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New Zealand BusinessNZ PMI dropped to 51.7, not getting too carried away with recovery

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    ActionForex.com
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    New Zealand BusinessNZ Performance of Manufacturing Index dropped from 54.0 to 51.7 in October. Production dropped from 56.7 to 51.1. New orders dropped from 58.1 to 52.4. But employment rose from 51.7 to 52.6.

    BusinessNZ’s executive director for manufacturing Catherine Beard said that the sector remains in a state of flux, although still managing to keep in positive territory.

    BNZ Senior Economist, Craig Ebert said that “October’s PMI serves as a gentle reminder of not getting too carried away with the sense of recovery, even if the worst of COVID’s impacts can be assumed to be behind us”.

    Full release here.

    France PMI manufacturing finalized at 55.9 in Nov, tentative signs of stabilization

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      ActionForex.com
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      France PMI Manufacturing was finalized at 55.9 in November, up from October’s 53.6. That’s the first increase since May. Markit noted that output volumes were broadly unchanged during the month. Demand improved, but remained subdued amid supply-related constraints. Output price inflation reached new high.

      Joe Hayes, Senior Economist at IHS Markit, said: “Tentative signs of stabilisation were seen in the French Manufacturing PMI during November, with the growth slowdown seen since post-pandemic growth peaked back in May finally coming to a halt. The headline PMI posted its first increase for six months as trends improved in output, new orders and employment.

      “That said, beyond this positive direction change, the latest data continued to show intense supply-related constraints impeding manufacturing production, denting order book volumes and adding further pressure on margins. As a result, output prices were raised to the greatest extent since this data were first published back in 2002. While demand conditions have slowed, anecdotal evidence has thus far suggested this to be a symptom on component shortages, causing firms to postpone and cancel orders until supplies improve. We’re not seeing much evidence that higher prices are a factor in causing demand to soften, which means elevated rates of inflation may not prove so transitory as many anticipate.”

      Full release here.

      UK PMI construction fell to 48.9, contracts on rising borrowing costs and weaker housing market

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        ActionForex.com
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        UK’s construction sector faced a downturn in June as PMI fell from 51.6 in May to 48.9, falling short of 50.9 expectation. This marks the first contraction in construction activity in five months, driven primarily by the fastest decline in residential work witnessed in over three years.

        Tim Moore, Economics Director at S&P Global Market Intelligence, explained the contraction, stating, “Weaker housing market conditions in the wake of higher borrowing costs acted as a major constraint on UK construction output in June.” According to him, the steep downturn in residential work since May 2020—excluding the slump during lockdown—has been the most rapid in over 14 years.

        On a positive note, input prices decreased for the first time since January 2010, a potential silver lining for the construction sector. Additionally, supplier performance improved at its fastest pace in 14 years, signalling some resilience despite the prevailing industry headwinds. However, recent contraction raises concerns about the health of construction sector amidst rising borrowing costs and a cooling housing market.

        Full UK PMI construction release here.

        Ethereum tumbling, bitcoin follows

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          ActionForex.com
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          Ethereum plummets further today and the post “merge surge” decline extends. Deeper fall is expected as long as 1474.00 minor resistance holds. Next near term target is 100% projection of 2028.90 to 1418.47 from 1787.45 at 1177.02. Firm break there could bring downside acceleration through 878.5 to 161.8% projection at 799.77.

          Bitcoin’s development is even worse. Deeper decline is expected as long as 20167 resistance holds, for 17575 low. Break there will target 100% projection of 25198 to 18518 from 22764 at 16084.

          Trump to delcare national emergency and sign the shutdown averting bill

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            ActionForex.com
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            White House spokesperson Sarah Sanders confirmed that Trump will sign the bill that avert another government shut down. However, as the bill doesn’t include the full sum of the funding that Trump demands for the border wall, he’s going to declare national emergency.

            Sanders said “President Trump will sign the government funding bill, and as he has stated before, he will also take other executive action – including a national emergency.”

            Top Democrat in the Congress, House of Representatives Speaker Nancy Pelosi said she might file a legal challenge to Trump’s action and “that’s an option”. Senate Democrat leader Chuck Schumer also criticized Trump of a “gross abuse of the power of the presidency.”

            Australia GDP Q4: 0.4% qoq, AUD/USD pressing 55 H EMA

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              Australia GDP Q4: 0.4% qoq vs exp 0.5% qoq vs prior 0.7% qoq

              Australia GDP Q4: 2.4% yoy vs exp 2.5% vs prior 2.9% yoy

              From the release: Chief Economist for the ABS, Bruce Hockman, said: “Growth this quarter was driven by the household sector, with continued strength in household income matched by growth in household consumption.”

              Full release here

              AUD/USD struggling to break 55 day EMA and topped at 0.7814. Rebound from 0.7712 is corrective looking. Focus back on whether 55 H EMA could hold.

              UK PMI composite finalized at 53.3, economy picked up since general election

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                ActionForex.com
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                UK PMI Services was finalized at 53.9 in January, up from 50.0 in December. PMI Composite rose to 53.3, up from 49.3, back in expansion region for the first time since last August. Markit noted there was robust and accelerated increase in new orders. Growth expectations also continued to improve.

                UK PMI composite finalized at 53.3,

                Tim Moore, Economics Associate Director at IHS Markit, which compiles the survey:

                “January’s PMI surveys give a clear signal that the UK economy has picked up since the general election, as a diminishing headwind from political uncertainty translated into rising business and consumer spending. We maintain our nowcast of UK GDP rising by approximately 0.2% in the first quarter of 2020, which represents an improvement on the sluggish conditions seen at the end of last year.

                “A solid return to growth in the service sector was the main factor behind the recovery in the UK economy, with survey respondents commenting that a rebound in sales enquiries had quickly translated into rising workloads so far this year.

                “Signs of greater willingness to spend and renewed positivity about the domestic economic outlook has helped lift service providers’ growth projections to the highest for just under five years. However, this sub-index was the only measure in the final UK Services PMI dataset to drop since the earlier ‘flash’ estimate, which may suggest that business expectations tailed off towards the end of the month.

                “With the vast majority of PMI survey data collected prior to 23rd January, we’ve yet to see any overall impact on business conditions from the Wuhan coronavirus outbreak, but disruptions to global supply chains and international travel could present risks to the UK economy and key trading partners in the coming months.”

                Full release here.

                ECB Vasiliauskas pushes banking union, but Knot said risk reduction first

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                  ActionForex.com
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                  ECB Governing Council member Klaas Knot urged that risk must be reduced before the Eurozone banking union is shared more widely among member states. The measures under the union include bank deposit insurance scheme and streamlining liquidity provision for banks under resolution. Knot argued that “these elements all imply more public risk-sharing in (the European Monetary Union) as liability for bank failures in other countries is shared at the European level.” And he emphasized that ” risk-sharing should be preceded by sufficient risk-reduction.”

                  Separately, another Governing Council member Vitas Vasiliauskas reiterated the call for an “EU-wide banking union”. And he said that “allow for a centralized supervisory approach for all of the EU’s largest systemically important banks, regardless of host-country membership in the monetary union.” Also, he added that “we need to do a better job at convincing decision-makers in non-euro area countries to enter into the “close cooperation” regime (with the ECB).”

                  US retail sales rose 0.3%, ex-auto sales up 0.7%

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                    ActionForex.com
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                    US retail sales rose 0.3% to USD 529.6B in December, matched expectations. Total sales for the 12 months of 2019 were up 3.6% from 2018. Ex-auto sales rose 0.7% mom versus expectation of 0.5% mom. Ex-gasoline sales rose 0.1% mom. Ex-auto and gasoline sales rose 0.5% mom.

                    Full release here.

                    Australia GDP grew 3.1% qoq in Q4, strong terms of trade

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                      ActionForex.com
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                      Australia GDP grew 3.1% qoq in Q4, above expectation of 2.5% qoq. Growth slowed slightly from Q3’s 3.4% qoq. Over the year, GDP dropped -1.1% yoy. Terms of trade rose 4.7% qoq off the back of higher export prices, particularly for iron ore. Terms of trade contributed to a 4.2% increase in nominal GDP, strongest rise since Q3 1983.

                      Head of National Accounts at the ABS, Michael Smedes said: “Despite the two consecutive quarters of strong growth, economic activity remained 1.1 per cent lower than recorded in the 2019 December quarter.” This is the first time in the over sixty year history of the National Accounts that GDP has grown by more than 3.0 per cent in two consecutive quarters.

                      Full release here.

                      Anticipated symbolic NAFTA agreement might not be reached

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                        ActionForex.com
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                        Reuters reported that Trump’s push for some form of NAFTA “agreement” before the Summit of the Americas in Lima could fail. It’s widely rumored that Trump would at least want to have something “symbolic” to sign this week. But there are still many fundamental differences between the US with its NAFTA partners Canada and Mexico.

                        A source was quoted saying that even a symbolic agreement needs to contain “everything defined in black and white” and key issues could not be left open for negotiation afterwards. The source noted that a deal could be possible by the end of April or early May if discussions keep advancing.

                        It should be noted that CAD has been strongest one this month as seen in the monthly top movers table, as well as the M heatmap. It’s mainly due to optimism that a certain form of NAFTA agreement could be delivered at the Summit of the Americas on April 13-14, or before. There is firstly, risk of sell-on-news, if the agreement is delivered. There is now secondly, risk of selloff on disappointment that it’s not delivered. So, CAD traders, beware.

                        US retail sales rose 17.7% in May, ex-auto sales rose 12.4%

                          By
                          ActionForex.com
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                          US retail sales rose 17.7% to USD 465.5B in May, wall above expectation of 7.6% mom. Ex-auto sales rose 12.4% mom, above expectation of 5.1% mom. Ex-gasoline sales rose 18.0% mom. Ex-auto, ex-gasoline sales rose 12.5%. For the period Mar through May, headline sales dropped -10.5% yoy from the same period a year ago.

                          Full release here.

                          US PMI composite output dropped to 45.0, further disconcerting signs

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                            ActionForex.com
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                            US PMI Manufacturing dropped from 52.2. to 51.3 in August, a 25-month low. PMI Services dropped from 47.3 to 44.1, a 27-month low. PMI Composite output dropped from 47.7 to 45.0, a 27-month low.

                            Siân Jones, Senior Economist at S&P Global Market Intelligence said:

                            “August flash PMI data signalled further disconcerting signs for the health of the US private sector. Demand conditions were dampened again, sparked by the impact of interest rate hikes and strong inflationary pressures on customer spending, which weighed on activity. Gathering clouds spread across the private sector as services new orders returned to contractionary territory, mirroring the subdued demand conditions seen at their manufacturing counterparts. Excluding the period between March and May 2020, the fall in total output was the steepest seen since the series began nearly 13 years ago.

                            “Lower new order inflows and continued efforts to rein in spending led to the slowest uptick in employment for almost a year. Reports of challenges finding suitable candidates started to be countered by those companies noting that voluntary leavers would not be replaced with any immediacy due to uncertainty regarding demand over the coming months.

                            “One area of reprieve for firms came in the form of a further softening in inflationary pressures. Input prices and output charges rose at the slowest rates for a year-and-a-half amid reports that some key component costs had fallen. Although pointing to an ongoing movement away from price peaks, increases in costs and charges remained historically robust. At the same time, delivery times lengthened at the slowest pace since October 2020, albeit still sharply, allowing more firms to work through backlogs.”

                            Full release here.

                            RBA Lowe: We’re not out of firepower, but negative rate still extraordinarily unlikely

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                              ActionForex.com
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                              In the post meeting press conference, RBA Governor Philip Lowe said ” it would be incorrect to conclude that we are out of firepower” after today’s package of easing measures. He emphasized the central bank still has a “range of tools”, including ” further liquidity provision, asset purchases and transactions in the foreign exchange market.”

                              Still, negative rate policy is “extraordinarily unlikely”. “There is little to be gained from lowering the policy rate into negative territory,” he added. “While a negative rate might lead to a helpful depreciation of the Australian dollar, it could impair the supply of credit to the economy and lead some people to save more, rather than spend more. ”

                              Full speech here.

                              Fed Rosengren: If Trump’s trade war causes slowdown, Fed has the tool to deal with it

                                By
                                ActionForex.com
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                                Boston Fed President Eric Rosengren said Fed is well prepared to react if Trump’s trade war with China causes slowdown in the economy. He said, “if the impact of the tariffs – and whatever financial market reaction to those tariffs is – causes more of a slowdown, then we do have the tools available to us, including lower interest rates”.

                                But for now, “it’s hard for the Fed to react until we have better information, so in terms of us viewing our policies as being patient, I’m not sure this alters our view of that until we have a better sense of whether this is going to have more long-lasting effects,” Rosengren added.

                                Separately, Minneapolis Fed President Neel Kashkari said the “relative to China, the US is in a very strong position.” “”Not only is our economy bigger, our economy is much less sensitive to trade. Trade is important to the U.S. economy, but it’s much more important to the Chinese economy, just as a share of its economy,” he added.

                                Hence, Kashkari said “if there’s a tit-for-tat strategy, and I’m not advocating it, but a tit-for-tat strategy would seem to lean toward the U.S. strength rather than the China strength.”

                                China condemns US blackmailing after Trump threatens with extra tariffs on USD 200B Chinese products

                                  By
                                  ActionForex.com
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                                  Trump ordered US Trade Representative to identify USD 200B worth of Chinese products for additional 10% tariffs. It noted in the statement that “the initial tariffs that the President asked us to put in place were proportionate and responsive to forced technology transfer and intellectual property theft by the Chinese. It is very unfortunate that instead of eliminating these unfair trading practices China said that it intends to impose unjustified tariffs targeting U.S. workers, farmers, ranchers, and businesses. At the President’s direction, USTR is preparing the proposed tariffs to offset China’s action.”

                                  Full USTR statement.

                                  The Chinese Ministry of Commerce vowed to fight back with “qualitative” and “quantitative” for any additional tariffs. The MOFCOM condemned to initiative of imposing extra tariffs on USD 200B of Chinese goods. It said in a statement today that “Such a practice of extreme pressure and blackmailing deviates from the consensus reached by both sides on multiple occasions, and is a disappointment for the international community.” And, “the United States has initiated a trade war and violated market regulations, and is harming the interests of not just the people of China and the U.S., but of the world.”

                                  MOFCOM statement (in simplified Chinese).

                                  UK to resume Brexit debate as campaigns for second referendum and Bremain gather momentum

                                    By
                                    ActionForex.com
                                    -

                                    Brexit debate will resume in the House of Commons today to find a majority for a way forward that breaks the current impasse. Prime Minister Theresa May said she hopes to hold a vote on her deal again this week. But so far, there is no signs the twice-defeated deal could make a turnaround. Instead, May could unveil plans to hold indicative votes.

                                    The push for second referendum gained momentum over the weekend with with over a million people joined the “Put It To The People” March in London. Speakers at the rally included Labour’s deputy leader Tom Watson, Scotland’s First Minister Nicola Sturgeon, London Mayor Sadiq Khan. Separately, the “Revoke Article 50 and remain in the EU” petition now gathered over 5.3M signatures.

                                    It appears that Chancellor of Exchequer Philip Hammond doesn’t object to a referendum. He said: “I’m not sure there’s a majority in parliament in support of a second referendum… Many people will be strongly opposed to it, but it’s a coherent proposition and it deserves to be considered along with the other proposals.”

                                    However, Brexit Minister Stephen Barclay warned that “at its logical conclusion, the risk of a general election increases because you potentially have a situation where parliament is instructing the executive to do something that is counter to what it was elected to do.”

                                    Meanwhile, the Sunday Times  reported that 11 unidentified senior ministers could try to oust May today as she has become a toxic and erratic figure whose judgment has “gone haywire”. Two leading candidate Cabinet Minister David Lidington and Environment Secretary Michael Gove backed May though. Also, it’s reported that hardline Brexiteer including Jacob Rees-Mogg & Iain Duncan Smith demanded May to set a timeline to step done for get their support on the Brexit deal.

                                    With short Article 50 extension granted by EU last week, if UK parliament could approve a deal, Brexit is delayed to May 22. If no deal is approved, UK will have to leave with no withdrawal agreement on April 12, or provide an alternative.

                                    US ISM services rose to 53.9, corresponds to 1.4% annualized GDP growth

                                      By
                                      ActionForex.com
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                                      US ISM Services PMI rose from 50.3 to 53.9 in June, above expectation of 51.3. Business activity/production jumped from 51.5 to 59.2. New orders rose from 52.9 to 55.5 Employment rose from 49.2 to 53.1. Prices dropped from 56.2 to 54.1.

                                      ISM said, “The past relationship between the Services PMI and the overall economy indicates that the Services PMI for June (53.9 percent) corresponds to a 1.4-percent increase in real gross domestic product (GDP) on an annualized basis.”

                                      Full US ISM services release here.

                                      UK unemployment rate rose to 4.1%, but wage growth accelerated

                                        By
                                        ActionForex.com
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                                        UK unemployment rate rose 0.1% to 4.1% in the three months ended September, above expectation of 4.0%. But wage growth showed clear acceleration. Average weekly earnings including bonus rose 3.0% 3moy in September, up from 2.7% and matched expectation. Weekly earnings excluding bonus rose 3.2% 3moy, up from 3.1%, beat expectation of 3.1%. Jobless claims rose 20.2k in October, higher than expectation of 4.3k. Overall set of data should be pound positive, but there is no follow through buying yet.

                                        Full release here.

                                        Eurozone Sentix rose to -2.7, vaccines boost many expectations indices to record highs

                                          By
                                          ActionForex.com
                                          -

                                          Eurozone Sentix Investor Confidence improved to -2.7 in December, up from -10.0, much better than expectation of -11.9. That’s also the highest level since February. Current situation rose from -32.3 to -30.3, highest since March. Expectation index jumped from 15.3 to 29.3, highest since April, 2015.

                                          Sentix noted: “The Corona crisis year 2020 will end with a bang, which will set several exclamation marks for the global economy. In our December results, we have a series of all-time highs (!) in the expectation components of various world economic regions. Hopes for an early use of vaccines are fuelling the fantasy that the economy in 2021 will recover more clearly than previously expected from the consensus.”

                                          • Germany’s overall index rose from 1.3 to 6.9, highest since May 2019. Current situation rose slightly from -17.5 to -17.3, highest since March. Expectations rose from 22.0 to 34.3, an all time high.
                                          • US overall index rose from 4.8 to 9.1, highest since February. Current situation dropped from -10.5 to -11.8. Expectations rose from 21.3 to 32.3, an all time high.
                                          • Japan overall index rose from 6.1 to 14.5, highest since October 2018. Current situation rose from -8.3 to -2.3, highest since Feb. Expectations rose from 31.5 to 32.8, an all time high.

                                          Full release here.

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