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US initial jobless claims rose to 251k, continuing claims rose to 1.384m

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    ActionForex.com
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    US initial jobless claims rose 7k to 251k in the week ending July 16, above expectation of 240k. Four-week moving average of initial claims rose 4.5k to 240.5k.

    Continuing claims rose 51k to 1384k in the week ending July 9. Four-week moving average of continuing claims rose 13k to 1353k.

    Full release here.

    ECB hikes 50bps, frontloading exit from negative deposit rate

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      ActionForex.com
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      ECB announced to raise the three key interest rates by 50bps today. The main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 0.50%, 0.75% and 0.00% respectively, with effect from 27 July 2022.

      The “larger first step” in policy normalization was based on the “updated assessment of inflation risks and the reinforced support provided by the TPI for the effective transmission of monetary policy.” The “frontloading” of exit from negative deposit rate ” allows the Governing Council to make a transition to a meeting-by-meeting approach to interest rate decisions.” Future policy path will continue to be “data-dependent”.

      Also, the Governing Council approved the Transmission Protection Instrument (TPI), to “ensure that the monetary policy stance is transmitted smoothly across all euro area countries”.

      Full statement here.

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

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        ActionForex.com
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        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.

        BoJ stands part, downgrades 2022 growth forecasts, upgrades inflation

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          ActionForex.com
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          BoJ left monetary policy unchanged today as widely expected. Under the yield curve control frame work, short-term policy rate is held at -0.10%. BoJ will also will continue to purchase JGBs, without setting upper limit, to keep 10-year yield at around 0%. It will continue to offer to purchase 10-year JGBs at 0.25% yield every business day through fixed rate operations. Goushi Kataoka dissented again, pushing for further strengthening monetary easing.

          In the new economic projections, BoJ downgraded fiscal 2022 GDP forecasts, but upgraded both fiscal 2023 and 2024. CPI forecasts was upgraded across the horizon. Here are the new projections.

          • Fiscal 2022 GDP growth at 2.4% (downgraded from April’s 2.9%).
          • Fiscal 2023 GDP growth at 2.0% (up from 1.9%).
          • Fiscal 2024 GDP growth at 1.3% (up from 1.1%).
          • Fiscal 2022 CPI at 2.3% (up from 1.9%).
          • Fiscal 2023 CPI at 1.4% (up from 1.1%).
          • Fiscal 2024 CPI at 1.3% (up from 1.1%).
          • Fiscal 2022 CPI core-core (ex-fresh food and energy) at 1.3% (up from 0.9%).
          • Fiscal 2023 CPI core-core at 1.4% (up from 1.2%).
          • Fiscal 2024 CPI core core at 1.5% (unchanged).

          Full statement here.

          Full Outlook for Economic Activity and Prices.

          Australia NAB business condition rose to 20 in Q2, but confidence dropped to 5

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            ActionForex.com
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            Australia NAB quarterly business confidence dropped from 15 to 5 in Q2. Current business conditions rose from 11 to 20. Next 3 months business conditions was unchanged at 26. next 12 months business conditions dropped from 34 to 29. Capex plan for next 12 months dropped from 33 to 31.

            Alan Oster, NAB Group Chief Economist, “Conditions strengthened in Q2 as the disruptions related to the virus receded. Trading, profitability, and employment were all higher with conditions approaching the high levels seen in early 2021.”

            “Confidence eased in Q2, down to around long-run average levels,” said Oster. “That likely reflects the waning of some of the pandemic-recovery optimism, as well as the mounting challenges of rising inflation and also rising interest rates that businesses are confronting.”

            Full release here.

            New Zealand good imports jumped 25% yoy on petroleum, imports rose 7.7% yoy

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              ActionForex.com
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              New Zealand goods exports rose 7.7% yoy to NZD 6.4B in June. Goods imports rose 25.0% yoy to NZD 7.1B. Trade balance came in at NZD -701m deficit, versus expectation of NZD 204m surplus.

              “Petroleum and products imports rose $795 million to reach a new high of $1.2 billion,” Stats NZ. “This rise lead the sharp increase in total imports for the month compared with June 2021.”

              US leads monthly export rise, up 22%. Exports to EU were up 28% and Japan up 24%. Exports to China were down -6% and to Australia down -12%.

              Import form all top partners rose, with China up 12%, EU up 11%, Australia up 6%, US up 30%, and Japan up 4.1%.

              Full release here.

              IMF: Germany GDP to grow 1.2% in 2022, persistent shutoff of Russian gas the greatest threat

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                ActionForex.com
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                IMF said in a report that Germany’s GDP growth is expected at 1.2% in 2022 and 0.8% in 2023. Unemployment rate is estimated at 3.1% in 2022 and 3.4% in 2023. Headline inflation is projected at 7.7% in 2022 and 4.8% in 2023.

                It added, “uncertainty is very high, with risks to the baseline growth forecast skewed downward and risks to the inflation forecast skewed upward.”

                The greatest threat is a “persistent shutoff” of the remaining Russian gas exports to Europe, which could cause “sizable reductions in German economic activity and increases in inflation”.

                “Prolonged war and resurging COVID-19 infections could also intensify supply chain disruptions. ”

                “Persistently-high inflation and fears of a de-anchoring of inflation expectations can prompt major central banks to tighten policies faster than currently expected”.

                Full report here.

                Canada CPI accelerated ot 8.1% yoy, 7 of 9 major components up 3% or more

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                  ActionForex.com
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                  Canada CPI accelerated from 7.7% yoy to 8.1% yoy in June, missing expectation of 8.8% yoy. Excluding gasoline, CPI accelerated from 6.3% yoy to 6.5% yoy. That’s still the highest level since January 1983. Statistics Canada said the acceleration was mainly due to higher prices for gasoline, however, price increases remained broad-based with seven of eight major components rising by 3% or more.

                  CPI common rose from 4.5% yoy to 4.6% yoy, above expectation of 4.2% yoy. CPI median was unchanged at 4.9% yoy, below expectation of 5.1% yoy. CPI trimmed was unchanged at 5.5% yoy, below expectation of 5.6% yoy.

                  Full release here.

                  UK CPI rose to 9.4% yoy in Jun, goods up 12.7% yoy, services up 5.2% yoy

                    By
                    ActionForex.com
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                    UK CPI accelerated from 9.1% yoy to 9.4% yoy in June, above expectation of 9.3% yoy. That’s also the highest level since the series began in January 1991. Indicative model estimates that it’s the highest since 1982, when it was 11%.

                    The CPI all goods index rose by 12.7% yoy, accelerated from 12.4%. CPI all services rose 5.2% yoy, accelerated from 4.9%. CPI core (excluding energy, food, alcohol, and tobacco) slowed from 5.9% yoy to 5.8% yoy, below expectation of 6.0% yoy.

                    Full CPI release here.

                    Also published from the UK, PPI input was at 1.8% mom, 24.0% yoy, versus expectation of 0.9% mom, 23.5% yoy. CPI output was at 1.4% mom, 16.5% yoy, versus expectation of 2.0% mom, 16.8% yoy. CPI output core was at 0.8% mom, 15.2% yoy, versus expectation of 2.0% mom, 15.5% yoy.

                    NZD/JPY ready for upside breakout, AUD/JPY to follow

                      By
                      ActionForex.com
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                      Kiwi and Aussie are both trading broadly higher today, with help from improving market sentiment. Asian stocks are trading higher, following the strong rebound in US indexes overnight. Technically, speaking, NZD/JPY looks ready for an upside breakout, while AUD/JPY could follow soon.

                      NZD/JPY’s consolidation pattern from 86.80 should have completed 83.30, after struggling around 55 day EMA. Break of 86.80 resistance should send the cross through 87.33 high to resume larger up trend. Next target will be 100% projection of 79.44 to 86.80 from 83.00 at 90.36. But break of 84.85 will dampen this view and bring more corrective trading first.

                      AUD/JPY is lagging behind for now. But it’s also possible that corrective pattern from 96.86 is complete at 91.41. Further rise is in favor as long as 93.96 minor support holds. Break of 96.86 will confirm up trend resumption. Next target is 100% projection of 87.28 to 96.86 from 91.41 at 100.99.

                      Australia Westpac leading index dropped to 0.40%, economic slowdown ahead

                        By
                        ActionForex.com
                        -

                        Australia Westpac leading index dropped from 0.56% to 0.40% in June, indicating economic slowdown later in the year, but momentum is still above trend in the near term.

                        Westpac currently expects growth to slow from 4% in 2022 to 2% in 2023, but that is highly dependent on the profile of RBA’s tightening cycle.

                        Westpac expects RBA to opt for a fourth successive rate hike on August 2, and a third success time by 50bps. The current cycle is the first time cash rate has been lifted by 50bps or higher since 1990.

                        Full release here.

                        RBA Lowe: Further increase in rates required over the month ahead

                          By
                          ActionForex.com
                          -

                          RBA Governor Philip Lowe said in a speech that the robust post-COVID recovery is “now behind us” given that inflation is high and labor market is very tight. RBA thus have withdrawn some emergency insurance and raised cash rate by 125bps over the past three meetings to 1.35%.

                          RBA “expects that further increase will be required over the months ahead”, to “”help establish a more sustainable balance between demand and supply in the Australian economy.

                          Full speech here.

                          BoE Bailey: 50bps hike on the table for next meeting, but not locked in

                            By
                            ActionForex.com
                            -

                            In a speech, BoE Governor Andrew Bailey said, ” 50 basis point increase will be among the choices on the table when we next meet”. But “50 basis points is not locked in,  and anyone who predicts that is doing so based on their own view”.

                            Also, at next meeting, “it is also time for the MPC to discuss the strategy for beginning to sell the gilts held in our Asset Purchase Facility portfolio,” he added. “We will publish, alongside the Monetary Policy Report, more detail on how we will do this, to allow financial market participants to make the necessary preparations.”

                            Full speech here.

                            Eurozone CPI finalized at 8.6% yoy in Jun, core CPI at 3.7% yoy

                              By
                              ActionForex.com
                              -

                              Eurozone CPI was finalized at 8.6% yoy in June up from May’s 8.1% yoy. Excluding energy, food, alcohol & tobacco, CPI was finalized at 3.7% yoy, down form May’s 3.8% yoy. The highest contribution to the annual Eurozone inflation rate came from energy (+4.19%), followed by food, alcohol & tobacco (+1.88%), services (+1.42%) and non-energy industrial goods (+1.15%).

                              EU CPI was finalized at 9.6% yoy, up from May’s 8.8% yoy. The lowest annual rates were registered in Malta (6.1%), France (6.5%) and Finland (8.1%). The highest annual rates were recorded in Estonia (22.0%), Lithuania (20.5%) and Latvia (19.2%). Compared with May, annual inflation fell in two Member States and rose in twenty-five.

                              Full release here.

                              ECB said to consider 50bps hike this week, EUR/CAD rising towards 1.3383

                                By
                                ActionForex.com
                                -

                                Euro jumps broadly after Reuters reported that ECB policymakers will discuss whether to raise interest rate by 50bps this Thursday, as a option to the pre-committed 25bps hike. But ECB spokesperson declined to comment so far.

                                Similar to EUR/USD, EUR/CAD should have formed a short term bottom at 1.2970. Further rise is expected to 1.3383 support turned resistance fist. Firm break there will target channel resistance (now at 1.3535). On the downside, below 1.3101 minor support will bring retest on 1.2970 low instead.

                                UK payrolled employees rose 31k in Jun, unemployment rate unchanged at 3.8% in May

                                  By
                                  ActionForex.com
                                  -

                                  UK number of payrolled employees rose 31k in the month of June to a record 29.6m. Comparing with June 2021, payrolled employees rose 3.0% or 874k. Claimant count dropped -20k in the month, versus expectation of -41.2k.

                                  Unemployment rate in the three months to May dropped was unchanged at 3.8%, matched expectations. Over the previous quarter, unemployment rate was down -0.1%, employment rate rose 0.4%, economic inactivity rate dropped -0.4%, hours worked rose 6.5m.

                                  Average earnings including bonus rose 6.2% 3moy in may, below expectation of 6.8%. Average earnings excluding bonus rose 4.3% 3moy, matched expectations.

                                  Full release here.

                                  RBA Bullock: Households in fairly good position for rate hikes

                                    By
                                    ActionForex.com
                                    -

                                    In a speech, RBA Deputy Governor Michelle Bullock said households are in a “fairly good position” for interest rate increases. It’s “unlikely” that there will be substantial financial stability arising from the household sector, but risks are “a little elevated”.

                                    The household sector has “large liquidity buffers”, with “substantial equity” in housing assets. Much of the debt is held by “high-income households” while low fixed rate loans have give time for preparation for high rates. But rate hikes could impact households’ debt servicing burden and cash flow. Risk play out will also be included by future path of employment growth.

                                    “This, along with the Board’s assessment of the outlook for inflation, will be important considerations in deciding the size and timing of future interest rate increases,” she concluded.

                                    Full speech here.

                                     

                                    RBA minutes: Arguments for 50bps hike stronger than 25bps in Jul

                                      By
                                      ActionForex.com
                                      -

                                      In the minutes of the July 5 meeting, RBA noted that members considered raising interest rates by 25bps or 50bps. The arguments for a 50bps hike were “stronger”.

                                      “The level of interest rates was still very low for an economy with a tight labour market and facing a period of higher inflation,” the minutes noted. “Members viewed it as important that inflation expectations remained well anchored and that the period of higher inflation be temporary.”

                                      Also, board members agreed that “further steps would need to be taken to normalise monetary conditions in Australia over the months ahead,” The “size and timing” of future hikes will be guided by “incoming data” and assessment of the outlook for “inflation and labor market”.

                                      Full minutes here.

                                      BoE Saunders: Tightening cycle may still have some way to go

                                        By
                                        ActionForex.com
                                        -

                                        BoE MPC member Michael Saunders said in a speech, “my own view is that further monetary tightening is likely, and indeed, as evident from my votes at the MPC’s recent policy meetings, my preference has been to tighten relatively quickly.”

                                        “This partly reflects my view that risks are tilted on the side of a more persistent period of excess demand and domestic inflation pressures than implied by the most recent MPR forecast (published in early May),” he said.

                                        “Unless restrained by tighter monetary policy, the relatively high level of longer-term inflation expectations implies that domestic cost growth and firms’ pricing strategies may remain above target-consistent rates even if capacity pressures ease to more normal levels.”

                                        Also, the cost of “not tightening promptly enough – would be relatively high at present”, and “such an outcome would increase the costs of returning inflation to target in coming years.”

                                        “rather than focus on a precise forecast for Bank Rate over the next year, the key point is that the tightening cycle may (in my view) still have some way to go.”

                                        Full speech here.

                                        New Zealand CPI jumped to 32-yr high at 7.3% yoy in Q2

                                          By
                                          ActionForex.com
                                          -

                                          New Zealand CPI rose 1.7% qoq, 7.3% yoy in Q2, above expectation of 1.5% qoq, 7.1% yoy. The annual inflation accelerated from 6.9% yoy to 7.3%, a 32-year high, after 7.6% in Q2 1990.

                                          StatsNZ said, “the main driver for the 7.3 percent annual inflation to the June 2022 quarter was the housing and household utilities group, due to rising prices for construction and rentals for housing… Transport was also a main driver of the quarterly rise, driven by petrol and diesel.”

                                          Full release here.

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