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Today’s top mover: NZD/CHF just correcting a medium term impulsive rise

    By
    ActionForex.com
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    NZD/CHF is so far the top mover today. On the one hand commodity are under broad selling pressure. Kiwi and Aussie are paring some of last week’s gain. Meanwhile, the Swiss Franc is surprisingly the strongest one for today. In particular, USD/CHF’s selling accelerates through 0.9952 support after weaker than expected US housing data.

    To assess the outlook of NZD/CHF, we’d like to have a look at the bigger picture in the weekly chart first. Powerful rise from 2018 low at 0.6313 appears to be a medium term impulsive wave. The corrective fall from 0.7323 (2017 high) should have completed at 0.6313. Hence, rise from 0.6313 is possibly resuming the long term rise from 0.5831 (2015 low).

    With that in mind, the current fall from 0.6884 short term top (on bearish divergence condition in 4 hour MACD), is likely just a corrective pull back. We’re currently viewing it as correcting the rise from 0.6462 only. Hence, while further decline is likely, downside should be contained by 38.2% retracement of 0.6462 to 0.6884 at 0.6723 to bring rebound. Break of 0.6884 will target 0.7210 resistance next.

    Nevertheless, firm break of 0.6723 will argue that NZD/CHF is correcting whole rise from 0.6313. IN that case, deeper pull back could be seen towards 55 day EMA (now at 0.6607).

    Into US session: Risk appetite fades quickly, Investors turn cautious

      By
      ActionForex.com
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      Risk appetite had a brief come back in Asia earlier today, after China pledges to strive to have a good start in 2019. But sentiments turned cautious in European session, ahead of the Brexit meaningful vote in UK commons. Sterling is clearly paring some gains because of that. On the other hand, Euro is weighed down by recession worries on Germany. The country reported annual growth of 1.5% in 2018, slowest since 2013. And there is risk of technical recession in Q3 and Q4 of last year.

      For now, Canadian Dollar is the strongest one for today so far, followed by Dollar. Swiss Franc is the weakest one, followed by Euro. Markets could turn more cautious ahead of the Brexit vote. There is no exact time set, but it’s believed to be somewhere between 1900-2100 GMT.

      In Europe, at the time of writing:

      • FTSE is down -0.05%
      • DAX is down -0.30%
      • CAC is down -0.07%
      • German 10-year yield is down -0.0223 at 0.209

      Earlier in Asia:

      • Nikkei rose 0.96%
      • Hong Kong HSI rose 2.02%
      • China Shanghai SSE rose 1.36%
      • Singapore Strati Times rose 1.22%
      • Japan 10 year JGB yield dropped -0.0123 to 0.013

      Australia AiG services rose to 55.8, but employment fell

        By
        ActionForex.com
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        Australia AiG Performance of Services rose 1.5 pts to 55.8 in February, highest since June 2018, as “recovery following the COVID-19 recession of 2020 gaining in strength”. Looking at some details, sales rose 5.5 pts to 65.7. New orders rose 3.6 pts to 58.4. However, employment dropped -13.2 to 42.7. Input prices rose slightly by 1.8 to 64.4. But selling prices jumped 11.2 to 56.2.

        Ai Group Chief Executive, Innes Willox, said: ” While the continued improvement in conditions is heartening, employment fell in February following a strong recovery in the preceding months. Employers and employees will be hoping that the further growth in new orders recorded in February signals the continued recovery of sales and employment over the next few months.”

        Full release here.

        Australian employment grew 28.4k driven by part-time jobs, unemployment rate rose to 5.2%

          By
          ActionForex.com
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          In April, Australia employment rose 28.4k, more than expectation of 15.2k. However, the growth was mainly driven by 34.7k growth in part-time jobs. Full-time employment contracted -6.3k. Unemployment rate rose to 5.2%, up from 5.1% and above expectation of 5.0%. That’s also an eight-month high. But participation rate also rose 0.2% to record high of 65.8%.

          Looking at some details, in seasonally adjusted terms, the largest increase in employment was in New South Wales (up 25.1k), followed by Western Australia (up 6.4k) and Queensland (up 5.4k). The only decrease was in Victoria (down 7.6k).

          The seasonally adjusted unemployment rate increased in New South Wales (up 0.2 pts to 4.5%), Victoria (up 0.2 pts to 4.9%), South Australia (up 0.2 pts to 6.1%), Western Australia (up 0.1 pts to 6.1%) and Tasmania (up 0.1 pts to 6.8%). The only decrease was observed in Queensland (down 0.2 pts to 5.9%).

           

          Full release here.

          AUD/USD dipped notably after the release but quickly recovered. While the set of job data isn’t stellar, it’s actually not too bad.

          China Caixin PMI manufacturing dropped to 49.9, recovery not solid

            By
            ActionForex.com
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            China Caixin PMI Manufacturing dropped from 50.6 to 49.9 in November, below expectation of 50.5. Caixin added that output rose for the first time in four months as power supply issues unwound. But total new orders fell slightly. Inflationary pressures eased markedly.

            Wang Zhe, Senior Economist at Caixin Insight Group said: “To sum up, the manufacturing sector remained stable overall in November. Increased downward pressure and easing inflationary pressure were prominent features of the economic situation…. After the shortage of power was alleviated, the supply side began to recover. But due to weak demand, the supply recovery was limited, and the foundation of the recovery was not solid.”

            Full release here.

            US initial jobless claims dropped to 4.4m, continuing claims rose to 16m

              By
              ActionForex.com
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              US initial jobless claims dropped -810k to 4427k in the week ending April 18. Four-week moving average of initial claims rose 280k to 5787k. Continuing claims rose 4064k to 15976k in the week ending April 11, highest on record. Four-week moving average of continuing claims rose 3548k to 9598k.

              Full release here.

              NASDAQ could be starting a medium term correction

                By
                ActionForex.com
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                NASDAQ suffered most among major US indices on Trump’s intention to curb foreign investments in US tech industry. This week’s downside acceleration is starting to argue that it’s in a medium term correction. For the near term, outlook will stay bearish as long as 7610.67 resistance holds. Focus is on 55 day EMA (now at 7460.17). Sustained trading below this EMA will add more weight to this bearish case.

                Looking at the bigger picture, outlook isn’t too good neither with bearish divergence condition seen in weekly MACD and RSI. Long term trend line support at around 7125 is another line of defence. Firm break there would confirm that fall from 7806.60 is correcting whole up trend from 4209.76. In that case, we’ll likely see more downside to 38.2% retracement of 4209.76 to 7806.60 at 6432.60) before forming a bottom.

                 

                IMF ready to mobilize $1T lending capacity as coronavirus response

                  By
                  ActionForex.com
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                  IMF Managing Director Kristalina Georgieva said in a blog post that the fund is ready to mobilize its USD 1T lending capacity to help member countries on coronavirus impacts. And, “as a first line of defense, the Fund can deploy its flexible and rapid-disbursing emergency response toolkit to help countries with urgent balance-of-payment needs.”

                  Meanwhile she also urged that “the case for a coordinated and synchronized global fiscal stimulus is becoming stronger by the hour.” There are three areas of actions for the global economy, including fiscal policies, monetary policies and regulatory responses. “All this work—from monetary to fiscal to regulatory—is most effective when done cooperatively.”

                  German ZEW dropped to -16.1. Trade war, Italy and data weighed

                    By
                    ActionForex.com
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                    German ZEW economic sentiment dropped to -16.1 in June, down from -8.2, below expectation of -14.6. Current situation index dropped to 80.6, down from 87.4, below expectation of 85.0.

                    Eurozone ZEW economic sentiment dropped to -12.6, down from 2.4, below expectation of 0.1. Current situation index dropped -16.2 to 39.9.

                    Quote from the release:

                    “The recent escalation in the trade dispute with the United States as well as fears over the new Italian government pursuing a policy which potentially destabilises the financial markets have left their mark on the economic outlook for Germany. On top of this, German industry has been reporting worse than expected figures for exports, production and incoming orders for April. As a result, the economic outlook for the next six months has worsened considerably,” comments ZEW President Professor Achim Wambach.

                    Full release here.

                    No news on NAFTA as May 17 deadline looms

                      By
                      ActionForex.com
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                      There is so far no positive news out of NAFTA negotiation yet. House Speaker Paul Ryan said today (Thursday) is the last day the Congress has to receive a notification of a deal, if it is to pass it within this year. But it’s believed that the fundamental differences regarding auto contents and sunset clause remain between the US and the other two countries, Mexico and Canada.

                      BoC Governing Council Member Schembri said yesterday that uncertainty on NAFTA is impacting firms’ investment decisions. And, capacity is being “hindered” by firms’ reluctance to take on investment in face of uncertainty. And some of which is related to NAFTA.

                      EU adopted Brexit negotiation guidelines

                        By
                        ActionForex.com
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                        EU leaders formally approved the guidelines for the negotiation of future relations with the UK after Brexit in the EU summit today. Only a few minutes were taken for the approval. While symbolic, the approval now clears the way to move one to the next phase of Brexit negotiation. And the process will likely gain momentum from now on. Brexit negotiator Michel Barnier will now talk directly to the US about future relationship. The target is to reach a broad political agreement by October.

                        The 7-page document can be found here.

                        UK Prime Minister Theresa May said that “I believe we are approaching this with a spirit of cooperation, a spirit of opportunity for the future as well, and we will now be sitting down and determining those workable solutions for Northern Ireland, but also for our future security partnership and economic partnership.” And, she added that “the best interest of both the UK and the EU that we get a deal that actually is in the interests of both.”

                        RBNZ Orr: Monetary policy was too loose for a period

                          By
                          ActionForex.com
                          -

                          RBNZ Governor Adrian Orr told a parliamentary committee, “our core inflation is too high and that suggests at some point monetary policy was too loose for a period.”

                          “I have already apologized for the current level of inflation. I have already said that the Reserve Bank was party to that,” he added.

                          However, “the worst mistake we could be having would be fighting deflation, unnecessary unemployment and economic collapse,” he said. “We have ended up with the better problem — but it is a problem — which is inflation, core inflation of 4-6% that we need to put back in the bottle.”

                          Wuhan coronavirus death tolls jumped 242 in Hubei, provincial party secretary replaced

                            By
                            ActionForex.com
                            -

                            According to health officials in China’s Hubei province, coronavirus death tolls surged by a record 242 on February 12, bringing total deaths in the province to 1310. A massive 14840 new confirmed cases were also reported in Hubei alone, dwarfing the 2015 cases reported for February 11 throughout whole of China. The surge in numbers were said to be due to new counting methods. Excluding cases confirmed using the new methods, the number of new cases rose by only 1,508 in the province.

                            The new reporting system created much confusions and raised questions on transparency again. Meanwhile, at the time of writing, there is no update from the National Health Commission on country-wide numbers of the Wuhan coronavirus yet, which is very unusual.

                            Separately, Jiang Chaoliang, Chinese Communist Party’s Hubei provincial secretary, is relieved of duty by the central committee. Shanghai Mayor Ying Yong is appointed as replacement.

                            German PMI composite at 48-month low, reduced optimism, lack of momentum into new year

                              By
                              ActionForex.com
                              -

                              Germany PMI manufacturing dropped to 51.5, down from 51.8, missed expectation of 51.7. It’s a 33-month low. PMI services dropped to 52.5, down from 53.3, missed expectation of 53.5. It’s the lowest in 7 months. PMI composite dropped to 52.2, down from 52.3, a 48-month low.

                              Commenting on the flash PMI data, Phil Smith, Principal Economist at IHS Markit said:

                              “The PMI data disappointed again in December, indicating the continuation of only a modest rate of underlying growth across Germany’s private sector. Furthermore, with new orders close to stalling in December and firms reporting reduced optimism towards the outlook, there’s a lack of momentum heading into the New Year.

                              “It’s a stark contrast from the situation this time last year. Reports of an economy close to overheating have been supplanted by concerns about an increasingly uncertain political backdrop, trade wars and a struggling autos industry.

                              “The survey’s measures of output and new orders diverged further from that of employment as December saw another solid – and slightly accelerated – round of job creation across both manufacturing and services. With firms now eating into backlogs of work at a faster rate, the indication is that a renewed slowdown in hiring is increasing likely.”

                              Full release here.

                              Canada added 67k jobs in January, CAD surges

                                By
                                ActionForex.com
                                -

                                Canadian Dollar rebounds strongly in early US session after stellar employment data. The job market grew 67k in January, way above expectation of 6.5k. Employment gains were driven entirely by private sector, which grew 112k. Unemployment rate rose to 5.8%, up from 5.6%, higher than expectation of 5.7%. But that was because “more people looked for work.”

                                Full release here.

                                USD/CAD’s focus is back on 1.3229 minor support after the dive. As long as 1.3229 holds, we’d still expect another rise to 1.3375 resistance. However, break could indicate completion of rebound from 1.3068 and bring deeper fall back to this short term bottom.

                                US Mnuchin putting enormous amount of effort to meet China trade talk deadline

                                  By
                                  ActionForex.com
                                  -

                                  US Treasury Secretary confirmed that he and US Trade Representative Robert Lighthizer will travel to Beijing next week for trade negotiations. Mnuchin said prior meetings with Chinese Vice Premier Liu He in Washington were “very productive”.

                                  He added that he and Lighthizer are “committed to continue these talks”. And, “We’re putting in an enormous amount of effort to try to hit this deadline and get a deal. So that’s our objective.”

                                  Mnuchin also said “we are also very focused on free and fair trade for U.S. companies to have access there and to having a more level playing field which will bring down the trade deficit.”

                                  His comments echoed Trump’s remark in the State of Union Address that the trade deal “must include real, structural change to end unfair trade practices, reduce our chronic trade deficit and protect American jobs.”

                                  Fed Evans: Probably going to be 2024 before interest rate hike

                                    By
                                    ActionForex.com
                                    -

                                    Chicago Fed President Charles Evans said, it’s “probably going to be 2024 before we see interest rates start to rise,: That would come with “continuations of labor market improvement, unemployment falling to 4% and hopefully below that”

                                    At that point, he said, “we can start to gently increase the federal funds rate, while it will still be accommodative in order to sort of achieve this overshooting and average 2% (inflation).”

                                    Eurozone PMI composite rises to 48.9, a step towards recovery amid German drag

                                      By
                                      ActionForex.com
                                      -

                                      Eurozone PMI Manufacturing dipped further from 46.6 to 46.1 in February, undershooting expectations of a 47.1 reading and signaling continued contraction. Conversely, PMI Services climbed from 48.4 to neutral mark of 50.0, surpassing the forecast of 48.7 and reaching a 7-month high. This uplift in services contributed to PMI Composite’s rise from 47.9 to 48.9, marking an 8-month peak yet still indicating slight overall economic contraction.

                                      Norman Liebke, Economist at Hamburg Commercial Bank, cited a “glimmer of hope” as Eurozone edges closer to recovery, particularly within the services sector. Despite the manufacturing downturn, Liebke reaffirms an annual growth forecast of 0.8% for 2024.

                                      ECB is likely to find the latest PMI figures concerning, especially with output prices increasing for the fourth consecutive month, largely driven by labor-intensive services sector grappling with rising wages. ECB is anticipated to make its first interest rate cut in June according to Liebke’s forecast.

                                      The disparity in economic performance between Germany and France is striking. Germany, Europe’s largest economy, appears to be a significant “drag” on the broader Eurozone growth, with its manufacturing sector facing pronounced challenges. In contrast, France is experiencing a more robust recovery across both services and manufacturing.

                                      Germany’s PMI readings for February further underscore its economic difficulties, with PMI Manufacturing plummeting to a 4-month low of 42.3, PMI Services rising from 48.2 and Composite PMI also hitting a 4-month low at 46.1.

                                      On the other hand, France’s economic indicators offer more positive news, with PMI Manufacturing surging to an 11-month high of 46.8, Services PMI rising to an 8-month high at 48.0, and PMI Composite reaching a 9-month high at 47.7.

                                      Full Eurozone PMI release here.

                                      RBNZ raises rate track, signaling additional rate hike

                                        By
                                        ActionForex.com
                                        -

                                        RBNZ decided to keep the Official Cash Rate steady at 5.50%, aligning with market expectations. However, a significant aspect of their announcement is the upward revision of their “rate track.”

                                        According to the bank’s forecasts in the Monetary Policy Statement, OCR is expected to peak at 5.70% in Q2 of 2024 and maintain this level throughout the year. Looking ahead, RBNZ anticipates a rate cut in Q2 of 2025, bringing it down to 5.4%.

                                        In the accompanying statement, RBNZ noted, “ongoing excess demand and inflationary pressures are of concern, given the elevated level of core inflation.”

                                        RBNZ also emphasized its readiness to hike again. “If inflationary pressures were to be stronger than anticipated, the OCR would likely need to increase further.”

                                        Moreover, RBNZ underlined the necessity of maintaining interest rates at a restrictive level for a sustained period, aiming at ensuring consumer price inflation returns to target level and to support maximum sustainable employment.

                                        Full RBNZ statement and MPS here.

                                        Eurozone exports rose 24.0% yoy in Aug, imports rose 53.6% yoy

                                          By
                                          ActionForex.com
                                          -

                                          Eurozone exports of goods rose 24.0% yoy to EUR 231.1B in August. Imports rose 53.6% yoy to EUR 282.1B. Trade deficit came in at EUR -50.9B. Intra-Eurozone trade rose 34.8% yoy to EUR 210.5B.

                                          In seasonally adjusted term, exports rose 3.5% mom to EUR 245.5B. Imports rose 5.5% mom to EUR 292.8B. Trade deficit widened from EUR -40.5B to EUR -47.3B, much larger than expectation of EUR -40.0B. Intra-Eurozone trade rose from EUR 230.9B to EUR 239.2B.

                                          Full release here.

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