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Japan industrial production dropped -1.0% mom in Dec, expected to rebound in Jan and Feb

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    ActionForex.com
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    Japan industrial production dropped -1.0% mom in December, worse than expectation of -0.8% mom. Manufacturers surveyed by the Ministry of Economy, Trade and Industry (METI) expected output to grow 5.2% in January and 2.2% in February.

    Retail sales grew 1.4% yoy in December, below expectation of 2.7% yoy. That’s nonetheless the third straight month of increase for sales, lifted by demand for general merchandise and food and beverages.

    Fed Bostic comfortable with 50bps or if data support

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      ActionForex.com
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      Atlanta Fed President Raphael Bostic said in an FT interview that “every option is on the table” for every FOMC meeting. “If the data say that things have evolved in a way that a 50 basis point move is required or be appropriate, then I’m going to lean into that . . . If moving in successive meetings makes sense, I’ll be comfortable with that,” he said.

      “The reduction of accommodation should translate into tighter financial markets,” Bostic said. “The developments that we’ve seen on that front are comforting in the sense that markets are still functioning the way they’re supposed to, and they are responding to conditions in ways that are rational and appropriate.” He also supports starting the runoff of the USD 9T balance sheet “as quickly as” possible without impairing market functioning.

      “Our policy path is not a constriction path. It’s a less accommodative path,” he said. “If we do the three [rate hikes] that I have in mind, that’ll still leave our policy in a very accommodative space. “I don’t think there’s going to be a lot of constraint on growth as we remove these emergency actions.”

      US PCE price index rose to 5.8% yoy, core PCE rose to 4.9% yoy

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        ActionForex.com
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        US personal income rose 0.3% mom, or USD 70.7B in December, below expectation of 0.5% mom. Spending dropped -0.6% mom, or USD -95.2B, matched expectations.

        PCE price index accelerated slightly from 5.7% yoy to 5.8% yoy, below expectation of 6.1% yoy. Core PCE price index jumped from 4.7% yoy to 4.9% yoy, above expectation of 4.8% yoy.

        Full release here.

        Eurozone economic sentiment indicator dropped to 112.7, EU down to 111.6

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          ActionForex.com
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          Eurozone Economic Sentiment Indicator dropped from 113.8 to 112.7 in January. Industry confidence dropped from 14.6 to 13.9. Services confidence dropped from 10.9 to 9.1. Consumer confidence dropped from -8.4 to -8.5. Retail trade confidence rose from 1.1 to 3.8. Construction confidence dropped from 10.1 to 8.1. Employment Expectations Indicator dropped from 113.5 to 113.3.

          EU ESI dropped from 113.0 to 111.6. EEI dropped from 113.6 to 113.1. Amongst the largest EU economies, the ESI rose in Germany (+0.8) and Spain (+0.6) while it worsened in Italy (-6.1), Poland (-4.2), France (-2.8) and the Netherlands (-1.3).

          Full release here.

          Germany GDP contracted -0.7% qoq in Q4, still -1.5% lower than pre-pandemic level

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            ActionForex.com
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            Germany GDP dropped -0.7% qoq in Q4, worse than expectation of -0.2% qoq. GDP was still -1.5% lower than pre-pandemic level in Q4, 2021. For whole of 2021, GDP grew 2.8%.

            Destatis said, “after economic output grew again in the summer despite increasing supply and material bottlenecks, the recovery of the German economy was halted by the fourth corona wave and renewed tightening of corona protection measures at the end of the year.”

            “Private consumption in particular decreased in the fourth quarter of 2021 compared to the previous quarter, while government consumer spending increased. Construction investments fell compared to the third quarter of 2021.”

            Full release here.

            Swiss KOF economic barometer rose to 107.8, various subgroups developing unevenly

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              ActionForex.com
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              Swiss KOF Economic Barometer rose from 107.2 to 107.8 in January, above expectation of 106.0. KOF said the “various subgroups of the barometer are developing unevenly.”

              Outlook has improved for consumer spending and for financial and insurance service providers. The outlook also tends to brighten for the accommodation and food service activities. However, in the goods production sector (manufacturing and construction), indicators for almost all sub-​aspects of business activity are weakening, especially for profit development, production activity and capacity utilisation.

              Full release here.

              France GDP grew 0.7% in Q4, up 7% in 2021

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                ActionForex.com
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                France GDP grew 0.7% qoq in Q4, above expectation of 0.5% qoq. On average over 2021, GDP increased by 7.0% after -8.0% in 2020. GDP was 0.9% above pre-pandemic level in Q4 2019. But the average level of GDP in 2021 was still -1.6% below its average level in 2019.

                Looking at some details, final domestic demand (excluding inventories) contributed to +0.5 points. In particular, the growth rate of household consumption expenditure (+0.4%) was similar to that of gross fixed capital formation (GFCF, +0.5%). Contribution of foreign trade to GDP growth was slightly negative this quarter at -0.2 points. contribution of inventory changes to GDP growth was positive this quarter (+0.4%).

                Full release here.

                Bitcoin trading sideway, risk still on the downside

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                  ActionForex.com
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                  Bitcoin stabilized after hitting 33000 and turned sideway. But risk is still staying heavily on the downside with 39636 support turned resistance intact. Current down trend from 68986 could extend with another falling leg, towards 29261 support, which is close to 30k psychological level too. We’d look for bottoming signal around there.

                  Meanwhile, on the upside, firm break of 39639 will argue that bitcoin has bottomed earlier than expected and bring rebound back towards 55 day EMA (now at 44839). Failure to defend 30k handle will indicate that the larger down trend is still in force for 100% projection of 68986 to 41908 from 52101 at 25023.

                  Gold breaks 1800, more downside ahead with Silver

                    By
                    ActionForex.com
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                    Gold is now back below 1800 handle as fall from 1853.70 extends. The development further affirms the case that rebound from 1752.32 has completed with three waves up to 1853.70. Deeper decline is expected as long as 1821.93 minor resistance holds. Current fall from 1853.70 is see as part of the pattern from 1877.05, which is a down leg inside the medium term range pattern from 1676.65. Break of 1782.48 support will add further credence to this case, and would set the stage for deeper decline through 1752.32 low to 100% projection of 1877.05 to 1752.32 from 1853.70 at 1728.97 eventually.

                     

                    Silver’s development is also inline with gold. Rebound from 21.39 should have completed with three waves up to 84.69. Deeper decline is expected as long as 23.55 minor resistance holds, to 21.93 support first. Such fall from 24.69 is seen as a leg inside the medium term falling wedge pattern from 30.07. Break of 24.69 would send silver through 21.39 low, to 50% retracement of 11.67 to 30.7 at 20.87 next.

                    IMF: BoJ’s commitment to prolonged monetary accommodation appropriate

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                      ActionForex.com
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                      IMF said in a report that BoJ’s commitment to maintaining prolonged monetary accommodation remains “appropriate”. It expects that a “prolonged period of monetary policy accommodation, flexible fiscal policy, and inclusive growth-oriented reforms will be required to durably lift inflation expectations and inflation to the target.”

                      Further measures could be considered for making monetary support “more sustainable”. On option could be to “steepen the yield curve by shifting the yield target from the 10-year to a shorter maturity”. This could help “mitigate the impact of prolonged monetary accommodation on financial institutions’ profitability”. If underlying inflation momentum remains weak, “cutting the policy rate should be the first option”.

                      Full report here.

                      US initial jobless claims dropped to 260k, matched expectations

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                        ActionForex.com
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                        US initial jobless claims dropped -30k to 260k in the week ending January 22, matched expectations. Four-week moving average of initial claims rose 15k to 247k.

                        Continuing claims rose 51k to 1675k in the week ending January 15. Four-week moving average of continuing claims dropped -11k to 1652k, lowest since August 18, 1973.

                        Full release here.

                        US durable goods orders dropped -0.9% mom in Dec, led by transportation equipment

                          By
                          ActionForex.com
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                          US durable goods orders dropped -0.9% mom, or USD -2.4B to USD 267.6B in December, worse than expectation of -0.5%. Ex-transport orders rose 0.4% mom, above expectation of 0.5% mom. Ex-defense orders rose 0.1%. Transportation equipment dropped USD -3.3B, or -3.9% mom to USD -80.1B.

                          Full release here.

                          US GDP grew 6.9% annualized in Q4, well above expectations

                            By
                            ActionForex.com
                            -

                            US GDP grew at 6.9% annualized rate in Q4, faster than Q3’s 2.3%, well above expectation of 5.6%. The increase in real GDP primarily reflected increases in private inventory investment, exports, personal consumption expenditures (PCE), and nonresidential fixed investment that were partly offset by decreases in both federal and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

                            For 2021 as a whole, real GDP grew 5.8% The increase in real GDP in 2021 reflected increases in all major subcomponents, led by PCE, nonresidential fixed investment, exports, residential fixed investment, and private inventory investment. Imports increased.

                            Full release here.

                            EUR/USD downside breakout, how bearish is the long term outlook?

                              By
                              ActionForex.com
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                              EUR/USD finally breaks out to the downside and falls to the lowest level since June 2020. Near term outlook is staying bearish and next target is 61.8% projection of 1.1908 to 1.1185 from 1.1482 at 1.1035.

                              The biggest question is indeed in the long term picture. As seen in the monthly chart, an interpretation is that price actions from 1.0339 (2017 low) are a three wave consolidation pattern that has completed at 1.2348, after double rejections by 38.2% retracement of 1.6039 to 1.0339 at 1.2516. If that’s the case, a break through 1.0339 low would be eventually be seen.

                              Of course, it’s still a bit early to tell if the above bearish case is true. And that is unlikely to be revealed soon, at least not by first half of the year. But it’s something that is worth noting.

                              Swiss exports rose to record in 2021, US became largest buyer

                                By
                                ActionForex.com
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                                Swiss trade surplus came in at CHF 3.69B in December, below expectation of CHF 5.23B. For 2021 as a whole, exports rose 15.2% to a new record high at CHF 259.5B. Imports rose 10.1% to CHF 200.8B. Trade surplus swelled to CHF 58.7B.

                                Also, the FOCBS said US became Switzerland’s largest buyer in 2021. Foreign trade with China rose to new high. Double-digit growth rates were observed in deliveries to Europe (+18.1%, or +21.9B) and North America (+17.0%, or +7.4B). Shipments to Asia were also up by 9.0%, or CHF 4.4B.

                                Full release here.

                                Germany Gfk consumer sentiment rose to -6.7, assuming pandemic to ease in spring

                                  By
                                  ActionForex.com
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                                  Germany Gfk Consumer Sentiment for February rose 0.2 pts to -6.7, better than expectation of -8.0. In January, economic expectations rose from 17.1 to 22.8. Income expectations rose from 6.9 to 16.9. Propensity to buy rose from 0.8 to 5.2.

                                  “Despite rising incidences and inflation, consumers are once again showing some optimism at the beginning of the year. In particular, they are hoping for a slight alleviation in price trends, as in January 2022 the base effect resulting from the January 2021 reversal of the VAT cut will mitigate the inflation rate to some degree. Nevertheless, consumers price expectations remain significantly higher than in recent years.”, explains Rolf Bürkl, GfK consumer expert. “In addition, experts assume that the pandemic situation would ease in the spring, which will lead to a number of restrictions being removed.”

                                  Full release here.

                                  Gold dives on strong Dollar, 1805 support in focus

                                    By
                                    ActionForex.com
                                    -

                                    Gold dropped sharply overnight following broad based Dollar strength. The development now raises the chance that rebound from 1752.32 has completed with three waves up to 1853.70 Immediate focus is now on 1805.59 support. Firm break there should add more credence to this bearish case and send Gold through 1782.48 to 1752.32 support.

                                    More importantly, rejection by medium term trend line resistance, together with the corrective structure of the rise from 1752.32 to 1853.70, suggests that medium term sideway pattern is extending with another falling leg. Break of 1782.48 support will open up the case for deeper decline to 100% projection of 1877.05 to 1752.32 from 1853.70 at 1728.97 eventually.

                                    New Zealand CPI surges to 5.9% yoy, NZD/USD dives on risk aversion

                                      By
                                      ActionForex.com
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                                      New Zealand CPI rose 1.4% qoq in Q4, above expectation of 1.2% yoy. Annual rate accelerated from 4.9% yoy to 5.9% yoy, above expectation of 5.6% yoy. That’s the highest level in three decades since 1990.

                                      “New Zealand is not alone, with many other OECD countries experiencing higher inflation than in recent decades,” consumers prices senior manager Aaron Beck said. “Price increases were widespread with 10 out of 11 main groups in the CPI basket increasing in the year, with only the communications group decreasing.”

                                      Full CPI release here.

                                      The data reinforces the case for RBNZ to raise interest rate in February. Westpac is forecasting a series of OCR hikes over the coming year with cash rat peaking at 3% in 2023. But New Zealand Dollar tumbles broadly following deep risk-off sentiment.

                                      NZD/USD dives to as low as 0.6602 so far today as down trend continues. Next target is 61.8% projection of 0.7217 to 0.6700 from 0.6889 at 0.6569 and then 100% projection at 0.6372.

                                      The strong break of medium term falling channel support indicates downside acceleration. Fall from 0.7463 could be a correction to up trend from 0.5467, or a impulsive down trend itself. In either case, NZD/USD would target 61.8% retracement of 0.5467 to 0.7463 at 0.6229 before making a bottom.

                                      NASDAQ rejected by 14k after hawkish Fed, risks heavily on the downside

                                        By
                                        ActionForex.com
                                        -

                                        US stock markets tumbled sharply overnight and futures dive further in Asian session. Fed Chair Jerome Powell sounded very hawkish during the post meeting press conference. The indication that rate hikes would start in March wasn’t much of a surprise. But Powell indicated that every meeting in “live” and refused to rule out 50bps hikes. Some economists are now forecasting as many as five hikes this year.

                                        On inflation, Powell also warned “are still to the upside in the views of most FOMC participants, and certainly in my view as well”. And, “there’s a risk that the high inflation we are seeing will be prolonged. There’s a risk that it will move even higher. So, we don’t think that’s the base case, but, you asked what the risks are, and we have to be in a position with our monetary policy to address all of the plausible outcomes,”

                                        NASDAQ was rejected by 14k psychological level and 38.2% retracement 15319.03 to 13094.65 at 13944.36 to close flat. The development keeps near term risks heavily on the downside. Immediate focus is back on 13414.14 support. Break firm break there will argue that the free fall from 16212.22 is resuming. Next target will be 38.2% retracement of 6631.42 to 16212.22 at 12552.35.

                                        Fed keeps rate at 0-0.25%, soon appropriate to hike

                                          By
                                          ActionForex.com
                                          -

                                          Fed keeps federal funds rate target unchanged at 0-0.25%. It added, “with inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate.” The monthly pace of net asset purchases will continued to be reduced to “bring them to an end in March”. The decision was unanimous.

                                          Full statement here.

                                          Press conference live stream below.

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