hand, food prices dropped -0.6%.

                NZD/USD recovers mildly after the release but upside is so far limited. As long as 0.6665 minor resistance holds, corrective fall from 0.6755 might extend through 0.6851 temporary low. But considering bullish convergence condition in 4 hour MACD, downside should be contained by 38.2% retracement of 0.6203 to 0.6755 at 0.6544 to bring rebound. Break of 0.6665 should bring retest of 0.6755 high.

                UK PMI services finalized at 50.0, energy crisis hit business and consumer spending

                  By
                  ActionForex.com
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                  UK PMI Services was finalized at 50.0 in September, down from August’s 50.9, weakest reading since February 2021. PMI Composite was finalized at 49.1, down from prior month’s 49.6, lowest since January 2021.

                  Tim Moore, Economics Director at S&P Global Market Intelligence: “September data highlighted an absence of growth in the UK service sector for the first time in 19 months as the energy crisis continued to hit business and consumer spending…. Service sector businesses trimmed their growth expectations to the lowest seen for nearly two-and-a-half years in September, which survey respondents linked to concerns about falling disposable income and the unfavourable global economic outlook.”

                  Full release here.

                  Mnuchin arrives in Beijing as China warns to stand up to US bullying

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                    ActionForex.com
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                    US Treasury Secretary Steven Mnuchin arrives in Beijing today and is set to kick start trade negotiation with Chinese Vice-Premier Liu He. Mnuchin told reporter he’s “thrilled to be here” upon arriving his hotel. The delegation planned to leave Friday evening.

                    Ahead of the meeting, the official China Daily said in a editorial that it will “stand up to the US’ bullying as necessary”. And “as a champion of globalisation, free trade and multilateralism, it will have strong support from the international community”. It warned that “the US wants greater access to China’s market, but it should not use trade actions as a battering ram to force China to open its doors.”

                    Trump still claimed he always has a good relationship with Chinese President Xi in his tweet ahead of the meeting.

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                    US crude oil inventories rose 4.9m barrels, WTI pressing 42 key resistance

                      By
                      ActionForex.com
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                      US commercial crude oil inventories rose 4.9m barrels in the week ending July 17, versus expectation of -2.1m barrels decline. At 536.6m barrels, oil inventories are about 19% above the five year average for this time of the year. Total motor gasoline inventories dropped -1.8m barrels. Distillate fuel inventories rose 1.1m barrels. Propane/propylene inventories rose 2.0m barrels. Total commercial petroleum inventories rose 8.8m barrels.

                      WTI gyrated higher to 42.29 this week with rather weak upside momentum. 42.05 key resistance level was breached but WTI couldn’t sustain above it yet. We’d maintain that 42.05 should eventually hold. Break of 38.45 support would confirm short term topping and bring long-overdue pull back. However, sustained break of 42.05 would carry some larger bullish implications.

                      Fed hikes 50bps, rate to hit 5.1% in 2023

                        By
                        ActionForex.com
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                        Fed raises interest rate by 50bps to 4.25-4.50% as widely expected. The decision was unanimous.

                        Tightening bias is maintained as “the Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time”.

                        In the new median economic projections:

                        • Federal funds rate is projected to hit 5.1% in 2023, then falls back to 4.1% in 2024, and then 3.1% in 2015.
                        • Real GDP growth was revised down from 1.2% to 0.5% in 2023, from 1.7% to 1.6% in 2024, and unchanged at 1.8% in 2025.
                        • Unemployment rate was revised up from 4.4% to 4.6% in 2023, from 4.4^ to 4.6% in 2024, and from 4.3% to 4.5% in 2025.
                        • PCE inflation was revised up from 2.8% to 3.1% in 2023, 2.3% to 2.5% in 2024, a and from 2.0% to 2.1% in 2025.
                        • Core PCE inflation was revised up from 3.1% to 3.5% in 2023, 2.3% to 2.5% in 2024 and unchanged at 2.1% in 2025.

                        In the “dot plot”

                        • 17 policy makers expect interest rate to climb to 5.125% and above in 2023, with 7 expects 5.375% and above.
                        • 12 policy makers expect interest to fall back to 4.125% in 2024 and below.


                        Full statement here.

                        Full economic projections here.

                        WTI oil gyrates lower as medium term consolidation extends

                          By
                          ActionForex.com
                          -

                          WTI crude oil continued to gyrate lower this week. EU has yet confirmed banning Russian coal and even if they do, it’s not expected to take effect until August. Oil embargo is not in sight. Meanwhile, oil demand in China is not looking good as coronavirus lockdowns put activity in Shanghai into a halt.

                          Anyway, the current fall from 118.57 in WTI crude oil is seen as a leg inside the medium term corrective pattern from 131.82. Deeper decline might be seen through 93.98 support. But strong support should be seen at around 85.92 resistance turned support to bring rebound.

                          On the upside, break of 106.59 resistance will bring rebound back to 118.57 resistance and possibly above. But there is no scope in break through 131.82 high for the near term. The corrective pattern will take a while to complete.

                          Eurozone retail sales dropped -5.9% mom in Jan, EU down -5.1% mom

                            By
                            ActionForex.com
                            -

                            Eurozone retail sales dropped sharply by -5.9% mom in January, worse than expectation of -1.1% mom. Volume of retail trade decreased by -12.0% mom for non-food products and by -1.1% mom for automotive fuels, while it increased by 1.1% mom for food, drinks and tobacco.

                            EU retail sales dropped -5.1% mom. Among Member States for which data are available, the largest decreases in total retail trade were registered in Austria (-16.6% mom), Ireland (-15.7% mom) and Slovakia (-11.1% mom). The highest increases were observed in Sweden (+3.5% mom), Bulgaria (+1.8% mom) and Estonia (+1.7% mom).

                            Full release here.

                            Germany export rose 4.1% mom in Oct, imports rose 5.0% mom

                              By
                              ActionForex.com
                              -

                              In calendar and seasonally adjusted term, Germany export rose 4.1% mom to EUR 121.3B in October. Imports rose 5.0% mom to EUR 108.5B. Trade surplus narrowed to EUR 12.5B, down from EUR 13.2B, below expectation of EUR 12.9B. Over the year, exports rose 8.1% yoy, while imports rose 17.3% yoy.

                              In calendar and seasonally adjusted term, exports were 3.8% higher than pre-pandemic level in February 2020. Imports were 13.5% higher.

                              Full release here.

                              ECB Schnabel emphasizes data-driven approach amid banking sector disturbances

                                By
                                ActionForex.com
                                -

                                European Central Bank (ECB) Executive Board member Isabel Schnabel emphasized the importance of a data-driven approach to policy decisions in light of recent disturbances in the banking sector. She stated yesterday, “I can’t tell you what we’ll decide at the next meeting, and especially at the following meetings,” adding that the situation has become “even more complex.”

                                Schnabel noted the significance of monitoring the potential impact of banking sector uncertainty on lending, saying, “It’s even more important that we look at all the data we’ll get. It’s important whether the uncertainty in the banking sector will have an additional impact on lending.”

                                When discussing the ECB’s future plans for its balance sheet, Schnabel admitted that the endpoint remains uncertain and is currently under discussion. She emphasized the need to manage the balance sheet in a way that markets can digest during these turbulent times and expressed satisfaction with the current approach, stating, “So far, it’s worked extraordinarily well.”

                                US CPI accelerated to 1.3% yoy, core CPI rose to 1.7% yoy

                                  By
                                  ActionForex.com
                                  -

                                  US CPI rose 0.4% mom in August, above expectation of 0.3% mom. CPI core rose 0.4% mom, above expectation of 0.2% mom. Annually, headline CPI accelerated to 1.3% yoy, up from 1.0% yoy, beat expectation of 1.2% yoy. CPI core accelerated to 1.7% yoy, up from 1.6% yoy, beat expectation of 1.6% yoy.

                                  Full release here.

                                  Japan CPI core hit 41-yr high at 4.2% in Jan

                                    By
                                    ActionForex.com
                                    -

                                    Japan all item CPI rose from 4.0% yoy to 4.3% yoy in January, below expectation of 4.5% yoy. CPI core (all-item ex-food) rose from 4.0% yoy to 4.2% yoy, matched expectations. CPI core-core (all-item ex-food and energy) rose from 3.0% yoy to 3.2% yoy, matched expectations.

                                    Core CPI rate of 4.2% was the highest in 41-year since September 1981. The core inflation rate stayed above BoJ’s 2% target for nine consecutive months.

                                    ECB to hike by 25bps or 50bps? EUR/CHF to head back to parity?

                                      By
                                      ActionForex.com
                                      -

                                      ECB will finally raise interest rates for the first time in 11 years today. Opinions are divided on whether ECB would hike by 25bps as pre-committed, or opt for a larger 50bps hike this time. In addition to this question, markets will be eager to get any guidance for the size of hike in September, and any indication for October.

                                      Here are some previews on ECB:

                                      EUR/CHF is holding steady in range above 0.9804 temporary low. For now, outlook stays bearish with 0.9953 minor resistance intact. Downside breakout remains in favor. However, downside momentum has been clearly diminishing as seen in 4 hour MACD. Firm break of 0.9953 will bring stronger rebound back to 55 day EMA (now at 1.0109), that is, back above parity.

                                      Swiss CPI slowed to 2.2% yoy in May, slightly above expectations

                                        By
                                        ActionForex.com
                                        -

                                        Swiss CPI rose 0.3% mom in May, slightly below expectation of 0.4% mom. Core CPI (excluding fresh and seasonal products, energy and fuel) rose 0.2% mom. Domestic products prices rose 0.3% mom. Imported products prices rose 0.1% mom.

                                        Comparing with May 2022, CPI slowed from 2.6% yoy to 2.2% yoy, above expectation of 2.1% yoy. Core CPI was unchanged at 2.2% yoy. Domestic products prices slowed from 2.6% yoy to 2.4% yoy. Imported products prices fell notably from 2.4% yoy to 1.4% yoy.

                                        Full Swiss CPI release here.

                                        IMF to RBA: More tightening needed to curb inflation

                                          By
                                          ActionForex.com
                                          -

                                          In a report on Australia’s economy, IMF highlighted concerns about persistent inflation levels in the country. Even though inflation is “gradually declining”, it continues to hover “significantly above” RBA’s target, with the country’s output “remains above potential.”

                                          The IMF staff “recommend further monetary policy tightening”. They believe this approach will realign inflation with RBA’s target range by 2025 and “minimize the risk of de-anchoring inflation expectations.”

                                          In terms of economic momentum, the IMF predicts a further slowdown in the near future, coinciding with a steady decrease in inflation. While risks to growth appears “broadly balanced”, the potential for inflation to surpass expectations remains a cause for concern.

                                          Full IMF report here.

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