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Eurozone CPI finalized at 5.9% yoy in Feb, EU at 6.2% yoy

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    ActionForex.com
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    Eurozone CPI was finalized at 5.9% yoy in February, up from January’s 5.1% yoy. The highest contribution to the annual euro area inflation rate came from energy (+3.12%), followed by services (+1.04%), food, alcohol & tobacco (+0.90%) and non-energy industrial goods (+0.81%).

    EU CPI was finalized at 6.2% yoy, up from January’s 5.6% yoy. The lowest annual rates were registered in Malta, France (both 4.2%), Portugal, Finland and Sweden (all 4.4%). The highest annual rates were recorded in Lithuania (14.0%), Estonia (11.6%) and Czechia (10.0%). Compared with January, annual inflation fell in two Member States and rose in twenty-five.

    Full release here.

    BoE to continue tightening today, GBP/CHF extending rebound

      By
      ActionForex.com
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      BoE is widely expected to raise the Bank rate again by 25bps to 0.75% today. The main focus is the voting. Last time, a slim majority of five MPC members won the vote and hiked only 25bps. Four members had indeed voted for a 50bps hike.

      With Russia invasion of Ukraine, inflation would likely stay higher for longer, and might even peak above BoE’s own projection of 7.25% in April. Policy makers are clearly getting more alerted on the outlook and some might push for front-loading the rate hikes. But others could prefer to wait for new economic projections in May before acting more aggressively. The voting would reveal the balance inside MPC.

      Here are some previews:

      GBP/CHF rebounded quickly after war triggered selloff. A short term bottom is in place at 1.2112 and further rally is expected as long as 1.2255 minor support holds. But a strong break of 1.2598 resistance is needed to confirm completion of the down trend from 1.3070. Otherwise, medium term outlook will be neutral at best, with prospect of another fall through 1.2112.

      AUD/JPY uptrend resumes, follows CAD/JPY

        By
        ActionForex.com
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        AUD/JPY rises to as high as 87.05 today, following broad based selloff in Yen. The break of 86.24 high confirms resumption of larger up trend from 59.85 (2020 low). The next near term target is 161.8% projection of 78.77 to 84.27 from 80.34 at 89.23, which is close to 90.29 long term resistance.

        In the bigger picture, the whole down trend from 105.42 (2013 high) has completed with three waves down to 59.85. The support from 55 week EMA was a medium term bullish sign, and argues that AUD/JPY is reversing the whole down trend from 105.42. Sustained break of 90.29 would confirm this case and target 105.42 again.

        CAD/JPY’s picture is similar. It’s now extending the up trend from from 73.80, (2020 low). Break of 100% projection of 87.42 to 92.16 from 89.21 at 93.95 should pave the way to 161.8% projection at 96.87 next.

        The down trend from 106.38 (2014 high) has completed with three waves down to 73.80. 91.62 key resistance has been taken out already (corresponding to 90.29 in AUD/JPY). Further rally is now expected as long as 89.;21 support holds, towards 106.48 high.

        Australia employment rose 77.4k in Feb, unemployment rate dropped to 4%

          By
          ActionForex.com
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          Australia employment grew 77.4k in February, nearly double of expectation of 40.0k. Full-time jobs rose 121.9k while part-time jobs dropped -44.5k. Employment was around 202k above pre-Delta high of June 2021.

          Unemployment rate dropped from 4.2% to 4.0%, better than expectation of 4.1%. That’s the lowest level since August 2008. Participation rate rose 0.2% to 66.2%. Monthly hours worked rose 8.9%, or 149m, to 1813m hours.

          Full release here.

          BoJ Kuroda: Too early to debate specifics on stimulus exit

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            ActionForex.com
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            BoJ Governor Haruhiko Kuroda told the parliament today, “it will take more time to achieve our 2% inflation target in a stable manner, so it’s too early to debate specifics on how to exit from easy policy.”

            Core consumer inflation in Japan is generally expected to climb up in the months ahead, with prospect of hitting the 2% target. But Kuroda talked down the significance of such development. “I don’t think Japan is in a condition where inflation stably hits 2%, even when the impact of cellphone fee cuts taper off and energy prices rise further,” he said.

            Kuroda just reiterated that BoJ will consider stimulus exit when 2% inflation is achieved. And, “in doing so, we will guide monetary policy to ensure markets including those for Japanese government bonds remain stable.”

            S&P 500 eyes 34179 resistance after post FOMC rebound

              By
              ActionForex.com
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              Markets responded rather well to Fed’s rate hike, statement and new economic projections. In short, Fed raised federal funds rate target by 25bps to 0.25-0.50%. In the updated dot plot, 12 of the FOMC participants expected federal funds rate to reach 1.75-2.00% by then end of 2022, that is, 1.50% above the current level. The end point of current tightening cycle was also raised from 2.1% to 2.8%, and pulled ahead to 2023. Balance sheet runoff could start at a “coming meeting”, that is, May.

              Suggested readings on Fed

              Major stock indexes closed sharply higher overnight. S&P 500 is now having 34179.07 near term resistance in radar. Firm break there will argue that the pull back from 36952.65 has completed with three waves down to 32272.64 already. Stronger rally would then be seen be seen back to retest 36952.65 high.

              The strong support from 23.6% retracement of 18213.65 to 36952.65 at 32530.24, which is a rather bullish sign from long term perspective. Even though break of 36952.65 high is not expected at the first attempt. The range for consolidation could have been set already.

              Fed Chair Powell press conference live stream

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                ActionForex.com
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                Fed hike 25bps, sees rate at 1.9% by end of 2022, 2.8% by end of 2023

                  By
                  ActionForex.com
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                  Fed raised federal funds rate target by 25bps to 0.25-0.50% s widely expected. James Bullard dissented, and voted for a 50bps hike. Additionally, Fed expects to start reducing asset holdings “at a coming meeting”.

                  In the updated dot plot, 12 of the FOMC participants expected federal funds rate to reach 1.75-2.00% by then end of 2022, that is, 1.50% above the current level.

                  Fed has also significantly lowered 2022 GDP growth forecast, raised 2022 core inflation forecasts and federal funds rate forecasts. The end point of current tightening cycle was also raised from 2.1% to 2.8%, and pulled ahead to 2023.

                  New median projections – GDP growth

                  • 2022 real GDP growth was lowered from 4.0% to 2.8%.
                  • 2023 real GDP growth unchanged at 2.2%.
                  • 2024 real GDP growth unchanged at 2.0%.
                  • Longer run GDP growth unchanged at 1.8%.

                  Unemployment rate:

                  • 2022 unemployment rate unchanged at 3.5%.
                  • 2023 unemployment rate unchanged at 3.5%.
                  • 2024 unemployment rate raised from 3.5% to 3.6%.
                  • Longer run unemployment rate unchanged at 4.0%.

                  Core PCE:

                  • 2022 core PCE inflation raised from 2.7% to 4.1%.
                  • 2023 core PCE inflation raised from 2.3% to 2.7%.
                  • 2024 core PCE inflation raised from 2.1% to 2.3%.

                  Federal funds rate

                  • 2022 federal funds rate raised from 0.9% to 1.9%.
                  • 2023 federal funds rate raised from 1.6% to 2.8%.
                  • 2024 federal funds rate raised from 2.1% to 2.8%.
                  • Longer run federal funds rate lowered from 2.5% to 2.4%

                  Full statement here.

                  Full projections here.

                  US oil inventories rose 4.3m barrels, WTI pull back slows

                    By
                    ActionForex.com
                    -

                    US commercial crude oil inventories rose 4.3m barrels in the week ending March 100, versus expectation of -1.8m barrels decline. At 451.9m barrels, oil inventories are about -12% below the five year average for this time of year.

                    Gasoline inventories dropped -3.6m barrels. Distillate rose 0.3m barrels. Propane/propylene dropped -2.2m barrels. Total commercial petroleum inventories dropped -3.6m barrels.

                    WTI crude oil in hovering in tight range at around 96 after the release. The pull back from 131.82 high was much deeper than expected. But still, it’s seen as developing into a corrective pattern for now. Selloff is slowing as it’s trying to draw support from 55 day EMA. There is prospect of a rebound from current level. Break of 105.24 minor resistance will indicate that a rebound is underway, back towards 131.82 high.

                    Canada CPI jumped to 5.7% yoy in Feb, highest since 1991

                      By
                      ActionForex.com
                      -

                      Canada CPI accelerated sharply form 5.1% yoy to 5.7% yoy in February, above expectation of 5.5% yoy. That’s the largest gain since August 1991, and it’s the second consecutive month where headline inflation exceeded 5% level. Excluding gasoline, CPI rose 4.7% yoy up from January’s 4.3% yoy, fastest since its introduction in 1999. On a monthly basis, CPI rose 1.0% mom in February, largest monthly increase since February 2013.

                      CPI common rose from 2.3% yoy to 2.6% yoy, above expectation of 2.4% yoy. CPI median rose from 3.3% yoy to 3.5% yoy, matched expectations. CPI trimmed rose from 4.0% yoy to 4.3% yoy, above expectation of 4.2% yoy.

                      Full release here.

                      US retail sales rose 0.3% mom in Feb, ex-auto sales rose 0.2% mom, missed expectations

                        By
                        ActionForex.com
                        -

                        US retail sales rose 0.3% mom to USD 658.1B in February, below expectation of 0.6% mom. Ex-auto sales rose 0.2% mom, below expectation of 0.9% mom. Ex-gasoline sales dropped -0.2% mom. Ex-auto, ex-gasoline sales dropped -0.4% mom.

                        Total sales for December 2021 through February 2022 period were up 16.0% from the same period a year ago.

                        Full release here.

                        ECB Nagel doesn’t expect stagflation at the moment

                          By
                          ActionForex.com
                          -

                          ECB Governing Council member Joachim Nagel told German newspaper Handelsblatt, “I don’t expect stagflation at the moment, even though the fallout of the war will boost inflation rates and weaken economic growth.” He added that there are currently “no signs” of a wage-price spiral.

                          He said ECB’s current approach of tapering asset purchases while being non-committal on rate hike was a “good and balanced” approach. He said, “”I consider it very important that we don’t pre-commit in times of high uncertainty, but stay flexible.”

                          FOMC rate hike and projections awaited, 10-year yield pressing key resistance

                            By
                            ActionForex.com
                            -

                            Fed is widely expected to raise interest rate for the first time since 2018, lifting the federal funds rate target by just 25bps to 0.25-0.50%. It’s nonetheless the start of a tightening cycle to combat persistently high inflation.

                            The new economic projections would be the main market moving factor. Given the development since December, it’s likely that FOMC members are now penciling more than just three 25bps rate hike this year. There are three questions to answer. Firstly, where would interest be by the end of the year? Secondly, is FOMC going to “front-load” some of the rate hikes? And thirdly, will the estimated longer run federal funds rate be lifted from the current 2.50%?

                            US 10-year yield is extending recent up trend this week, and it’s now pressing a important long term resistance zone at 2.159/2.187 (61.8% retracement of 3.248 to 0.398 at 2.159, 61.8% projection of 0.398 to 1.765 to 1.343 at 2.187). This level is expected to hold for a while.

                            Nevertheless, a strong break there could clear the way to 100% projection at 2.710, probably with some medium term up side acceleration. That, if happens, would be very supportive to USD/JPY and set up further rally back to 125, the level reached only back in 2015.

                             

                            Japan imports surged 34% yoy in Feb on Yen depreciation and higher energy prices

                              By
                              ActionForex.com
                              -

                              Japan exports rose 19.1% yoy to JPY 7190B in February. That’s the 12th straight month of growth. Auto exports increased 8.3% yoy, rebounding from January’s -1.0% yoy decline. Exports to the US rose 16.0% yoy to JPY 1.3T. Exports to China rose 25.8% yoy to JPY 1.5T.

                              Imports rose 34.0% yoy to 7858B. That’s the 13th consecutive month of growth. Crude oil imports surged a massive 93.2% yoy to JPY 08.6B, up for the 11th straight months, on the back of Yen’s depreciation and higher oil prices. Trade deficit came in at JPY -668B.

                              In seasonally adjusted terms, exports dropped -0.5% mom to JPY 7432B. Imports rose 2.7% mom to JPY 8463B. Trade deficit widened to JPY -1031B.

                              Australia Westpac leading index improved slightly in Feb

                                By
                                ActionForex.com
                                -

                                Australia Westpac-MI leading index improved slightly from -0.50% to -0.25% in February. But Westpac is expecting “strong above trend growth in 2022”, largely due to the aftermath of the extraordinary emergency policy measures from both the fiscal and monetary authorities during 2020 and 2021.

                                Westpac expects RBA to stand pat in April meeting with its “patience” stance. But after Q1 inflation data and further progress on wages growth, RBA would moving to a tightening bias over June and July, prior to raising the cash rate in August.

                                Full release here.

                                ECB Lagarde: Russia-Ukraine war lowers and raises inflation

                                  By
                                  ActionForex.com
                                  -

                                  ECB President Christine Lagarde said in a speech that the Russia-Ukraine war would “lower growth and raise inflation through higher energy and commodity prices, the disruption of international trade and weaker confidence”. But the baseline scenario is still for the economy to “grow robustly in 2022”.

                                  However, “uncertainty surrounding the outlook had increased significantly”, policy makers are looking at two alternative scenarios that ” growth could be dampened significantly and inflation could be considerably higher in the near term”. Still, “in all scenarios, inflation is still expected to decrease progressively and settle at levels around our two per cent inflation target in 2024.”

                                  Lagarde added that if data support the expectation that medium-term inflation outlook will not weaken even after the end of net asset purchases, ECB will “conclude net purchases in the third quarter”. Any adjustments to interest rates will “take place some time after the end of our net purchases and will be gradual.”

                                  Full speech here.

                                  Canada manufacturing sales rose 0.6% mom in Jan

                                    By
                                    ActionForex.com
                                    -

                                    Canada manufacturing sales rose 0.6% mom to CAD 64.8B in January, below expectation of 1.3% mom. That’s nonetheless the fourth consecutive month of increase. Sales rose in 14 of 21 industries, led by the petroleum and coal (+6.8%) and wood (+6.5%) product industries. The gain was partially offset by lower sales of motor vehicles (-17.5%).

                                    Full release here.

                                    US PPI rose 0.8% mom, 10.0% yoy in Feb

                                      By
                                      ActionForex.com
                                      -

                                      US PPI for final demand rose 0.8% mom in February, below expectation of 1.0% mom. On an unadjusted basis, final demand prices moved up 10.0 yoy for the 12 months ended in February, matched expectations.

                                      Prices for final demand goods was up 2.4% mom while prices for final demand services was unchanged.

                                      Full release here.

                                      German ZEW had largest fall on record, expect a stagflation in the coming months

                                        By
                                        ActionForex.com
                                        -

                                        German ZEW Economic Sentiment tumbled sharply from 54.3 to -39.3 in March, well below expectation of 10.3. That -93.6 pts decline was the largest on record, since the survey began in December 1991. That’s even worse than the -58.2 pts fall at the beginning of the pandemic. Current Situation Index dropped from -8.1 to -21.4, slightly better than expectation of -22.5.

                                        Eurozone ZEW Economic Sentiment dropped from 48.6 to -38.7, below expectation of 49.3. Current Situation Index dropped 22.5 pts to -21.9.

                                        Inflation expectations indicator stands at jumped sharply from -35.1 to 69.5. 76.5 per cent of the experts expect the inflation rate to increase in the next six months.

                                        “A recession is becoming more and more likely. The war in Ukraine and the sanctions against Russia are significantly dampening the economic outlook for Germany. The collapsing economic expectations are accompanied by an extreme rise in inflation expectations. The experts therefore expect a stagflation in the coming months. The worsened outlook affects practically all sectors of the German economy, but especially the energy-intensive sectors and the financial sector,” comments ZEW President Achim Wambach on current expectations.

                                        Full release here.

                                        Eurozone industrial production flat in Jan, EU rose 0.4% mom

                                          By
                                          ActionForex.com
                                          -

                                          Eurozone industrial production rose 0.0% mom in January, below expectation of 0.4% mom. Production of non-durable consumer goods rose by 3.1%, while production of intermediate goods and energy both fell by -0.3%, durable consumer goods by -0.5% and capital goods by -2.4%.

                                          EU industrial production rose 0.4% mom. Among Member States for which data are available, the largest monthly increases were registered in Austria (+6.2%), Czechia (+3.1%) and Poland (+3.0%). The highest decreases were observed in Estonia (-6.1%), Portugal (-5.0%) and Greece (-4.1%).

                                          Full release here.

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