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Eurozone industrial production rose 1.5% mom in Jul, EU up 1.4% mom

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    ActionForex.com
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    Eurozone industrial production rose 1.5% mom in July, above expectation of 0.5% mom. For the month, production of non-durable consumer goods rose by 3.5%, capital goods by 2.7%, durable consumer goods by 0.6% and intermediate goods by 0.4%, while production of energy fell by 0.6%.

    EU industrial production rose 1.4% mom. Among Member States for which data are available, the highest monthly increases were registered in Ireland (+7.8%), Belgium (+5.0%) and Portugal (+3.5%). The largest decreases were observed in Lithuania (-2.0%), Slovenia (-1.8%) and Croatia (-1.6%).

    Full release here.

    Ifo: Germany inflation to hit 3% this year, fall back to 2-2.5% next

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      ActionForex.com
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      Ifo said inflation in Germany could hit as high as 3% this year. That could be explained by “accelerated increase in prices over the course of 2021” in apparent in energy, food, and some service industries.

      Inflation is expected to slow to 2.0-2.5% next year. But Head of Forecasts Timo Wollmershäuser said: “At the beginning of 2022, the special factors that have been driving inflation will peter out: it will be a year since the reduction in VAT was reversed and energy prices reached their pre-crisis levels,”

      Separately, ECB Governing Council member Pablo Hernandez de Cos said, “ECB is monitoring the inflation performance closely but we are not seeing any second-round impacts.”

      UK CPI surged from 2% to 3.2% yoy in Aug, largest monthly leap on record

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        ActionForex.com
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        UK CPI surged to 3.2% yoy in August, up from 2.0% yoy, above expectation of 2.9% yoy. That sharp 1.2% jump in CPI was the highest leap recorded, but ONS said “this is likely to be a temporary change. CPI core rose to 3.1% yoy, up from 1.8% yoy, above expectation of 2.9% yoy. RPI also rose to 4.8% yoy, up from 3.8% yoy, above expectation of 4.6% yoy.

        Also released, PPI input came in at 0.4% mom, 11.0% yoy, versus expectation of 0.2% mom, 10.3% yoy. PPI output was at 0.7% mom, 5.9% yoy, versus expectation of 0.4% mom, 5.4% yoy. PPI core output was at 1.0% mom, 5.4% yoy.

        Full CPI release here.

        China retail sales grew only 2.8% yoy in Aug, way below expectation

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          ActionForex.com
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          China retail sales growth slowed sharply to 2.8% yoy in August , down from July’s 8.5% yoy, well below expectation of 7.1% yoy. China industrial production growth slowed further to 5.3% yoy, below expectation of 5.8% yoy. Fixed asset investment rose 8.9% ytd yoy, below expectation of 9.1%.

          In a released, the National Bureau of Statistics said, “generally speaking, in August, the national economy maintained the trend of recovery. However, we must be aware that the international environment is still complicated and severe. At home, it has been felt that the sporadic outbreak of COVID-19 and natural disasters such as floods had caused impact on the economy, and the foundation for the economic recovery still needs to be consolidated”.

          OECD downgrades Australia growth forecast, urges broad RBA review

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            ActionForex.com
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            In the latest Economy Survey of Australia, OECD downgraded the country’s GDP growth to 4.0% in 2021 and 3.3% in 2022, from May’s forecast of 5.1% and 3.4% respectively. It said the upcoming post-restriction recovery may be “more gradual than in past episodes”, as it will “occur in an environment of higher virus transmission”. COVID-19 outbreaks in other states than New South Wales and Victoria, could deepen the economic shock. “Any ratcheting up of tensions with China could further weaken trade activity.”

            OECD also pointed out that underlying inflation has undershot RBA’s target band for an extended period of time. It suggested that RBA should “conduct a monetary policy framework review that is broad in scope, transparent and involves consultation with a wide variety of relevant stakeholders.”

            In response, Treasurer Josh Frydenberg said, “it’s something I will give consideration to in terms of looking at the RBA, looking at the monetary policy settings and learning from the experience through the pandemic. The RBA has performed very well through this crisis, its policy response has been in sync and coordinated with the government’s fiscal response.”

            OECD press release, blog post, and report.

            Australia Westpac consumer sentiment rose to 106.2, strong resilient despite lockdown

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              ActionForex.com
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              Australia Westpac-MI consumer sentiment rose 2.0% to 106.2 in September. The index remained comfortably above the levels five years prior to the pandemic. Confidence in New South Wales rose 5.3% while Victoria was steady at 104.1, despite extended lockdown in both states. Queensland jumped 8.4% to 111.6. Overall, the data indicates strong resilience of consumer sentiment and positives reactions to vaccination progresses.

              Westpac added that given that RBA has already defer the next review of the asset purchase program to February, it’s highly unlikely that there will be any policy changes before that meeting. Nevertheless, it added, “with the US Federal Reserve likely to have begun its tapering program by then and the economy likely to be bouncing back as high vaccination levels see easing restrictions, we expect the Board to further taper its bond purchases in February.”

              Full release here.

              Gold breaks above 1800, finished correction?

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                ActionForex.com
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                Gold’s break of 1803.61 resistance suggests that correction from 1833.79 has completed at 1779.44. 38.2% retracement of 1682.60 to 1833.79 was well defended, maintaining near term bullishness. Further rise is now in favor to retest 1832.47/1833.79 resistance zone. Sustained break there will raise the chance that whole corrective pattern from 2074.84 has completed too. Further rally would then be seen to 1916.30 resistance for confirmation.

                Canada manufacturing sales dropped -1.5% mom in July

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                  ActionForex.com
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                  Canada manufacturing sales dropped -1.5% mom to CAD 59.6b in July, worse than expectation of -1.0% mom. Sales were down in 12 of 21 industries, led by the wood product (-21.8%), aerospace product and parts (-19.0%), miscellaneous (-12.1%) and petroleum and coal product (-2.3%) industries.

                  The declines were partially offset by higher sales in the motor vehicles (+13.5%), primary metal (+3.9%) and motor vehicle parts (+7.6%) industries.

                  Full release here.

                  US core CPI slowed for the second month to 4.0% yoy in Aug, missed expectations

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                    ActionForex.com
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                    US headline CPI rose 0.3% mom, in August, below expectation of 0.4% mom. CPI core rose 0.1% mom, below expectation of 0.3% mom. Over the 12 months, headline CPI slowed to 5.3% yoy, down from 5.4% yoy, matched expectations. CPI core slowed to 4.0% yoy, down from 4.3% yoy, missed expected of 4.2% yoy. That’s indeed the second straight month of decline in core CPI.

                    Full release here.

                    Bundesbank Weidmann: A gradual approach makes sense in digital Euro

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                      ActionForex.com
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                      Bundesbank President Jens Weidmann said a “gradual approach” might make sense in digital Euro given the risks involved. “That means a digital euro with a specific set of features and the option to add further functionalities later,” he added.

                      In particular, he warned that in times of crises, consumers could rush to covert bank deposits to central bank money. That would destabilize the financial system.

                      UK unemployment rate dropped to 4.7%, employment rate rose to 75.2%

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                        ActionForex.com
                        -

                        UK unemployment rate dropped slightly from 4.7% to 4.6% in the three months to July. That’s still 0.6% higher than pre-pandemic level. Employment rate rose to 75.2% but remains -1.3% below pre-pandemic level. Average earnings including bonus rose 8.3% 3moy, below expectation of 8.6%. Average earnings excluding bonus rose 6.8% 3moy, also below expectation of 7.3%. Claimant count dropped -58.6k in August, versus expectation of -71.7k.

                        Full release here.

                        RBA Lowe explains tapering asset purchases while extending the program

                          By
                          ActionForex.com
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                          In a speech, RBA Governor Philip Lowe said, “n the economy, our central message is that the Delta outbreak has delayed – but not derailed – the recovery of the Australian economy”. While the outbreak is a “significant setback”, there is a “clear path out of the current difficulties”.

                          Lowe provided some explanations to the decision to taper weekly asset purchases to AUD 4B, but extend the program till February next year. Firstly, give the delay in recovery, “we considered it appropriate that we delay any consideration of a further taper in our bond purchases until next year.” Continuing the with purchases will also “provide some additional insurance against downside scenarios.”

                          Secondly, fiscal policy is considered the “more effective policy instrument in responding to the Delta outbreak.” Public balance sheet can be used to “offset the hit to private incomes during the lockdown”. But monetary policy “works mainly on the demand side and the effects on income are felt with a lag”.

                          Thirdly, “by continuing to purchase government bonds at the rate of $4 billion a week we will be adding to the support provided to the economy during the recovery phase.”

                          Lowe also reiterated that the condition for lifting interest rate will “not be met before 2024”. A “tighter labor market” is needed to meet the condition, with wages growing by “at least 3 per cent”, comparing to the 1.7% yoy rate in Q2.

                          Full speech here.

                          Australia NAB business confidence rose to -5, resilience and well positioned to rebound

                            By
                            ActionForex.com
                            -

                            Australia NAB business confidence rose slightly from -7 to -5 in August. Business conditions improved from 10 to 14. Looking at some details, trading condition rose from 12 to 19. Profitability condition rose from 5 to 15. Employment condition, however, dropped from 11 to 9.

                            NAB said, “while the sustained lockdowns now in place will cause a large hit to activity in the quarter, the resilience seen in the August survey results suggest that the supports in place, and lingering momentum from earlier in the year, are continuing to support the economy”.

                            “There are also signs that progress on the vaccine rollout and growing certainty that lockdowns will end in coming months are providing a reason for optimism. The economy remains well positioned to rebound once restrictions are eased.”

                            Full release here.

                            OPEC: Oil demand recovery delayed in to H1 2022

                              By
                              ActionForex.com
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                              In the monthly oil market report, OPEC revised down Q4 oil demand forecasts to average 99.70m bpd, down 110k bpd from last months’ projections. For 2022, Overall, global oil demand would rise by 5.96m bpd in the whole of 2021. Demand growth forecasts for 2022 was revised from 3.28m bpd to 4.1m bpd.

                              It said the “increased risk of COVID-19 cases primarily fueled by the Delta variant is clouding oil demand prospects going into the final quarter of the year.” As a result, “second-half 2021 oil demand has been adjusted slightly lower, partially delaying the oil demand recovery into first-half 2022.”

                              “The pace of recovery in oil demand is now assumed to be stronger and mostly taking place in 2022,” OPEC said. “As vaccination rates rise, the COVID-19 pandemic is expected to be better managed and economic activities and mobility will firmly return to pre-COVID-19 levels.”

                              Full report here.

                              ECB Schnabel: Premature tightening would choke the recovery

                                By
                                ActionForex.com
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                                In a speech, ECB Executive Board member Isabel Schnabel said inflation in Eurozone is “likely to ease noticeably next year”. She warned that “a premature monetary policy tightening in response to a temporary rise in inflation would choke the recovery and be most harmful to those who are already suffering from the current spike in inflation.”

                                Also she said, “there are good reasons to assume that the current constellation of fiscal and monetary policy in the euro area may finally chart the path out of the low interest rate environment.”

                                Full speech here.

                                BoE Hauser: Balance sheet will be structurally larger even after QE unwind

                                  By
                                  ActionForex.com
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                                  BoE Executive Director Andrew Hauser said in a speech, the central bank balance sheets will be “structurally larger”, comparing to the start of the millennium, even after current QE program unwind. Central will need to meet at “bigger share of the structurally higher demand for liquidity; and contemplate possible Central Bank Digital Currencies.”.

                                  Also, the balance sheets will be “more variable as lower global interest rates and a broader liquidity insurance toolkit mean balance sheets play a more active countercyclical role.”.

                                  Full speech here.

                                  Germany likely to have a noticeable jump in output in Q3

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                                    ActionForex.com
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                                    Germany’s Economy Ministry said in its monthly report that “there will likely be a noticeable increase in economic output in the current third quarter.” Nevertheless, there were also signs of normalization of growth in Q4. Also, the spread of new variants of COVID-19 could cloud the outlook.

                                    GDP grew only 1.6% qoq in Q2, as constrained by shortage of semiconductor chips and other intermediate goods.

                                    Japan corporate goods price ticked down to 5.5% yoy, wholesale inflation will remain under upward pressure

                                      By
                                      ActionForex.com
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                                      Japan’s corporate goods price index slowed slightly to 5.5% yoy in August. But it was close to July’s 5.6% yoy, which was the highest reading since September 2008. Also, at 105.8, the index marked the highest level since 1982.

                                      Shigeru Shimizu, head of the BoJ’s price statistics division, said, “as the global economy continues to recover thanks to progress in vaccinations, domestic wholesale inflation will remain under upward pressure, though there’s uncertainty over the outlook due to a resurgence in infections.”

                                      NZIER revised up inflation forecast, NZD to remain elevated for coming years

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                                        ActionForex.com
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                                        In NZIER’s September survey, consensus forecast for 2021/22 GDP was revised down from 5.0% to 4.5%. But 2022/23 GDP forecast for 2022/23 was revised up from 3.7% to 4.5%. The revision likely reflects the impact of the current COVID-19 outbreak. GDP is forecast to grow 2.3% in 2023/24 (revised down from 2.6%), then pick up to 2.7% in 2024/25.

                                        Inflation forecasts were revised up sharply from 2.1% to 3.5% in 2021/22, up from 1.9% to 2.0% in 2022/23. It’s unchanged at 2.2% in 2023/24 and expected to be steady at 2.2% in 2024/25. NZIER said, “Capacity pressures continue to build up across the New Zealand economy, as acute labour shortages and COVID-related supply chain disruptions drive up cost pressures further. Solid demand has made it easier for businesses to pass these costs onto customers by raising prices.”

                                        The NZD outlook is mixed with trade-weighted index revised lower in the near term. However, NZIER said, “expectations are for the currency to remain elevated over the coming years,” as RBNZ rate hike expectations improved yield attractiveness.

                                        Full release here.

                                        New Zealand ANZ business confidence rose to -6.8, showing resilience

                                          By
                                          ActionForex.com
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                                          In the preliminary September read, New Zealand ANZ Business confidence rose to -6.8, up from August’s -14.2. Own Activity outlook dropped to 18.2, down from 19.2. Looking at some more details, export intentions dropped from 7.4 to 5.7. Investment intentions dropped from 14.4 to 12.2. Employment intentions dropped from 17.0 to 14.7. Inflation expectations ticked lower from 3.05 to 2.97.

                                          ANZ said the report showed “resilience” despite lockdown in Auckland, with most forward-looking activity indicators holding up well. ANZ said, “We examined a split between Auckland and the rest of the country but the differences were very small.”

                                          “Overall, the preliminary ANZ Business Outlook results suggest that firms can see light at the end of the tunnel, even in Auckland. We can do this, it said”.

                                          Full release here.

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