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UK retail sales volume up 1.2% mom in Feb, sales value rose 1.6% mom

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    ActionForex.com
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    UK retail sales volume rose 1.2% mom in February, well above expectation of 0.2% mom. Ex-fuel sales volume rose 1.5% mom, above expectation of 0.1% mom. Nevertheless, in the three months to February, comparing to the prior three month, sales volume declined -0.3%, while ex-fuel sales volume dropped -0.4.

    In value term, total sales rose 1.6% mom while ex-fuel sale rose 2.2% mom. In the three months to February, comparing to the prior three months, total sales value rose 0.7% while ex-fuel sales value rose 1.0%.

    Full UK retail sales release here.

    BoE Haldane: None of the conditions of negative rates satisfied

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      ActionForex.com
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      BoE Chief Economist Andy Haldane said in a speech that the MPC minutes “contained no such signal” as it’s introducing negative rates in the near-term. The operational feasibility assessment of negative rates is “likely to take a number of months”. Then, judgement on negative rates will depend on the economic outlook. The decision would then depend on the balance of costs and benefits, , with comparison to other monetary tools.

      “All three of these conditions would need to be satisfied before negative rates became a reality. At present, none of those conditions is in my view satisfied,” he added.

      Haldane also urged that “encouraging news about the present needs not to be drowned out by fears for the future. Now is not the time for the economics of Chicken Licken”

      “This is human nature at times of stress. But it can also make for an overly-pessimistic popular narrative, which fosters fear, fatalism and excess caution. This is unhealthy in itself but, if left unaddressed, also risks becoming self-fulfilling.”

      Full speech here.

      Canadian Dollar jump as GDP grew 0.3% in Jan, well above expectation

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        ActionForex.com
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        Canadian Dollar jumps after stronger than expected GDP report. Real GDP grew 0.3% mom in January, well above expectation of 0.1% mom. It’s also strong enough to offset contraction in both December and November. On three month rolling average basis, real GDP edged up 0.1%, unchanged from the three-month rolling average in December. Manufacturing and construction contributed most to January’s GDP growth. Ning and oil and gas extraction contracted.

        Full GDP release here.

        Also from Canada, IPPI rose 0.3% mom in February while RMPI rose 4.6% mom.

        Australia PMI composite dropped to 45.3, slipped from strong recovery to contraction

          By
          ActionForex.com
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          Australia PMI Manufacturing dropped from 57.7 to 55.3 in January. PMI Services tumbled sharply from 55.1 to 45.0. PMI Composite also dropped from 54.9 to 45.3, first contraction follow three months of growth. All are at their 5-month low.

          Jingyi Pan, Economics Associate Director at IHS Markit, said: “The Australian economy had slipped from a state of strong recovery in end-2021 to being affected by the surge in COVID-19 infections at the start of 2022… Supply issues meanwhile remained prevalent… This had led to input price inflation worsening Employment levels were unchanged.”

          Full release here.

          An update of AUD/JPY short, lower stop to breakeven

            By
            ActionForex.com
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            Here is an update on our AUD/JPY short (sold at 80.25), as entered here.

            The cross finally resumes recent down trend today by breaking 79.51 to as low as 79.05 so far. 79.16/22 cluster is already breached (61.8% projection of 83.92 to 79.69 from 81.78 at 79.16, 61.8% retracement of 72.39 to 90.29 at 79.22). But as noted before, we’d expect this cluster to be taken out with relative ease on current down side momentum, as seen in daily MACD.

            The real test lies in 77.55/85 (61.8% projection of 90.29 to 80.48 from 83.92 at 77.85, 100% projection of 83.92 to 79.69 from 81.78 at 77.55). A way to trade this is to take profit at 78.00, slightly above this cluster. But we’d prefer not to rigidly do that but assess the downside momentum further.

            We’re indeed looking at the prospect of deeper fall towards 72.39 low, as the rejection from falling 55 week EMA was rather bearish in medium term. The whole up trend from 72.39 (2016 low) should have completed at 90.29 (2017 high). Sustained break of 61.8% retracement of 72.39 to 90.29 at 79.22, which we anticipate, could pave the way to retest 72.39 low.

            So now, we’ll hold AUD/JPY short (sold at 80.25). Stop is lowered to breakeven at 80.25, to give it a little breathing room, yet guard against a strong rebound from 79.16/22 in case we’re wrong. We won’t put a target yet, but will assess downside momentum of the current decline.

             

            BoJ stands pat, Kataoka dissented again, calling for further easing

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              ActionForex.com
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              BoJ announced to keep monetary policy unchanged by 8-1 vote. Short term interest rate is held at -0.1%. The central bank will also continue with JGB purchases to keep 10 year yield at around 0%. The current pace of JPY 80T annual purchase is also maintained

              BoJ also maintained the pledge to continue with the “Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control” until year-on-year core CPI stay above 2% target in a “stable manner”.

              Goushi Kataoka dissented again. It’s noted in the statement that “taking account of risk factors through fiscal 2020 such as the consumption tax hike and a possible economic downturn in the United States”, Kataoka believed it’s desirable to “further strengthen monetary easing”.

              Here is BoJ’s full statement.

              South Korea the first that got indefinite exemption on US steel tariffs

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                ActionForex.com
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                The South Korea’s Ministry of Trade said today that is’ exempted from the US steel and aluminum tariffs. However, South Korea now received a quota of around 2.68m tonnes of steel exports. And that is 70% of the annual average of Korean steel exports to the US between 2015-2017. South Korean contributed to 9.7% of US steel imports in 2017.

                In the mean time, Both countries also agreed on 20-year extension of Korean pickup trucks, until 2041. US automakers could also bring in 50000 vehicles to South Korean annually, doubling from prior amount of 25000.

                That is the first of many US allies to receive an indefinite exemption on the steel and aluminum tariffs. Other six, Argentina, Australia, Brazil, Canada, Mexico and EU are just having the tariffs temporarily suspended.

                At this point, there is no news regarding the expemption on Japan and Taiwan, two other major US allies in Asia, yet.

                Eurozone Sentix investor confidence rose to -24.8, An upswing but reversals not yet assured

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                  ActionForex.com
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                  Eurozone Sentix Investor Confidence improved to -24.8 in June. That’s the second straight month of rebound, from April’s -42.9 then May’s -41.8. Current situation index rose from -73.0 to -61.5. Expectations index jumped from -3.0 to 21.8, turned positive, and hit the highest level since November 2017.

                  Sentix questioned: “But what do these numbers mean? Is there a “normal” upswing that will soon bring us back to a normal, good economic situation? To get a better understanding of these figures, we conducted a special survey among investors. We wanted to know how much of the economic slump caused by the Corona pandemic will be made up within a year. So where does the recovery go?!”

                  They then added: “The result is likely to disappoint optimists. For the eurozone, investors expect that within a year, just over 50% of the slump can be made up. This means that in a year’s time we would still be noticeably below the pre-crisis level. And this despite all the stimulus measures, the fiscal packages and monetary easing. An upswing has begun, but a real trend reversal is not yet assured.”

                  Full report here.

                  US NFP grew 263k in Sep, unemployment rate dropped to 3.5%

                    By
                    ActionForex.com
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                    US non-farm payroll employment grew 263k in September, just slightly below expectation of 265k. Monthly job growth has averaged 420k in 2022, comparing with 562k in 2021.

                    Unemployment rate rose dropped from 3.7% to 3.5%, below expectation of 3.7%. Labor force participation rate dropped from 62.4% to 62.3%.

                    Average hourly earnings rose 0.3% mom, matched expectations.

                    Full release here.

                    BoE to hike 50bps, GBP/CHF ready for breakout?

                      By
                      ActionForex.com
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                      BoE is expected raise interest rate by 50bps to 1.75% today. That would be the largest rate hike since 1995, while interest rate will then be at the highest level since 2008. The voting will again be a focus and the new economic projections will be scrutinized too. Back in June BoE said inflation is expected to rise to slightly above 11% in October while GDP was weaker than anticipated at the May report. The change in outlook would be reflected in the new economic projections.

                      Here are some previews on BoE:

                      GBP/CHF turned into range trading after hitting 1.1525 in late June. There is risk of sell-on-fact in Sterling after BoE which prompt a downside breakout. But anyway, outlook will stay bearish as long as 1.1774 resistance holds, even in case of a rebound. Current down trend is still expected to resume towards 1.1107 low, which is close to 161.8% projection of 1.3070 to 1.2134 from 1.2598 at 1.1084 next, in the medium term.

                      US jobless claims dropped to 212k, housing starts, Philly Fed survey

                        By
                        ActionForex.com
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                        US initial jobless claims dropped -16k to 212k in the week ending May 11, below expectation of 220k. Four-week moving average of initial claims rose 4.75k to 225k. Continuing claims dropped -28k to 1.66M in the week ending May 4. Four week-moving average of continuing claims rose 1.5k to 1.668M.

                        Building permits rose 0.6% mom to 1.296k annualized rate. Housing starts rose 5.7% to mom to 1.235M.

                        Philadelphia Fed Business Outlook diffusion index jumped to 16.6 in May, up from 8.5 and beat expectation of 9.0.

                        US oil inventories dropped -2.1m barrels, WTI accelerating as rally resumes

                          By
                          ActionForex.com
                          -

                          US commercial crude oil inventories dropped -2.1m barrels in the week ending December 31. At 417.9m barrels, oil inventories are about -8% below the give year average for this time of year. Gasoline inventories rose 10.1m barrels. Distillate rose 4.4m barrels. Propane/propylene dropped -0.7, barrels. Total commercial petroleum inventories rose 10.2m barrels.

                          WTI crude oil rises further after the release, as rally from 62.90 resumed. 100% projection of 62.90 to 73.66 from 66.46 at 77.22 is considered firmly taken out. Further rise is expected as long as 74.48 support holds. WTI is likely in another round of upside acceleration to 161.8% projection at 83.86, which is close to 85.92 high.

                          For now, we’re not expecting a break of 85.92 yet. We’d expect at least one more down leg before the corrective pattern from there completes. Hence, we’d look for topping between 83.86/85.92. But we’ll see.

                          ECB Panetta open to case-by-case resumption of bank dividend payouts

                            By
                            ActionForex.com
                            -

                            Executive Board member Fabio Panetta told Portuguese newspaper Expresso that he’s open to allowing some banks to resume paying dividends. Nevertheless, “if they don’t distribute dividends this year, they can distribute more next year and in the meantime they will be in a better position to face a situation of serious crisis”.

                            “If I had to choose between the two approaches, I would opt to be more prudent, but that could imply a cost for banks,” he said. “I consider that a reasonable solution, as economic conditions improve, would be a case-by-case approach by banking supervision authorities.”

                            ECB’s Wunsch awaits core inflation and wage growth to come down

                              By
                              ActionForex.com
                              -

                              In an interview with Financial Times, ECB Governing Council member Pierre Wunsch mentioned that the central bank is waiting for both wage growth and core inflation to decrease in conjunction with headline inflation before considering a pause.

                              Wunsch stated, “I would not be surprised if we had to go to 4 percent at some point.” He emphasized that ECB aims for a soft landing, and “nobody is going to err on the side of destroying the economy for the sake of destroying the economy.”

                              “But I have absolutely no indication that what we are doing (on interest rates) is too much,” he added.

                              Regarding rate hikes, Wunsch clarified, “I’m not a fetishist. I’m not going to hike rates even in a recession just because we have 2.3 percent or 2.1 percent inflation in the two-year forecast. But I’m not seeing inflation numbers going in the right direction yet.”

                              He also pointed out that if wage agreements persist around a 5 percent growth for an extended period, inflation may not return to 2 percent on a structural basis.

                              NFP: Where’s the balance between job growth and wage inflation?

                                By
                                ActionForex.com
                                -

                                The imminent NFP report poses a potential quandary for both Fed and market participants. On one hand, steady job growth aligns with Fed’s intention to engineer a soft landing for the US economy. On the other, elevated wages growth due to tight labor market could compel Fed to maintain its tightening course, potentially complicating the soft landing strategy.

                                Expectations are set for a 200k job increase in July, while unemployment rate is predicted to hold steady at 3.6%. Average hourly earnings are projected to climb 0.3% month-on-month.

                                Based on recent developments, economists are gradually warming to the idea that Fed might achieve its “soft-landing” scenario for the economy. Consistent job growth around the 200,000 region per month would provide further support for this possibility.

                                However, uncertainties loom regarding wage growth. With an expected 0.3% mom growth, the annual rate could comfortably remain above 4% yoy – a figure significantly higher than the levels consistent with Fed’s 2% inflation target. A strong report will certainly spark debates in the market about whether Fed will need to tighten its monetary policy further toward a peak of 6%, up from the current 5.25-5.50%.

                                Relevant employment data presents a mixed bag. ISM Services Employment index was at 50.7 in July, down -2.4 points from 53.1 in June. Meanwhile, ISM Manufacturing Employment was lower at 44.4, marking a decline of -3.7 points from 48.1 in June. In contrast, ADP reported private payrolls at 324k against forecast of 195k and prior month’s stronger 455k.

                                 

                                Fed Powell: Far from a strong labor market despite surprising recovery

                                  By
                                  ActionForex.com
                                  -

                                  In a relatively dovish speech, Fed Chair Jerome Powell said, “despite the surprising speed of recovery early on, we are still very far from a strong labor market whose benefits are broadly shared.” And, “even those grim statistics understate the decline in labor market conditions for the most economically vulnerable Americans.”

                                  “Given the number of people who have lost their jobs and the likelihood that some will struggle to find work in the post-pandemic economy, achieving and sustaining maximum employment will require more than supportive monetary policy,” he added. “It will require a society-wide commitment, with contributions from across government and the private sector.”

                                  Full speech here.

                                  Nikkei lost -1.33% on Yen’s strength, China SSE gained 1% as government manipulate halted Yuan’s slide

                                    By
                                    ActionForex.com
                                    -

                                    In tandem with the strong rally in the Japanese yen today, Stocks were sold off deeply. Nikkei 225 ended the day down -300.89 pts, or -1.33%, at 22396.99. Technically, 23050.39 proves to be too strong a resistance level for Nikkei.

                                    But still, for now, we’re favoring the bullish case that rise from 21462.94 is resuming whole rebound from 20347.59. Hence, we’d expect strong support at around 55 day EMA (now at 22345.59) to contain downside and break rally resumption. Firm break of 23050.93 will confirm rise resumption for 100% projection of 20347.49 to 2305039 from 21462.92 at 24165.84. That is close to 24129.34 high.

                                    However, sustained break of the 55 day EMA will extend the sideway pattern inside 21462.94/23050.39 in near term.

                                    On the other hand, China Shanghai SSE composite gained 30.27 pts also 1.07% to close at 2859.54. the break of 2848.37 resistance confirm resumption of rebound from 2691.02 low. Sentiments have clearly improved on talks that China has intervened last week to halt the Yuan’s recent free fall.

                                    Further rise should be seen to 55 day EMA (now at 2946.10) and possibly above. But at this point, we’re seeing no prospect of sustained break of 3000 handle. Hence, we’d expect another fall back to retest key support zone between 2016 low at 2638.30 and 2700 at a later stage.

                                    BoJ Kuroda to patiently pursue powerful monetary easing

                                      By
                                      ActionForex.com
                                      -

                                      BoJ Governor Haruhiko Kuroda reiterated to the parliament today that the central bank ” won’t end the ultra-easy policy before inflation reaches 2 percent”. And BoJ will “patiently pursue powerful monetary easing”. Though, Kuroda also noted policymakers will take into account the “side effects” such as the “impact of financial institutions, particularly regional banks”.

                                      Regarding the economy, Kuroda said it’s expanding moderately, with consumption helped by loose monetary policy. While there is sustaining momentum in growth, prices lack so. And there is still some distance to inflation target. BoJ will remain mindful of uncertainties on economic and price outlook.

                                      Deputy Governor Masazumi Wakatabe said that BoJ can achieve the inflation target “with the current policy”. Though, “if conditions change and our current policy becomes inappropriate, we may need to change policy.”

                                      Australia GDP grew 0.9% qoq in Q2, driven by household spending and exports

                                        By
                                        ActionForex.com
                                        -

                                        Australia GDP grew 0.9% qoq in Q2, matched expectations. Household spending rose 2.2% for the quarter, contributing 1.1% pts to GDP. Net trade contributed 1.0% pts to GDP, driven by exports which rose 5.5%, partially offset by 0.7% rise in imports. Terms of trade rose 4.6% with export and import prices up strongly.

                                        Sean Crick, head of National Accounts at the ABS, said: “Rises in household spending and exports drove growth in the June quarter. This is the third consecutive quarter of economic growth, following a contraction in the September quarter 2021, which was impacted by the Delta outbreak.”

                                        Full release here.

                                        Into US session: Dollar regains some ground as Fed Powell testimony awaited

                                          By
                                          ActionForex.com
                                          -

                                          Entering into US session, New Zealand Dollar remains the strongest one as supported by improvement in RBNZ’s own preferred core inflation measure. Swiss Franc is trading as the second strongest one, partly on speculation that SNB could start to raise interest rate finally by the end of 2019. Dollar’s fortune reversed as markets await Fed chair Jerome Powell’s Congressional testimony. Meanwhile, Sterling is trading as the weakest one, receiving no support from an after all solid set of job data. Yen follows as the second weakest.

                                          In other markets, Nikkei closed up 0.44% at 22697.36 today, but that came after hitting as high as 22832.22. Singapore Strait Times was up 0.21% at 3239.64. China Shanghai SSE pared back much losses to closed down -0.57% at 2798.13, barely unable to regain 2800 handle. WTI crude oil continues to press 68 handle while gold gyrates around 1240.

                                          Today will begin Powell’s two-day testimony, starting with Senate Banking Committee. House Financial Services Committee comes tomorrow. Expectation is rather low on the event. Fed’s rate path is clear for the near term, that is two more hikes in 2018. Recent economic data support the path, with solid job market and improving inflation. Powell will most likely reiterate the views as see in the minutes of the June 13 FOMC meeting.

                                          Nonetheless, his views on the topic of flattening or even inverting yield curve might raise some eyebrows. Minneapolis Fed President Neel Kashkari said in an essay released yesterday that ‘This time is different’ are the four most dangerous words, in response to those who tried to talk down flattening yield curve and the link to recession. So, to Powell, it’s this time the same? Or is it different?

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