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China’s unreliable entities list on the way as countermeasures to US

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    ActionForex.com
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    Just as the Chinese Communist Party run hawkish tabloid Global Times warned that “major retaliative measures’ on US for Huawei are underway, the Commerce Ministry announced to set up a list of “unreliable entities” targets companies that violate market rules, cut off supply to the country.

    The ministry noted that for non-commercial purposes, some foreign entities impose blockades, confessions and other discriminatory measures against Chinese enterprises and damage their legitimate rights and interests”. Such entities endanger China’s national security and interests, and also pose a threat to global supply chain. Detailed measures regarding the list will be announced later.

    Off shore Chinese Yuan is back under pressure today, with USD/CNH hitting as high as 6.9472 so far. 6.9488 resistance is back in focus. Overall, we’re not expecting a sustainable top in USD/CNH at current level, not even at the psychologically important 7 handle.

    There were talks that USD/CNH above 7 would cause serious capital outflow and risks delaying internationalization of the Yuan. But it’s also noted that the government has implement measures already, including tighter compliance requirements. For, we’d believe that all the official would try is only slowing Yuan’s decline, rather than blocking it.

    Bitcoin shatters 40K barrier, path to 50K now open?

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      ActionForex.com
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      Bitcoin’s surged over the weekend, breaking the 40K barrier for the first time since May 2022, has brought a fresh wave of optimism and focus in the cryptocurrency market. The immediate attention is now on the key level of 41259, a significant Fibonacci projection level. Decisive break through this level could set the stage for a climb through 50K handle.

      The surge is largely driven by growing optimism surrounding the approval of Bitcoin ETF by the SEC. Bloomberg’s expectation of a batch of such funds gaining SEC approval by January adds to this sentiment. This development signifies a major shift towards mainstream acceptance of Bitcoin, fulfilling a long-awaited milestone for many investors and traders.

      Another contributing factor is the anticipated Bitcoin halving event scheduled for May next year. Historically, Bitcoin halvings, which occur every four years, have been associated with bullish market trends. Market participants are eyeing a potential bull run post-halving, with some traders positioning themselves early in anticipation of both the halving and the ETF approval.

      Technically, D MACD suggests that Bitcoin is now in a re-acceleration phase. Immediate focus is on 100% projection of 15452 to 31815 from 24896 at 41259. Decisive break there will pave the way to 161.8% projection at 51371 next.

      There might be some initial resistance from 41259 to limit upside at the first attempt. Break of 37485 support will bring consolidations in Bitcoin first. But pull back should be contained by 31815 resistance turned support to bring another rally.

      Canada CPI slowed to 6.3% yoy, core down to 5.3% yoy

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        ActionForex.com
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        Canada CPI slowed from 6.8% yoy to 6.3% yoy in December, matched expectations. Excluding food and energy, CPI Core slowed from 5.4% yoy to 5.3% yoy.

        CPI median dropped from 5.1% yoy to 5.0% yoy, above expectation of 4.9% yoy. CPI trimmed dropped from 5.4% yoy to 5.3% yoy, above expectation of 5.2% yoy. CPI common dropped from 6.8% yoy to 6.6% yoy, matched expectations.

        On a monthly basis, CPI dropped -0.6% mom, largest monthly decline since April 2020. The fall was mostly driven by gasoline prices, which also posted their largest monthly decline since April 2020.

        Full release here.

        BoC press conference live stream

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          New Zealand ANZ business confidence jumped to -6.9 in Nov, surge in manufacturing

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            ActionForex.com
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            New Zealand ANZ Business Confidence jumped to -6.9 in November, well above preliminary reading of -15.6 and October’s final of -15.7. Manufacturing confidence surged 14.5 pts and turned positive to 6.7. Retail confidence and services confidence also rose 17.9 pts and 10.2 pts to -3.8 and -6.6 respectively. Agriculture and construction dropped by -2.4 and -15.8 to -52.4 and -3.3.

            Activity Outlook rose to 9.1, versus preliminary reading of 4.6 and October’s 4.7. Manufacturing outlook rose 13.4 to 15.0. Construction rose 14.5 to 23.3. Services rose 3.2 to 9.2. But retail dropped -2.2 to 0 while agriculture dropped -5.1 to -9.1.

            ANZ noted: “Monetary and fiscal policy have undoubtedly done their jobs this year. But it’s worth remembering that both work by bringing forward spending from the future. There’s no free lunch, and they need to be used judiciously. The true underlying momentum of the economy should become clearer over the next few months as the impact of one-offs fade, but the case for further life-support measures is becoming less clear by the day. And that’s certainly something to celebrate.”

            Full release here.

            Germany industrial production rose 3.2% in Oct, but Ifo said expectations deteriorated

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              ActionForex.com
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              Germany industrial production rose 3.2% mom in October, above expectation of 1.8% mom. Production was down -3.0% yoy on the same month a year ago. Compared with February, before coronavirus restrictions, production was down -4.9%.

              However, separately released, Ifo said the industrial production expectations for the coming months have deteriorated, falling to 5.5 pts in November. “The consumer-oriented industries in particular are catching their breath, while the pharma industry is seeing a surge,” says ifo expert Klaus Wohlrabe.

              Eurozone PMI manufacturing finalized at 42.7, manufacturing recession is here to stay

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                ActionForex.com
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                Eurozone PMI Manufacturing was finalized at 42.7 in July, down from June’s 43.4, marking a 38-month low. PMI Manufacturing Output correspondingly dipped to 42.7 from 44.2, signaling another 38-month low.

                Among member states, Greece’s PMI Manufacturing showed a promising uptick to 53.5, a 14-month high, whereas Germany and Austria both posted a dismal 38-month low at 38.8. France also hit 38-month low at 45.1. Other states exhibited mixed results, with Spain hitting a 7-month low at 47.8, and Italy experiencing a modest 2-month high at 44.5.

                Commenting on these figures, Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, stated: “It looks like the manufacturing recession is here to stay in the eurozone. Stronger declines in output, new orders and purchase volumes at the start of the third quarter back up our view that the economy as a whole is in for a bumpy ride in the second half of the year.”

                de la Rubia also noted ECB’s reaction to deflation of output prices, which have quickened their decline, falling at the fastest pace in nearly 14 years. However, he cautioned that “the worries about services inflation remain high on the agenda.”

                Full Eurozone PMI Manufacturing release here.

                NZ BNZ services jumped back to 53.3, economy still on a broader slowing trajectory

                  By
                  ActionForex.com
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                  New Zealand’s BusinessNZ Performance of Services Index climbed from 50.1 in April to 53.3 in May, revealing a slight uptick in the services sector. However, it’s worth noting that this figure remains marginally under long-term average of 53.6. A closer look at the numbers shows activity/sales leaping from 45.4 to 52.0, employment increasing from 50.5 to 52.6, and new orders/business ascending from 50.1 to 55.4. Stocks inventories slightly declined from 57.1 to 56.8, while supplier deliveries edged up from 50.6 to 51.1.

                  BusinessNZ’s Chief Executive Kirk Hope shared his insights, stating, “The lift in expansion for May also saw a pickup in the proportion of positive comments, which rose from 39.8% in April to 50.6% for the current month.” He further added that while there weren’t any defining themes, the overall positive comments were “either industry-specific or very general around increased activity.”

                  Nonetheless, the economy appears to be on a deceleration trajectory, which, according to BNZ Senior Economist Craig Ebert, is necessary to deflate the inflationary pressures.

                  “The bounce back in the PSI in May arguably helped calm a lot of nerves – after it sagged to 50.1 in April, and after the services component of Q1 GDP declined 0.6%. Still, this doesn’t deny the economy is on a broadly slowing trajectory, which is what’s required to take the inflationary heat out of it,” Ebert explained.

                  Full NZ BNZ services release here.

                  Scholz: Additional coronavirus measures to taken as uniformly as possible across Germany

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                    ActionForex.com
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                    German Economy Minister Peter Altmaier said the country is dealing with “exponential growth” of coronavirus infections while “the number of new infections is rising by 70-75% compared to the week before.” He expected number of daily new cases to jump to 20k a day at the end of this week.

                    Separately, Finance Minister Olaf Scholz also said the development was “very worrying”. Additional measures to curb the spread “should be targeted, temporary and focussed.” “They should be taken as uniformly as possible across Germany and be generally understandable.”

                    “So far, our country has fared quite well during the coronavirus pandemic and it will be decided in the coming weeks whether it will stay that way. It’s in our hands,” he added.

                    Copper stabilizes after selloff on supply concern, no clear bounce yet

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                      ActionForex.com
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                      Copper trades steadily in range today, showing no immediate signs of a rebound. Near term selloff intensified following last week’s announcement by KoBold Metals, a venture with backing from notable figures including Bill Gates, about the discovery of a substantial copper deposit in Zambia. This revelation has the potential to significantly augment global copper supplies in the years ahead, casting a shadow over the commodity’s near-term price outlook.

                      Technically, near term outlook will stay bearish as long as 3.7414 resistance holds. Deeper decline would be seen to 3.5021 support. Firm break there will pave the way to retest 2022 low at 3.1314. This bearish development, if realized could drag AUD/USD further towards 2022 low at 0.6169.

                       

                      Into US session: Stocks down on renewed trade threats, JPY and CHF Higher

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                        ActionForex.com
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                        Entering into US session, Yen and Swiss Franc are trading as the strongest ones for today on risk aversion. Trump’s comments in Bloomberg interview regarding the EU is as bad as China revived the concerns over trade war across the Atlantic, including auto tariffs. The comments attracted strong responses from the EU as they realized Trump is not someone who keep promises. Anyway, Dollar follows as the third strongest, as it strengthens every time as trade tensions escalate. Australian and New Zealand Dollar are the weakest ones for today. Canadian Dollar as the third weakest even though it could make a turn around. Focuses are on the final hours of US-Canada trade negotiations.

                        Euro is mixed today as on the one hand it’s pressured by renewed tariff threats. Also, Eurozone CPI unexpectedly slowed back to 2.0% yoy August, reaffirming ECB’s stance that it won’t raise interest rates any time soon. On the other hand, Turkish Lira recovers mildly after the government raised tax on foreign currency savings, while scrapped taxes on local deposits.

                        In other markets, major European indices are all down today. FTSE is losing -0.4%, DAX falls -0.81% while CAC drops -1.14% at the time of writing. In Asian, Nikkei closed down -0.02%, Hong Kong HSI dropped -0.98%, China Shanghai SSE lost -0.46% and Singapore Strait Times declined -0.38%.

                        RBA Debelle: Still quite likely to have long-lived economic impact from pandemic

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                          ActionForex.com
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                          RBA Deputy Governor Guy Debelle said “recent data indicate that the outcomes in the Australian economy have been better than earlier feared.” But he also urged not to “lose sight of the fact that the decline in the economy and the impact on households and businesses is historically large”. Fiscal and monetary support that has been provided was, and remains, “warranted.”

                          The “considerable uncertainty” ahead and it’s “still quite likely” that the economic decline will have a “long-lived impact”. RBA will “maintain the current policies to keep borrowing costs low and credit available, and stands ready to do more as the circumstances warrant.”

                          Debelle also explained in the speech the details of RBA’s policy responses and the effectiveness.

                          UK CPI jumped to 1.5% yoy, core CPI up to 1.4% yoy

                            By
                            ActionForex.com
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                            UK CPI accelerated to 1.5% yoy in April, up from 0.7% yoy, above expectation of 1.4% yoy. Core CPI jumped to 1.3% yoy, up from 1.1% yoy, above expectation of 1.2% yoy. RPI rose to 2.9% yoy, up from 1.5% yoy, above expectation of 2.3% yoy.

                            Also released, PPI input came in at 1.2% mom, 9.9% yoy, versus expectation of 0.6% mom, 4.4% yoy. PPI output was at 0.4% mom, 3.9% yoy, versus expectation of 0.4% mom, 3.5% yoy. PPI core output was at 0.5% mom, 2.5% yoy, versus expectation of 0.3% mom, 1.8% yoy.

                            BoE Carney: Much of Q1’s lost output will not be made up

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                              ActionForex.com
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                              BoE Governor Mark Carney speaks to the Treasury Committee in the parliament for inflation report hearing today.

                              Regarding the dismal Q1 growth, Carney said ” it’s more likely to have been temporary and idiosyncratic factors that slowed the economy.” But the MP didn’t expect much of that “lost output” to be made up. Therefore, BoE forecast 0.4% growth in Q2 only.

                              Carney noted that there were arguments for and against publishing a rate path. But he pointed out that “e risk of it being interpreted as a promise, as a commitment are real, there are risks of procrastination once you put a path out there… there’s risk of pre-commitment as well”. And thus, the majority of the committee were not in favor of it.

                              US durable goods orders rose 0.2% mom in Dec, ex-transport orders rose 0.7% mom

                                By
                                ActionForex.com
                                -

                                US durable goods orders rose 0.2% mom to USD 245.3B in December, well below expectation of 1.0% mom rise. Ex-transport orders rose 0.7% mom, above expectation of 0.5% mom. Ex-defense orders rose 0.5% mom. Machinery rose 2.4% mom.

                                Full release here.

                                Silver targeting key resistance zone at 26 as momentum picks up

                                  By
                                  ActionForex.com
                                  -

                                  While Gold’s rally stalled after hitting new record high last week, Silver is picking up momentum. Given that Silver has been clearly lagging Gold this year, there is room for Silver to catch up and outperform in Q2.

                                  Fundamentally, both Gold and Silver as precious metal would benefit from policy loosening of major global central banks. But as additionally as an industrial metal, Silver could be benefited more with global growth and industrial demands pick up.

                                  Yet, technically, Silver has to overcome key resistance level around 26 first. For now, near term outlook will stay bullish as long as 23.99 support holds. It’s possible that consolidation pattern from 26.12 has completed with three waves to 21.92 already.

                                  Decisive break of 26.12 will confirm resumption of whole rise from 17.54 (2022 low). In this case, the near medium term target will be 61.8% projection of 17.54 to 26.12 from 21.92 at 27.22. Firm break there will pave the way for new record high above 30 later in the year.

                                  Nevertheless, rejection by 25.91/26.12 resistance zone, or break of 23.99 support, will delay the bullish case and extend the consolidation from 26.12 with another falling leg instead.

                                  Australia consumer sentiment dropped to 98.8, pessimists outnumbered again

                                    By
                                    ActionForex.com
                                    -

                                    Australia Westpac Consumer Sentiment dropped sharply by -4.9 to 98.8 in March, down from 103.8. That’s the lowest level since September 2017. Also, with sub-100 reading, pessimists outnumbered optimists again. The release of the national accounts update is seen as a piece of news that triggered the deterioration. Data collected before the March 6 release showed reading of 100.7. Those collected after showed combined reading of 92.7, down -8.

                                    Westpac continues to expect a total of -50bps rate cut by RBA by the end of 2019. And they expect the hikes to happen in August and then November.

                                    Full release here.

                                    RBA to stand pat, AUD to stay weak

                                      By
                                      ActionForex.com
                                      -

                                      RBA is widely expected to keep the cash rate unchanged at 1.50% tomorrow. Economists have been pushing back their expectation on the timing of an RBA hike after recent sluggish wage growth and inflation data. Late last year, there were speculations that RBA could hike twice by the end of this year. And now, markets are only pricing in around 40% chance of one hike in 2018. The majority expects that tightening won’t start until 2019.

                                      While the job markets have been strong in Australia, wage growth remained sluggish. Unemployment rate has now stabilized at 5.5-5.6% after last year’s growth. However,the figure is floored by continue rise in participation rate. In that sense, the unemployment rate would stays away from hitting 5% level for a while, the level considered to be at full employment. That is, slack will remain in the economy.

                                      RBA rate speculations, falling iron ore price and worries regarding US-China trade war left Aussie as one of the weakest back in March, in particular against Euro and Sterling. AUD will likely stay pressured after tomorrow’s RBA rate statement.

                                      ECB Rehn: Economic data to remain good despite Omicron

                                        By
                                        ActionForex.com
                                        -

                                        ECB Governing Council member Olli Rehn said over the weekend, “personally, I expect the economic data to remain relatively good despite being affected by the Omicron variant.” He added that rate hikes in 2023 would be a logical step if there are no new economic shocks.

                                        He added upward pressure on inflation will subside over the course of the year. Inflation is expected to hover around ECB’s target of 2% in the next two years.

                                        Trump: Rejected EU offer to scrap auto tariffs, said EU is as bad as China

                                          By
                                          ActionForex.com
                                          -

                                          Trump rejected EU’s offer to scrap auto tariffs on cars if US does the same. He said “it’s not good enough” and added that “Their consumer habits are to buy their cars, not to buy our cars.” He also added that EU is “almost as bad as China, just smaller.”

                                          European Trade Commissioner Cecilia Malmstrom told the European parliament yesterday that “we are willing to bring down even our car tariffs down to zero … if the U.S. does the same.” Nonetheless Malmstrom also expressed that “we do not agree with their methods of imposing massively billions of tariffs on China, as they have also done with Turkey. We do not share U.S. view that trade wars are good and easy to win.”

                                          If Trump is going to, as his supporters believe, tear down tariffs and trade barriers, EU’s offer is certainly a step in the right direction. Now it seems Trump is simply using something else as an excuse for not doing it.

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