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China CPI falls -0.4% yoy, core inflation hits 2-1/2 year high

    By
    ActionForex
    -

    China’s consumer prices slipped deeper into deflation in August, with CPI down -0.4% yoy after July’s flat reading, worse than expectations of -0.2% yoy and the weakest in six months. Food prices were the main drag, falling -4.3% yoy versus -1.6% yoy previously. On a monthly basis, CPI was unchanged, undershooting forecasts for a small 0.1% mom rise.

    At the same time, core inflation showed signs of life, rising 0.9% yoy in August compared with 0.8% yoyin July — the fastest pace in two and a half years. The pickup suggests underlying demand in services and other non-food sectors is holding up better than headline numbers imply, even as consumers face falling food costs.

    Producer prices continued to contract, though at a slower pace. PPI dropped -2.9% yoy, in line with expectations and an improvement from -3.6% yoy in July. The figures highlight China’s ongoing struggle with persistent factory-gate deflation, which has now lasted nearly three years.

    Gold rally may stretch to 3765 if US 10-year yield breaks 4%

      By
      ActionForex
      -

      The benchmark U.S. 10-year yield extended its recent slide on Monday, dropping to a five-month low. At the same time, Gold surged to another record high, reflecting strong demand for safety and conviction that inflation data due this week could steer the Fed toward faster easing.

      Markets are squarely focused on the August PPI release on Wednesday, followed by Thursday’s CPI, which will be critical in shaping expectations ahead of next week’s FOMC meeting. Any evidence of cooling inflation risks could soften Fed hawks’ resistance to faster rate cuts. While a 50bps move in September remains unlikely, the statement and dot plot could flag a steeper path of easing.

      That possibility is keeping pressure on U.S. yields. Key attention is on the 4% mark for the 10-year yield. A clean break below this psychological level could spur an even deeper slide

      Technically, 10-year has already broken through 100% projection of 4.629 to 4.205 from 4.493 at 4.069, with no sign of bottoming yet. It is also pressing against the lower bound of its near-term falling channel. Sustained break there will indicate further acceleration to 138.2% projection at 3.907 next, with prospect of diving to 3.886 support. In any case, outlook will stay bearish as long as 4.188 support turned resistance holds.

      Gold, meanwhile, remains in a phase of upward re-acceleration, as indicated by 4H MACD. It’s on track to 261.8% projection of 3267.90 to 3408.21 from 3311.30 at 3678.63. Overbought condition as seen in 4H RSI could limit upside there on first attempt. But break of 3579.44 support is needed to indicate temporary topping first.

      Meanwhile, if the 10-year yield breaks below 4% in the coming days, Gold’s rally could extend further, eyeing 323.6% projection at 3765.34 before a peak is established. For now, both Treasuries and bullion look unstoppable, with inflation data set to determine the next leg of momentum.

      Australia NAB business survey: Confidence falls, costs ease, capacity still tight

        By
        ActionForex
        -

        Australia’s NAB Business Confidence index slipped from 8 to 4 in August, but conditions showed improvement, rising from 5 to 7. Trading remained steady at 12, while profitability rose from 2 to 4 and employment from 2 to 5. NAB Chief Economist Sally Auld said the results support the view that “the outlook for businesses continues to improve,” with both confidence and conditions now near long-run averages.

        Capacity utilisation rose to 83.1% from 82.5%, staying two percentage points above its long-run norm. Capital expenditure intentions also improved, climbing from 8 to 10. Together, these suggest firms are still operating at high levels of resource use despite broader uncertainties.

        At the same time, cost pressures eased further. Purchase cost growth slowed from 1.3% to 1.1%, its lowest since 2021, while labour costs moderated to from 1.9% 1.5% and product price growth dipped to from 0.8% 0.6%. The survey points to an environment of resilient business activity and capacity tightness, but with inflation pressures continuing to recede.

        Full Australia NAB Monthly Business Survey release here.

        Westpac: Australia consumer optimism elusive, RBA to pause in September

          By
          ActionForex
          -

          Australia’s Westpac Consumer Sentiment Index dropped -3.1% mom to 95.4 in September, reversing part of last month’s boost from the RBA’s third rate cut. While sentiment remains modestly above July levels and well above the April tariff-driven low, the index has slipped back into “cautiously pessimistic” territory. Westpac said outright optimism remains “elusive”, with households still uneasy about the path ahead despite relief from the cost-of-living crisis.

          The RBA is expected to keep its cash rate steady at 3.6% when it meets later this month. Westpac noted recent data on inflation and demand came in “somewhat firmer than expected”, reinforcing the case for caution. Policymakers are seen waiting for further confirmation that underlying trends remain benign before resuming cuts.

          For now, consumer recovery looks sluggish, and Westpac expects “further easing will likely be needed” to sustain momentum. It forecasts another 25bp cut in November and two additional moves in 2026, underscoring the gradual path ahead for both sentiment and policy.

          Full Australia Westpac consumer sentiment release here.

          Aussie strength meets Loonie weakness, AUD/CAD targets 0.9128 and above

            By
            ActionForex
            -

            AUD/CAD resumed its rally from 0.8440 last week, breaking decisively through 0.9041 resistance level. The move reflects diverging fundamentals between Canadian Dollar, which is weighed down by weak domestic data, and Australian Dollar, which is drawing support from stronger consumption and external demand.

            For loonie, the trigger was August’s disappointing jobs report, which reignited expectations that the BoC will resume easing at its September 17 meeting. While markets have not fully priced a rate cut yet, sentiment is shifting toward renewed stimulus. Still, policymakers are likely to wait for the August CPI release on September 16 before making the final call.

            Underlying inflation dynamics remain sticky, with CPI common holding at 2.6% yoy for a third consecutive month in July. That has kept some uncertainty in market pricing. But once tariff-driven price pressures ease, the BoC will have scope to bring rates down from the current 2.75% to around 2.00%.

            In contrast, the RBA’s easing path looks less certain. Strong consumption data prompted Governor Michele Bullock to caution that fewer cuts may ultimately be delivered. The Australian Dollar has also found support from a sharp rally in Chinese equities, which has helped stabilize sentiment around regional growth prospects.

            Technically, AUD/CAD’s rise from 0.8440 should be reversing the whole downtrend from 0.8375. Further rise is expected as long as 0.8992 support holds, to 0.9128 structural resistance first. Firm break there will pave the way to 61.8% projection of 0.8440 to 0.9041 from 0.8902 at 0.9273.

            Eurozone Sentix confidence sinks to five-month low, summer optimism disintegrating at rapid pace

              By
              ActionForex
              -

              Eurozone investor sentiment deteriorated sharply in September, with the Sentix Confidence Index falling from -3.7 to -9.2, well below expectations of -1.1 and the weakest since April. Current Situation Index weakened to -18.8 from -13.0, while Expectations tumbled to 0.8 from 6.0.

              Germany was the clear weak spot. Its investor confidence plunged from -12.8 to -22.1, while Current Situation gauge collapsed from -29.0 to -39.0. Expectations turned negative again, falling from 5.0 to -3.5, highlighting growing pessimism about Europe’s largest economy emerging from recession.

              Sentix attributed the downturn to a mix of political and external headwinds: government instability in France, persistent weakness in German industry, an unfavorable tariffs arrangement with the US, and the ongoing war in Ukraine. These factors, it said, are exerting an “oppressive effect” on Eurozone sentiment.

              The institute warned that summer optimism has “disintegrated at a rapid pace” and sees little sign of an autumn rebound. With export-oriented sectors facing more pressure under U.S. tariffs and rising concern over sovereign debt — particularly in France — the outlook for the Eurozone remains fragile heading into year-end.

              Full Eurozone Sentix Investor Confidence release here.

              China exports growth slows in August, US flows collapse -33% yoy

                By
                ActionForex
                -

                China’s trade report for August showed growing pressure from U.S. tariffs. Exports rose 4.4% yoy, below expectations of 5.0% yoy and the slowest pace in six months. Shipments to the U.S. plunged -33.1% yoy, while flows to Southeast Asia jumped 22.5% yoy, suggesting exporters may be rerouting goods through regional partners to cushion losses.

                Imports also disappointed, rising just 1.3% yoy versus forecasts of 4.1% yoy. Imports from the U.S. dropped -16% yoy, reflecting both weaker domestic demand and the bite of tariffs. Still, the overall trade surplus widened from USD 98.2B to USD 102.3 B, beating expectations of USD 99.4B.

                While the surplus provides headline support, the underlying dynamics are fragile. U.S. President Donald Trump has already threatened a 40% penalty tariff on goods deemed to be transshipped from China, raising questions about how long exporters can sustain the ASEAN workaround. Besides, economists warn that once U.S. tariffs rise above 35%, they become prohibitively high for many Chinese manufacturers.

                Washington and Beijing extended their tariff truce by 90 days on August 11, locking in 30% U.S. duties on Chinese goods and 10% Chinese tariffs on U.S. exports. But with no path yet beyond the pause, uncertainty lingers over whether China can maintain export growth as tariff pressure intensifies.

                Japanese stocks soar towards record as Ishiba exit sparks optimism, NZD/JPY breaks higher

                  By
                  ActionForex
                  -

                  Japanese equities surged at the start of the week, with the Nikkei jumping more than 800 points in early trade and holding firm through the morning session. The index now sits within striking distance of a fresh record high. Risk-on appetite spilled over into currency markets, sending Yen sharply lower and leaving it vulnerable to further pressure if sentiment holds.

                  The trigger was the surprise resignation of Prime Minister Shigeru Ishiba over the weekend. Ishiba said the timing was deliberate, coming days after he secured the formal reduction of U.S. auto tariffs from 27.5% to 15%. “Now that negotiations on U.S. tariff measures have reached a conclusion, I believe this is the appropriate moment to resign,” he told reporters. His departure marks a sudden end to a premiership that began less than a year ago but was hampered by his coalition losing control of the lower house.

                  Nevertheless, Ishiba’s exit opens the door to fresh leadership amid hopes that new faces could re-energize both the party and the electorate. Koizumi Shinjiro, agricultural minister and son of former prime minister Junichiro Koizumi, is widely viewed as a frontrunner, with his youth and broad appeal resonating with markets. Takaichi Sanae, closely aligned with the late Abe Shinzo, is also expected to be a serious contender. The leadership race is expected to fuel speculation of policy continuity combined with a push for fresh fiscal initiatives.

                  Investors are betting that the incoming administration will prioritize expansionary fiscal measures to secure opposition cooperation, given the LDP-led coalition still commands only a minority. Such expectations have buoyed equities further and reinforced the risk-on backdrop weighing on Yen.

                  Technically, NZD/JPY’s rally from 85.54 resumed today. The break of 55 D EMA (now at 87.10) suggests that correction from 89.05 has completed after defending 38.2% retracement of 38.2% retracement of 79.79 to 89.05 at 85.51.

                  Further rise is expected as long as 86.61 support holds. Break of 88.33 resistance will indicate that whole up trend from 79.79 is ready to resume through 89.05 short term top.

                  SNB Schlegel: Hurdle to reintroducing negative rates remains high

                    By
                    ActionForex
                    -

                    SNB President Martin Schlegel said the bar for reintroducing negative rates remains “high,” acknowledging the policy’s “undesirable side effects” for savers and pension funds. His comments reinforced market expectations that the SNB will hold its policy rate steady well into 2026, with inflation staying positive for a third month in August.

                    Switzerland faces new headwinds from U.S. tariffs of 39%, which threaten its export-heavy economy and raise risks of further disinflation. Schlegel cautioned that while some firms will be hit hard, the overall economic impact is not yet clear. “Many companies are investing less, which is having a negative impact on the economy,” he told Migros-Magazin.

                    Canada employment falls -65.5k, jobless rate jumps to 7.1%.

                      By
                      ActionForex
                      -

                      Canada’s labor market weakened further in August, with employment falling by -65.5k, far below expectations of 4.9k gain. This marked the second consecutive monthly contraction, driven almost entirely by a sharp -60k drop in part-time jobs, while full-time employment was little changed.

                      Unemployment rate climbed to 7.1% from 6.9%, above expectations, marking the highest level since May 2016 outside the pandemic years. Both the employment rate and participation rate slipped, falling to 60.5% and 65.1%.

                      Wage growth offered little relief, with average hourly earnings rising 3.2% yoy, slightly slower than July’s 3.3% yoy.

                      Full Canada’s employment here.

                      US payrolls add just 22k, unemployment edges to 4.3%

                        By
                        ActionForex
                        -

                        US non-farm payrolls showed a sharp slowdown in hiring in August, with employment rising by only 22k, far below the 78k expected. Revisions painted a mixed picture, with July adjusted slightly higher to 79k but June lowered into contraction at -13k.

                        Unemployment rate ticked up from 4.2% to 4.3% as expected, while the participation rate edged higher by 0.1% to 62.3%. The employment-population ratio was steady at 59.6%, suggesting little improvement in labor utilization despite modest gains in the workforce.

                        Wage growth remained steady, with average hourly earnings rising 0.3% mom and up 3.7% over the past year. While pay increases are holding, the weak job creation numbers highlight the Fed’s dilemma: inflation may be edging down, but labor market cooling is becoming more pronounced.

                        Full US NFP release here.

                        Dollar on watch as NFP looms, risks tilt to downside

                          By
                          ActionForex
                          -

                          All attention is on U.S. non-farm payrolls today, with markets bracing for heightened volatility. Consensus expectations point to job growth of 78k in August, an uptick in the unemployment rate to 4.3%, and average hourly earnings at 0.3% mom. Risks appear skewed to the downside for Dollar, with potentially larger reaction if the data disappoints.

                          While some policymakers, including Chicago Fed President Austan Goolsbee, remain undecided, the broader consensus is that the Fed will cut rates by 25 bps later this month. A slightly stronger-than-expected NFP print could temper expectations for additional easing but is unlikely to derail the September cut.

                          In fact, a robust report would most likely reduce odds of a follow-up move in October, currently priced at just above 50%. Any Dollar bounce on strong payrolls may prove temporary, as the Fed remains on a path toward lower rates, albeit at a slower pace.

                          Conversely, a weaker-than-expected report could spark fears that the Fed is already falling behind the curve. In such a scenario, traders may begin to price in the possibility of a 50 bps cut this month—currently given a zero chance—or boost bets on back-to-back cuts in October and December. That would almost certainly trigger renewed dollar selling.

                          Supporting the downside risk narrative, recent labor indicators have softened. The ISM services employment subindex held at 46.5, while manufacturing employment edged only slightly higher to 43.8. The ADP private payrolls report showed just 54k new jobs in August, down sharply from 106k in July. Initial jobless claims have also trended higher, with the four-week average rising to 231k from 221k.

                          For EUR/USD, technicals reinforce the potential for Dollar weakness. The pair remains supported by its 55 Day EMA, consolidating between 1.1573 and 1.1741. Break above 1.1741 would pave the way toward 1.1829to resume the larger up trend from 1.0176.

                          Alternatively, a break below 1.1573 would extend the corrective pattern from 1.1829 with another falling leg back towards 1.1390 support. Uptrend resumption is only delayed in this case.

                          Bonuses lift Japan’s real wages to growth, but consumption recovery weak

                            By
                            ActionForex
                            -

                            Japan’s wage data showed a notable improvement in July, with real wages rising 0.5% yoy, the first increase in seven months. Nominal cash earnings jumped 4.1% yoy, far above expectations of 3.0% yoy, marking the 43rd consecutive month of annual gains.

                            Wage growth was boosted by a 7.9% yoy surge in special earnings, primarily reflecting summer bonuses, alongside a 2.5% yoy rise in base salaries and a 3.3% yoy increase in overtime pay, the strongest since late 2022.

                            However, inflation continues to erode some of those gains. Consumer prices used to calculate real wages rose 3.6% in July, still well above the BoJ’s 2% target. Food prices, especially rice, remained a major driver.

                            Also released, household spending increased 1.4% yoy, falling short of forecasts, though seasonally adjusted monthly spending posted a stronger 1.7% mom gain. A Ministry official said the uptick in spending was largely due to higher electricity bills and auto-related costs, while purchases of everyday food items remain subdued. “The recovery in consumer spending is not robust,” the official cautioned.

                            Fed’s Williams sees gradual return to neutral rates, tariffs still a drag

                              By
                              ActionForex
                              -

                              New York Fed President John Williams said Thursday that monetary policy is now “modestly restrictive” and appropriate for current conditions, but signaled that rates may eventually be guided back toward neutral if progress continues on inflation and employment. Speaking at the Economic Club of New York, Williams said he sees scope for gradual adjustments if his baseline forecast holds.

                              Williams projected GDP growth between 1.25% and 1.50% this year, with the unemployment rate edging up from 4.2% currently to 4.5% next year. He noted the job market has cooled, and it’s “clearly the case” that hiring risks are tilted to the downside.

                              On inflation, Williams said tariffs are clearly pushing prices higher, adding an estimated 1.0% to 1.5% to inflation this year. He forecast PCE inflation to average between 3% and 3.25% in 2025 before falling to 2.5% next year and back to the Fed’s 2% goal in 2027. Speaking to reporters, Williams added that upside risks from tariffs have eased “on the margin,” noting that inflation dynamics remain contained despite ongoing trade disruptions.

                              Separately, Chicago Fed President Austan Goolsbee struck a more cautious tone, saying he has not yet decided whether a cut is appropriate at the September 16–17 FOMC meeting. he described the gathering as a “live meeting,” adding that Friday’s jobs report and upcoming inflation data will be pivotal to his decision.

                              US ISM services rises to 52.0, new orders surge despite jobs weakness

                                By
                                ActionForex
                                -

                                US services activity picked up in August, with ISM Services PMI rising to 52.0 from 50.1, comfortably above expectations of 50.9. The headline gain was supported by stronger demand conditions, highlighting resilience in the sector despite lingering economic uncertainty. ISM noted the reading corresponds to a 1.1% annualized rise in GDP.

                                Details showed business activity rising to 55.0 from 52.6, while new orders jumped sharply to 56.0 from 50.3, marking the strongest pace since early this year. The improvement highlighted a rebound in demand momentum as companies prepared for the holiday season, with some firms reportedly advancing purchases to get ahead of tariff-related price increases.

                                The employment index, however, remained in contraction at 46.5, signaling persistent softness in hiring within the services sector. Meanwhile, the backlog of orders fell to a 16-year low, tempering optimism about the durability of demand. Prices stayed elevated at 69.2, marking a ninth consecutive month above 60—a sign of ongoing cost pressures across the industry.

                                ISM said commentary from respondents was dominated by tariff concerns, with firms highlighting both higher input costs and evidence of import demand being pulled forward.

                                Full US ISM services release here.

                                US initial jobless claims rise to 237k vs exp 232k

                                  By
                                  ActionForex
                                  -

                                  US initial jobless claims rose 8k to 237k in the week ending August 30, above expectation of 232k. Four-week moving average of initial claims rose 2.5k to 231k.

                                  Continuing claims fell -4k to 1940k in the week ending August 23. Four-week moving average of continuing claims fell -7k to 1947k.

                                  Full US jobless claims release here.

                                  US ADP jobs up 54k, hiring momentum slows further

                                    By
                                    ActionForex
                                    -

                                    US private employers added 54k jobs in August, short of expectations for 72k, according to ADP. Goods-producing industries created 13k positions, while services added 42k. Hiring by firm size showed modest gains across the board, with small companies up 12k, medium-sized firms up 25k, and large firms up 18k.

                                    Wage dynamics were mixed. Year-over-year pay growth for job-stayers held steady at 4.4%, while job-changers saw wages rise 7.1%, slightly faster than July’s 7.0%.

                                    ADP’s chief economist Nela Richardson said hiring momentum has been “whipsawed by uncertainty,” citing factors such as labor shortages, skittish consumer demand, and potential disruption from artificial intelligence adoption. The data add to concerns that job creation is losing momentum ahead of Friday’s official nonfarm payrolls report.

                                    Full US ADP release here.

                                    Eurozone retail sales fall -0.5% mom, food and fuel drag

                                      By
                                      ActionForex
                                      -

                                      Eurozone retail sales fell -0.5% mom in July, steeper than expectations of a -0.2% mom decline. Food, drinks, and tobacco sales dropped -1.1%, while automotive fuel purchases slumped -1.7%. Non-food sales edged higher by just 0.2%, offering little offset to the overall weakness.

                                      Across the broader EU, sales slipped -0.4% mom on the month. The divergence among member states was notable: Croatia (-4.0%), Estonia (-2.0%), and Germany (-1.5%) recorded the sharpest drops, while Lithuania (+1.5%), Latvia (+1.4%), and the Netherlands (+1.1%) posted gains.

                                      Full Eurozone retail sales release here.

                                      Swiss CPI subdued at 0.2% yoy, but no immediate deflation threat seen

                                        By
                                        ActionForex
                                        -

                                        Swiss consumer prices slipped in August, with headline CPI falling -0.1% mom, below expectations for a flat reading. Core CPI, which excludes fresh products and energy, also dropped -0.1% on the month, as both domestic and imported product prices declined by -0.1% mom.

                                        On an annual basis, inflation held steady at just 0.2% yoy, in line with expectations. Core CPI eased further to 0.7% yoy from 0.8% yoy previously. Domestic price growth slowed to 0.6% yoy from 0.7% yoy, while imported prices contracted by -1.3% yoy, a slight improvement from -1.4% yoy in July.

                                        The data confirm that inflation in Switzerland remains exceptionally subdued. Yet, deflation risk is not imminent. That leaves little urgency for the SNB to bring back negative interest rates for now.

                                        Full Swiss CPI release here.

                                        RBA’s Bullock hints fewer cuts ahead as spending surges, GBP/AUD extends lower

                                          By
                                          ActionForex
                                          -

                                          Australian Dollar is holding its ground as one of the strongest performers in FX markets this week, buoyed by upbeat economic data and comments from RBA Governor Michele Bullock.

                                          Australian consumer spending rose 5.1% yoy in July, according to the ABS released today, led by demand for health services, hotels, travel, and restaurants. The data point to resilient household demand despite tighter financial conditions and underline a growing willingness among households to spend after a prolonged stretch of caution.

                                          That strength follows Wednesday’s GDP report, which showed growth of 0.6% in Q2. Discretionary spending surged 1.4% in the quarter, the fastest pace in three years, highlighting that consumption is now a meaningful driver of Australia’s recovery.

                                          Responding to the GDP data, Governor Bullock cautioned overnight that sustained strength in consumption could limit scope for further easing. “If it keeps going, then there may not be many interest rate declines yet to come. But it all depends,” she said.

                                          Aussie’s strength stands in contrast to Sterling, which has been weighed down by fiscal concerns. Technically, GBP/AUD extended its decline from 2.1003 this week. Momentum is easing slightly near 2.0420 support level as seen in 4H MACD. But risks remain tilted lower as long as 2.0693 resistance holds. Current fall should be in progress through 2.0420 to 61.8% projection of 2.1643 to 2.0478 from 2.1003 at 2.0283.

                                          The 2.0283 area aligns closely with 55 W EMA now at 2.0265. Decisive move through that zone would suggest that the decline from 2.1643 is evolving into a medium-term downtrend, even if it’s just a correction to the rise from 1.5925 (2022 low).

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