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Australia retail sales rose 0.9% mom in Apr, driven by higher food prices

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    ActionForex.com
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    Australia retail sales rose 0.9% mom in April, slightly below expectation of 1.0% mom. For the 12-month period, sales rose 9.6% yoy.

    New South Wales was the only state or territory to record a fall, down -0.3%. Queensland had the largest rise in retail turnover, up 1.6%. Turnover also rose in Victoria (1.1%), Western Australia (2.2 %), South Australia (1.4%), Tasmania (2.0%), the Australian Capital Territory (0.5%) and the Northern Territory (0.7%).

    ABS said: “The strength in retail turnover is being driven by spending across the food industries. High food prices have combined with increased household spending over the April holiday period as more people are travelling, dining out and holding family gatherings.

    Full release here.

    BoJ Kuroda: Prices won’t rise sustainably without wage hikes

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      ActionForex.com
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      BoJ Governor Haruhiko Kuroda told the parliament today that core inflation (all items excluding fresh food) is “likely to remain around 2% for about 12 months”, unless energy prices drop sharply.

      However, he emphasized that “prices won’t rise sustainably, stably unless accompanied by wage hikes.” That’s seen as in indication that recent rise in inflation is not enough to lead to exit of the ultra-loose monetary policy.

      Also from Japan, Tokyo CPI core was unchanged at 1.9% yoy in May, below expectation of 2.0% yoy.

      US initial jobless claims dropped to 210k continuing claims down to 1.348m

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        ActionForex.com
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        US initial jobless claims dropped -8k to 210k in the week ending May 21, matched expectations. Four-week moving average of initial claims rose 7k to 207k.

        Continuing claims rose 31k to 1346k in the week ending May 14. Four-week moving average of continuing claims dropped -14k to 1348k, lowest since January 17, 1970 when it was 1340k.

        Full release here.

        Canada retail sales flat in Mar, auto and parts contracted sharply

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          ActionForex.com
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          Canada retail sales was flat mom in March, worse than expectation of 1.5% mom rise. Sales were up in 10 of 11 subsectors, led by gasoline (up 7.4%). However, sales at motor vehicle and parts dealers (-6.4%) erased the gains observed in the remaining subsectors.

          For Q1 as a whole, sales were up 3.0%, largest quarterly rise since Q3 of 2020. Preliminary data indicates sales rose 0.8% mom in April.

          Full release here.

          USD/CNH finished pull back, heading back to 6.83

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            ActionForex.com
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            Yuan’s decline today suggests that the near term recovery is already completed and there’s risk of more downside. The selloff came after Chinese Premier Li Keqiang held a rare high-profile meeting yesterday on measures to support the economy. That’s is seen as a sign that the government is in deep worry about the impact of the extend tough pandemic lockdowns in many majors city, including Shanghai.

            USD/CNH’s pull back from 6.8372 has likely completed at 0.6477, just ahead of 38.2% retracement of 6.3057 to 6.8372 at 6.6342. Strong rebound should be seen to 6.8372 and possibly above. The key resistance, however, still lies 61.8% retracement of 7.1961 to 6.3057 at 6.8560. USD/CNH could still be rejection by this fibonacci level at the second attempt.

            BoJ Kuroda: Exit from easy monetary policy won’t be easy

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              ActionForex.com
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              BoJ Governor Haruhiko Kuroda reiterated to the parliament today that ultra-loose monetary policy must be maintained for now. Consumer inflation is still expected to slow next year and beyond, after spiking above 2% target this year, only because of surging energy prices.

              Nevertheless, Kuroda also noted when the right time comes, BoJ will plan an exit from easy policy. “The key would be how to raise interest rates and scale back the BOJ’s expanded balance sheet,” he said. “The BOJ can combine various means and ensure markets remain stable in executing a smooth exit from easy policy. I must add, however, that it won’t be easy,” he said.

              Regarding exchange rate depreciation, Kuroda said Fed’s rate hike may not necessarily weaken the Yen, if they also shoot down stock prices.

              Prime Minister Fumio Kishida said in the same parliament session, “sharp yen moves are undesirable. While a weak yen benefits exports and firms with overseas assets, it hurts households and some businesses via higher costs.”

              RBNZ Orr: Single biggest risk is embedded inflation expectation

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                ActionForex.com
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                RBNZ Governor Adrian Orr told a parliamentary committee today, “the single biggest risk to this nation at the moment is enabling current high CPI inflation to become embedded in future ongoing inflation expectation.”

                Orr said that a recession is not projected for New Zealand, even though he cannot rule it out. Challenges to growth were coming through significant downgrades to global growth, particularly China.

                FOMC minutes affirms 50bps hikes ahead, Gold lost momentum

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                  ActionForex.com
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                  In the minutes of the May 3-4 FOMC minutes, Fed said, “most participants judged that 50 basis point increases in the target range would likely be appropriate at the next couple of meetings”. That is in-line with market expectations, and other communications from Fed officials, that the plan is set for 50bps hike per meeting for June and July at least.

                  Also, it’s noted, “at present, participants judged that it was important to move expeditiously to a more neutral monetary policy stance. They also noted that a restrictive stance of policy may well become appropriate depending on the evolving economic outlook and the risks to the outlook.”

                  Gold dips mildly after FOMC minutes, as recovery from 1786.65 lost momentum. For now, further rise could still be as long as 1833.22 minor support holds. Above 1869.46 will resume the rebound to channel resistance a around 1926. However, break of 1833.22 should resume the whole fall from 2070.06 high through 1786.65.

                  Overall, there is no change in the view that fall from 2070.06 is the third leg of the consolidation pattern from 2074.84. Deeper decline would be seen as the recovery completes, towards 1682.60 support.

                  SNB Jordan: We are moving into an unpleasant situation for monetary policy

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                    ActionForex.com
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                    SNB Chairman Thomas Jordan said in an interview, “it’s a new situation, for the first time since 2008, we are seeing monetary policy moving toward tightening in most currency areas.”

                    “We are moving into an unpleasant situation for monetary policy: inflation is already high globally and is even rising in many countries, while at the same time economic activity is weakening worldwide,” he said.

                    SNB will next meet on June 16. “We will, of course, analyze and take into account the impact of the sharp rise in global inflation on Switzerland,” he said.

                    US durable goods orders rose 0.4% in Apr, ex-transport orders up 0.3%

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                      ActionForex.com
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                      US durable goods orders rose 0.4% mom to USD 265.3B in April, below expectation of 0.6% mom. Ex-transport orders rose 0.3% mom, below expectation of 0.6% mom. Ex-defense orders rose 0.3% mom. Transportation equipment, rose 0.6% mom to USD 86.7B.

                      Full release here.

                      ECB Panetta: Policy normalization needs to be clearly defined

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                        ActionForex.com
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                        ECB Executive Board member Fabio Panetta said in a speech, “the very shocks that have led to a surge in inflation (in Eurozone) are also depressing output”. Hence, “the inflation path is starting from a much higher point but the medium-term inflation outlook is characterised by high uncertainty.” Policy normalization needs to be “clearly defined”.

                        Panetta explained that normalization does not mean moving to a “neutral” policy stance. it shouldn’t be assessed against “unobservable reference points” such as neutral rate. And, it “does not imply adjusting unconventional instruments more rapidly than conventional ones”.

                        Normalization is “a process of gradually reducing that stimulus in a way that firmly anchors the inflation path at 2% over the medium term”, he said.

                        Full speech here.

                        Germany Gfk consumer confidence rose to -26, war and inflation still weighing

                          By
                          ActionForex.com
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                          Germany Gfk consumer confidence for June rose slightly from -26.6 to -26.0, worse than expectation of -25.6. In May, economic expectations rose from -16.4 to -9.3. Income expectations rose from -31.3 to -23.7. Propensity to buy dropped from -10.6 to -11.1.

                          “Although this means that the consumer climate has improved slightly, consumer sentiment is still at an all-time low,” explains Rolf Bürkl, GfK consumer expert. “Despite further easing of pandemic-related restrictions, the war in Ukraine and especially high inflation are weighing heavily on consumer sentiment.”

                          Full release here.

                          Japan government concerned of re-spread of coronavirus in China and Ukraine war

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                            ActionForex.com
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                            In May’s Monthly Economic Report, Japan’s government maintained that the economy “shows movement of picking up”. Private consumption, business investment and industrial production have “shown movement of picking up”. Exports were still “almost flat”.

                            Employment assessment was upgrade slightly to “shows movement of picking up” rather than just in “some components. Consumer prices “have been rising recently”, with “moderately” dropped.

                            The government also warned that “full attention should be given to the downside risks due to supply-side constraints, rising raw material prices and fluctuations in the financial and capital markets while there are concerns regarding the effects of the re-spread of the Novel Coronavirus in China and lengthening the state of affairs of Ukraine”.

                            NZD/USD rising towards 0.6527/8 cluster resistance

                              By
                              ActionForex.com
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                              NZD/USD rises slightly after RBNZ rate hike, as rebound from 0.6215 short term bottom extends. Immediate focus is now on 0.6528 cluster resistance (38.2% retracement of 0.7033 to 0.6215 at 0.6527).

                              Sustained break of 0.6527/8 will raise the chance that whole corrective pattern from 0.7463 has completed at 0.6215. That came after drawing support from 61.8% retracement of 0.5467 to 0.7463 at 0.6229. In this case, further rally would be seen to 61.8% retracement of 0.7033 to 0.6215 at 0.6721.

                              However, rejection by 0.6527/8 will retain near term bearishness. Break of 0.6366 minor support will bring retest of 0.6215 low.

                              RBNZ hikes by 50bps, rate projected to peak at 3.9%

                                By
                                ActionForex.com
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                                RBNZ raised the Official Cash Rate by 50bps to 2.00% as widely expected. The central bank now projects OCR to peak at 3.9% in Q2 of 2023, before moving down slightly starting from Q3 2024.

                                In the statement, RBNZ said: “The Committee viewed the projected path of the OCR as consistent with achieving its primary inflation and employment objectives without causing unnecessary instability in output, interest rates and the exchange rate. Once aggregate supply and demand are more in balance, the OCR can then return to a lower, more neutral, level.”

                                Also in the new forecasts, GDP would grow 5.4% in 2022, then slow to 3.2% in 2023, 1.3% in 2024, and 1.2% in 2025. CPI would average 6.9% in 2022, then slow to 4.4% in 2023, 2.5% in 2024, and 2.0% in 2025. Unemployment rate is projected to be at 3.2% in 2022, then gradually climb to 3.8% in 2023, 4.4% in 2024, and 4.7% in 2025.

                                Full statement here.

                                And Monetary policy statement here.

                                US PMI composite dropped to 53.8, growth spurt has lost further momentum

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                                  ActionForex.com
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                                  US PMI Manufacturing dropped from 59.2 to 57.5 in May. PMI Services dropped from 55.6 to 53.5. PMI Composite dropped from 56.0 to 53.8.

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

                                  “The early survey data for May indicate that the recent economic growth spurt has lost further momentum. Growth has slowed since peaking in March, most notably in the service sector, as pent up demand following the reopening of the economy after the Omicron wave shows signs of waning. Companies report that demand is coming under pressure from concerns over the cost of living, higher interest rates and a broader economic slowdown.

                                  “Manufacturers in particular also report that capacity continues to be constrained by supply shortages, though these bottlenecks showed further encouraging signs of easing.

                                  “Despite all of the headwinds facing businesses, the survey data remain indicative of the economy growing at an annualised rate of 2%, which is also supporting stronger payroll growth. However, cost pressures have risen to a new survey high which, alongside the encouraging output and employment numbers, will fuel further speculation about the need for further imminent aggressive rate hikes.”

                                  Full release here.

                                  GBP/CHF breaking down after PMI shocker

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                                    ActionForex.com
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                                    Sterling tumbles broadly after the shockingly poor PMI services reading. GBP/CHF is finally accelerating down as the downtrend from 1.3070 extends. Near term outlook will now remain bearish as long as 1.2222 resistance holds. Next target is 61.8% retracement of 1.1107 to 1.3070 at 1.1857.

                                    It’s too early to exclude the case that fall from 1.307 is merely a corrective mode. However, the multiple rejection by 55 week EMA is clearly a bearish sign. Sustained break of 1.1857 would set up even deeper decline back to 1.1107 (2020 low).

                                    UK PMI manufacturing dropped to 54.6, services collapsed to 51.8

                                      By
                                      ActionForex.com
                                      -

                                      UK PMI Manufacturing dropped from 55.8 to 54.6 in May, below expectation of 55.1, hitting a 16-month low. PMI Services dropped sharply from 58.9 to 51.8, well below expectation of 57.3, a 15-month low. PMI Composite dropped from 58.2 to 51.8, also a 15-month low.

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

                                      “The UK PMI survey data signal a severe slowing in the rate of economic growth in May, with forward-looking indicators hinting that worse is to come. Meanwhile, the inflation picture has worsened as the rate of increase of companies’ costs hit yet another all-time high. The survey data therefore point to the economy almost grinding to a halt as inflationary pressure rises to unprecedented levels.

                                      “The tailwind from the reopening of the economy has faded, having been overcome by headwinds of soaring prices, supply delays, labour shortages and increasingly gloomy prospects. Companies cite increasingly cautious moods among households and business customers, linked to the cost-of-living crisis, Brexit, rising interest rates, China’s lockdowns and the war in Ukraine.

                                      “There are some signs that the rate of inflation could soon peak, with companies reporting price resistance from customers, and it is likely that the slowing in demand will help pull prices down in coming months. However, the latest data indicate a heightened risk of the economy falling into recession as the Bank of England fights to control inflation.”

                                      Full release here.

                                      Eurozone PMI composite dropped to 54.9, beleaguered manufacturing offset by buoyant service

                                        By
                                        ActionForex.com
                                        -

                                        Eurozone PMI Manufacturing rose dropped from 55.5 to 54.4 in May, below expectation of 54.9, hitting an 18-month low. PMI Services dropped from 57.7 to 56.3, below expectation of 57.5. PMI composite dropped from 55.8 to 54.9.

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

                                        “The eurozone economy retained encouragingly resilient growth in May, as a beleaguered manufacturing sector was offset by a buoyant service sector…. Thanks to buoyant demand for services, particularly from households, the PMI data are consistent with the economy growing at a solid quarterly rate of 0.6% so far in the second quarter….

                                        “Although there are signs that inflationary pressures could be peaking, with input cost inflation down for a second successive month and supply constraints starting to be less widely reported, inflationary pressures remain elevated at previously unprecedented levels. Such high price pressures, accompanied by the reassuringly resilient GDP growth signalled by the surveys, looks set to tilt policymakers at the ECB towards a more hawkish stance.”

                                        Full release here.

                                        ECB Lagarde: We’re moving very likely into positive at the end of Q3

                                          By
                                          ActionForex.com
                                          -

                                          In a Bloomberg TV interview, ECB President Christine Lagarde said, “we’re moving (deposit rate) very likely into positive territory at the end of the third quarter.”

                                          “When you’re out of negative (rates) you can be at zero, you can be slightly above zero. This is something that we will determine on the basis of our projections and … forward guidance,” she explained.

                                          Still, Lagarde emphasized the graduality and ECB’s policy adjustments. “I don’t think we are in a situation of surging demand at the moment,” Lagarde said. “It’s definitely an inflation that is driven by the supply side of the economy.”

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