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US Empire State manufacturing rose to17, hours worked surged

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    ActionForex.com
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    US Empire State Manufacturing index rose to 17.0 in September, up from 3.7, beat expectation of 6.2. Looking at some details, new orders rose 8.8 pts to 7.1. Shipments rose 7.4 pts to 14.1. Price paid rose 9.2 pts to 25.2. Prices received rose 1.8 pts to 4.7. Number of employees rose 0.2 pts to 2.6. Average employee workweek jumped sharply by 13.5pts to 6.7. The worweek number was also the first positive reading since the pandemic began. Future business conditions also rose 6 pts to 40.3, suggesting some optimism ahead.

    Full release here.

    Japan-US trade talks to start next week for exchanging views

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      ActionForex.com
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      Japan Economy Minister Toshimitsu Motegi announced today that the first round of Japan-US trade talks will start next week on April 15-16 in Washington. He said he’d intend to exchange view frankly with US Trade Representative Robert Lighthizer. It’s believed that a core topic is Japan’s near USD 70B trade surplus, with nearly two-thirds from auto exports.

      Finance Minister Taro Aso reiterated Japan’s intention to “further expand trade and investment between” between the two countries, in a “mutually beneficial manner”. He also pointed to the joint statement made last September. However, Japan has been very clear on its intention to defend the multilateral trade pact TPP that it leads, and US quitted under Trump. Hence, no matter what Japan is going to offer to the US, they won’t be something better than what’s offered to TPP partners.Ja

      US steel tariff temprary exemptions to end on May 1

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        ActionForex.com
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        The temporary exemptions on US steel and aluminum tariffs will expire tomorrow on May 1. There is little progress made on trade negotiation between the US and other countries. Commerce Secretary Wilbur Ross was quoted saying that some countries will have their exemptions extended, but not all. But there is no more information from the White House regarding the pressing issue.

        So far, only South Korea is granted permanent exemptions after revising the bilateral free trade agreements with the US. There, South Korea agreed to a quota of around 2.7 million tons of steel exports to the US. And, the quota for US car imports was doubled to 50,000, without the requirement to meet local safety standards.

        NAFTA negotiations made some progress last week after intensive work, but it’s not ready to be wrapped up before May 1 target. Talks will instead resume on May 7 after US Trade Representative Robert Lighthizer returns from his China trip. It’s believed that Canada and Mexico will have their exemptions extended but it’s only confirmed when it’s announced.

        Canadian Foreign Minister Chrystia Freeland reiterated her stance that NAFTA is a “completely separate track” from the steel tariffs. And, “there is no justification whatsoever for tariffs or quotas on Canadian steel or aluminum as a national security consideration.” Mexican Economy Minister Ildefonso Guajardo warned of retaliation and said “ambassador Lighthizer knows very clearly our position and how we have to react if any measure is imposed on Mexico.” It’s reported that Mexico already has a list of American products that it would tax in retaliation.

        German Chancellor Angela Merkel also warned of retaliation. She issued a statement after dialogue with French President Emmanuel Macron and UK Prime Minister Theresa May. Merkel said the three leaders “agreed that the U.S. ought not to take any trade measures against the European Union,” which is “resolved to defend its interests within the multilateral trade framework.”

        This topic will make some headlines in the early part of the week.

        US initial jobless claims rose 9k to 229k, import price rose 0.6% mom

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          ActionForex.com
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          US initial jobless claims rose 6k to 229k in the week ending March 9, above expectation of 225k. Four-week moving average of initial claims dropped -2.5k to 223.75k.

          Continuing claims rose 18k to 1.776M in the week ending March 2. Four-week moving average of continuing claims dropped -1k to 1.766M.

          Import price index rose 0.6% mom in February, fasting in 9 months, well above expectation of 0.3% mom.

          US retail sales rose 0.0% mom in Jul, ex-auto sales up 0.4% mom

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            ActionForex.com
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            US retail sales rose 0.0% mom to USD 682.8B in July, below expectation of 0.2% mom. Ex-auto sales rose 0.4% mom, above expectation of 0.1% mom. Ex-gasoline sales rose 0.2% mom. Ex-auto, gasoline sales rose 0.7% mom.

            Also total sales were up 10.3% yoy comparing with July 2021. Total sales for the May through July 2022 period were up 9.2% from the same period a year ago.

            Full release here.

            RBA considered hike and hold, Dec minutes show

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              ActionForex.com
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              Minutes of RBA’s December 5 meeting revealed that both a 25bps hike and maintaining the status quo were considered. Ultimately, they opted to keep the interest rate unchanged at 4.35%. The rationale behind this decision was the perceived value in “waiting for further data to assess how the balance of risks was evolving and how best to balance these risks when setting policy.”

              The board members concurred that the need for additional monetary tightening to ensure inflation returns to the target within a reasonable timeframe would be contingent on how incoming data influences the economic outlook and the assessment of risks.

              The RBA emphasized its commitment to closely monitoring various economic indicators in its future policy decisions. This includes developments in the global economy, trends in domestic demand, and the outlook for inflation and the labor market.

              Full RBA minutes here.

              Dollar dives as Fed adopts flexible form of average inflation targeting

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                ActionForex.com
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                Fed Chair Jerome Powell indicates in the Jackson Hole speech that the central bank is adopting a “flexible form of average inflation targeting”. That is, Fed would target to achieve inflation that “averages 2 percent over time”. Therefore, following periods when inflation has been running below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.

                Dollar is sold off after as Powell deliver the speech. Markets see that Fed would keep monetary policy loose for longer, to allow inflation to overshoot 2%.

                Powell’s full speech here.

                Canada CPI unchanged at 0.1% in Aug, missed expectations

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                  ActionForex.com
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                  Canada CPI was unchanged at 0.1% yoy in August, missed expectation of 0.5% yoy. CPI common rose to 1.5% yoy, up from 1.3% yoy, beat expectation of 1.4% yoy. CPI median was unchanged at 1.9% yoy, matched expectations. CPI trimmed was unchanged at 1.7% yoy, below expectation of 1.8% yoy.

                  Full release here.

                  Eurozone exports rose 4.32% yoy, imports rose 37.4% yoy in Apr

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                    ActionForex.com
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                    Eurozone exports rose 43.2% yoy to EUR 193.8B in April. Imports rose 37.4% yoy to EUR 18.2B. Trade surplus came in at EUR 10.9B, comparing to EUR 2.3% a year ago. Intra-Eurozone trade rose 61.9% yoy to EUR 178.9B.

                    In seasonally adjusted terms, Eurozone exports dropped -2.4% mom to EUR 193.4B. Imports rose 2.4% mom to EUR 184.0B. Trade surplus narrowed to EUR 9.4B, down from EUR 18.3B, below expectation of EUR 15.2B. Intra-Eurozone trade rose from EUR 171.7B to EUR 177.5B.

                    Full release here.

                    China annoucned 25% retaliation tariffs to USD 50b of US imports, including soybeans, aircrafts

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                      ActionForex.com
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                      In a quick response to US Section 301 tariffs, China announced to impose additional tariffs of 25% on 106 US products. The total value of the products will add up to around USD 50b, matching the size of the US 301 tariffs.

                      The Finance Ministry also said in a press briefing that the goods will include soybeans, autos, chemicals, some types of aircraft and corn products, among other agricultural goods. Additional, extra tariffs will be imposed on whisky, cigars and tobacco, some types of beef, lubricants, and propane and other plastic products. The list also include certain sorghum products, cotton, some types of wheat, as well as trucks, some SUVs, certain electric vehicles.

                      Here is the statement from the Ministry of Finance (in Simplified Chinese).

                      Japan industrial production dropped -7.2% mom in may, worst in two years

                        By
                        ActionForex.com
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                        Japan industrial production dropped -7.2% mom in May, much worse than expectation of -0.3% mom. That was also the worst contraction in two years, since the -10.5% mom decline in May 2020.

                        The index of production at factories and mines stood at 88.3 against the 2015 base of 100. Index of industrial shipments dropped -4.3% mom to 89.0. Inventories dropped -0.1% mom to 98.5.

                        Nevertheless, manufacturers surveyed by the Ministry of Economy, Trade and Industry (METI) expected output to rebound 12.0% in June, followed by a 2.5% expansion in July.

                        US ISM services rose to 54.5, employment and prices jump

                          By
                          ActionForex.com
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                          US ISM Services PMI rose from 52.7 to 54.5 in August, comfortably above expectation of 52.6. Looking at some details, business activity/production ticked up from 57.1 to 57.3. New orders rose from 55.0 to 57.5. Employment rose strongly from 50.7 to 54.7. Prices also rose from 56.7 to 58.9.

                          ISM said: “The past relationship between the Services PMI and the overall economy indicates that the Services PMI for August (54.5 percent) corresponds to a 1.6-percent increase in real gross domestic product (GDP) on an annualized basis.”

                          Full ISM services release here.

                          Non-farm payrolls will more likely disappoint then not

                            By
                            ActionForex.com
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                            US non-farm payroll report will be a major focus before the first full week of 2021 is wrapped up. Markets are expecting non-farm payrolls to grow 100k in December. Unemployment rate is expected to edge up to 6.8% while average hourly earnings are expected to rise 0.2% mom.

                            Looking at related indicators, ISM manufacturing employment turned back into expansion at 51.5 in December, up from 48.4. ISM Services employment, however, dropped back to contraction at 48.2, down from 51.5. ADP employment showed a contraction of -123k jobs. Four-week moving average of initial jobless claims rose nearly 100k to 837k.

                            The NFP result will more likely disappoint market expectations than not. Nevertheless, traders could still look through the set of “old” data to the policies of the new administration. A focus would be on whether 10-year yield could extend this week’s powerful rally, and whether that could help set up a sustainable Dollar rebound.

                            Into US session: Euro weakest, talks on trade talks lift sentiments again

                              By
                              ActionForex.com
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                              Entering into US session, Euro is trading as the lowest one for today, followed by Swiss Franc, in relatively mixed markets. New Zealand Dollar is the strongest one while Australian Dollar recovers much of yesterday’s losses. But for now, pre-weekend recovery in Sterling put it into second place. But movements in the currency markets are relatively limited. Thus, the picture could have a drastic change at close.

                              US-China trade negotiations were the main focus of the day. Words from both sides were positive, but without much substance. China’s Xinhua news agency said the delegations discussed topics including technology transfers, intellectual property protection, non-tariff barriers, services, agriculture and the trade balance. And both countries reached consensus is principle on a number of issues. They’re working towards a memorandum of understanding on trade and economic issues.

                              White House spokesperson Sarah Sanders confirmed that trade talks with China will continue in Washington next week. She said “The United States looks forward to these further talks and hopes to see additional progress.” And,  “Both sides will continue working on all outstanding issues in advance of the March 1, 2019, deadline for an increase in the 10 percent tariff on certain imported Chinese goods.”

                              US Trade Representative Robert Lighthizer said “we feel we have made headway on very, very important and difficult issues. We have additional work to do but we are hopeful,” Treasury Secretary Steven Mnuchin tweeted “Productive meetings with China’s Vice Premier Liu He and @USTradeRep Amb. Lighthizer”, without any elaboration.

                              But the development so far seems to be enough to lift sentiments slightly. DOW futures in currently up 76 pts.

                              In Europe:

                              • FTSE is up 0.55%.
                              • DAX is up 1.39%.
                              • CAC Is up 1.44%.
                              • German 10-year yield is down -0.0032 at 0.104, holding on to 0.1 handle.

                              Earlier in Asia:

                              • Nikkei dropped -1.13%.
                              • Hong Kong HSI dropped -1.87%.
                              • China Shanghai SSE dropped -1.37%.
                              • Singapore Strait Times dropped -0.41%.
                              • Japan 10-year JGB yield dropped -0.0114 to -0.022, staying negative.

                              Japan EM Motegi to meet USTR Lighthizer for trade talk on Sep 21

                                By
                                ActionForex.com
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                                Japanese Economy Minister Toshimitsu Motegi is said to be meeting US Trade Representative Robert Lighthizer on September 21 in the US. That will be a follow up to an inconclusive meeting on trade back in August. Back then Motegi said acknowledged the importance of expanding trade. Also, both sides exchanged views individual areas but nothing had been decided. Earlier this week, Motegi was quoted saying that the US and Japan have some difference in views but will seek to proceed with the discussions.

                                It’s known that Japan has been insisting in bring the US back to the Trans Pacific Partnership, which Trump pulled out soon after taking office. The multilateral framework is what Japan has been pushing for, which is clearly shown in its leadership role in the TPP too. On the other hand, Trump has been trying to force Japan into bilateral agreement, which he fails o far. It’s uncertain how this fundamental difference could be bridged.

                                The meeting between Motegi and Lighthizer will precede summit between Japanese Prime Minister Shinzo Abe and Trump on the sidelines of a UN meeting starting September 25.

                                Japan PMI manufacturing fell to 49.8, services down to 54.2

                                  By
                                  ActionForex.com
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                                  Japan PMI Manufacturing declined from 50.6 to 49.8 in June, below expectation of 50.2. PMI Manufacturing Output fell from 50.9 to 48.3. PMI Services dropped from 55.9 to 54.2. PMI Composite decreased from 54.3 to 52.3.

                                  Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence, said:

                                  “A fresh fall in manufacturing output coincided with a softer rise in services activity, leading to the weakest expansion of overall output for four months….

                                  “The softening of growth momentum fed through to reduced optimism around the outlook, with business confidence slipping to a five-month low…

                                  “However, there was some better news in terms of inflationary pressures, which showed further signs of easing. Notably, input price inflation softened to a 22-month low in June, while output charges increased at the softest pace since January.”

                                  Full Japan PMI release here.

                                  BoE Bailey: We’ve got a very tight labour market in this country

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                                    ActionForex.com
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                                    BoE Governor Andrew Bailey expressed his concern regarding the tight labour market in the UK during a hearing at the House of Lords Economics Affairs Committee today. His comments followed the release of data showing stronger than expected wages growth.

                                    Commenting on the situation, Bailey said, “As I’m afraid this morning’s numbers illustrated, we’ve got a very tight labour market in this country.” He also added, “We’ve had a fall in the supply of labour, which is showing signs of recovering, but very slowly, frankly.”

                                    On a similar note, MPC member Catherine Mann voiced her concerns, noting “wage increases of 4.0% would be a challenge to returning CPI to 2.0%.” She also flagged services price inflation as a potential hindrance in achieving the 2% CPI target.

                                    Mann stated, “Drop in inflation expectations was important for me to switch my vote to a 25 bps rate hike from 50 bps.”

                                    Japan household spending dropped -5.1%, due to sales tax hike

                                      By
                                      ActionForex.com
                                      -

                                      A batch of economic data is released from Japan today. Overall household spending dropped -5.1% yoy in October, worse than expectation of -3.0% yoy. The decline in spending was the first time in 11 month, and biggest fall since March 2016. It’s also a sharp reversal from the 9.5% rise in September, fastest growth on record.

                                      Apparently, the September and October figures were results of the sales tax hike in October, from 8% to 10%. Additionally, impacts from typhoon also accelerated the decline in spending. Overall spending might contract as a whole Q4, before some moderate pick up in Q1.

                                      Also released, labor cash earnings rose 0.5% yoy in October, above expectation of 0.2% yoy. Leading indicator dropped -0.1 to 91.8, below expectation of 92.0.

                                      Germany Ifo business climate rose to 91.8, shows resilience after initial shock of Russian attack

                                        By
                                        ActionForex.com
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                                        Germany Ifo business climate rose from 90.8 to 91.8 in April, above expectation of 88.1. Current assessment index rose from 97.0 to 97.2, above expectation of 95.0. Expectations index rose from 85.1 to 86.7, above expectation of 82.3.

                                        By sector, manufacturing rose from -3.6 to -1.0. Services rose from 0.8 to 5.4. Trade dropped from -12.0 to -13.3. Construction dropped sharply from -12.3 to -20.0.

                                        Ifo said, the improvement was “due primarily to less pessimism in companies’ expectations. Their assessments of the current situation are minimally better. After the initial shock of the Russian attack, the German economy has shown its resilience.”

                                        Full release here.

                                        EU said no-deal Brexit very much remains a possible, although undesirable, outcome

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                                          ActionForex.com
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                                          European Commission warned in a statement released today that “In light of the continued uncertainty in the United Kingdom regarding the ratification of the Withdrawal Agreement – as agreed with the UK government in November 2018 – and the overall domestic political situation, a ‘no-deal’ scenario on 1 November 2019 very much remains a possible, although undesirable, outcome.

                                          The Commission said it has screened all the no-deal preparation measures. And it “concluded that there is no need to amend any measures on substance and that they remain fit for purpose. The Commission does not plan any new measures ahead of the new withdrawal date. ”

                                          Full statement here.

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