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UK CPI slowed to 10.7% yoy in Nov, core CPI down to 6.3% yoy

    By
    ActionForex
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    UK CPI rose 0.4% mom in November, below expectation of 0.6% mom. In the 12 months to November, CPI slowed from 11.1% yoy to 10.7% yoy, below expectation of 10.9% yoy. Core CPI also slowed from 6.5% yoy to 6.3% yoy, below expectation of 6.5% yoy.

    ONS said: “The easing in the annual inflation rate in November 2022 reflected, principally, price changes in the transport division, particularly for motor fuels and second-hand cars. There were also downward effects from tobacco, accommodation services, clothing and footwear, and games, toys and hobbies. The largest, partially offsetting, upward effect came from price rises for alcohol in restaurants, cafes and pubs.”

    Full release here.

    FOMC preview: All about dot plots and 5%

      By
      ActionForex
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      Fed is widely expected to slow down the pace of rate hike today, and raise federal funds rate by 50bps to 4.25-4.50%. The main focus is on the new economic projections in particular the dot plots. Questions are where the terminal rate of the current cycle would be, and how long would rate stay there.

      Yesterday’s CPI report showed further evidence that inflation is cooling, rather than plateauing, and in a quicker manner than expected. Currently markets are expecting Fed to make two more 25bps rate hikes in Q1. That would eventually bring interest rate to 4.75-5.00% range, keep it below the 5% psychological level.

      Here are some previews:

      Yesterday’s post-CPI reactions in the markets were clearly indecisive. S&P 500 spiked higher to 4100.96 but that pared back much of the gains to close just 0.73% higher at 4019.65. Today’s reactions could be bearish if Fed’s dot plots indicate that interest way will peak above 5%. Break of 3906.54 support will trigger near term bearish reversal in SPX. Nevertheless, another rally through yesterday’s high should push SPX further towards 4325.58 resistance and end the year on a high note.

      Japan Tankan manufacturing mood deteriorated, but non-manufacturing upbeat

        By
        ActionForex
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        Japan Tankan Large Manufacturing Index dropped from 8 to 7 in Q4, above expectation of 6. Sentiment has been deteriorating for the fourth straight quarter, and hit the lowest level since Q1 2021. Large Manufacturing Outlook dropped from 9 to 6, matched expectations.

        On the other hand, Large Non-Manufacturing Index rose from 14 to 19, above expectation of 17. That’s the highest level since Q4 2019. Large Non-Manufacturing Outlook was unchanged at 11, below expectation of 16.

        Large all industry capex dropped from 21.5% to 19.2%, above expectation of 18.4%.

        Regarding inflation, 1-year ahead general prices expectations for all industries rose from 2.6% to 2.7%. 3-year ahead expectations rose from 2.1% to 2.2%. 5-year ahead expectations was unchanged at 2.0%.

        Full release here.

        RBNZ Hawkesby: We’ve seen very little impact of higher interest rates so far

          By
          ActionForex
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          RBNZ Deputy Governor Christian Hawkesby said in a speech that “we still think we have more work to do” to bring down inflation.

          “We’ve seen very little impact of higher interest rates so far, outside of falling house prices and a cooling of the construction pipeline,” he added.

          “As inflation expectations have been rising, we also think that neutral interest rates have drifted higher, meaning that the OCR needs to be higher than otherwise before monetary policy is really restricting the demand side of the economy,” he said.

          Hawkesby pointed to November projections that the OCR would peak around 5.50%. But he noted, “25 years as an economist has taught me that the only certainty is that our forecasts won’t be exactly right. There are always shocks and unexpected developments that will evolve the story.”

          Full speech here.

          US CPI slowed to 7.1% yoy in Nov, core CPI down to 6.0% yoy

            By
            ActionForex
            -

            US CPI rose 0.1% mom in November, lower than expectation of 0.3% mom. Food index rose 0.5% mom while energy index decreased -1.6% mom. CPI core (all items less food and energy) rose 0.2% mom, below expectation of 0.3% mom.

            Over the last 12 months, CPI slowed from 7.7% yoy to 7.1% yoy, below expectation of 7.3% yoy. CPI core slowed from 6.3% yoy to 6.0% yoy, below expectation of 6.1% yoy. Energy index rose 13.1% while food index rose 10.6% yoy.

            Full release here.

            Germany ZEW rose to -23.3, significant improvement in economic outlook

              By
              ActionForex
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              Germany ZEW Economic Sentiment rose from -36.7 to -23.3 in December, above expectation of -26.3. Current Situation Index rose from -64.5 to -61.4, below expectation of -57.0.

              Eurozone ZEW Economic Sentiment rose from-38.7 to -23.6, above expectation of -25.3. Current Situation Index rose 7.7 pts to -57.4. Inflation expectation s for Eurozone fell very sharply by -27.1 pts to -79.3.

              “The ZEW Indicator of Economic Sentiment rises again significantly in December. The vast majority of financial market experts expect the inflation rate to decline in the coming months. Together with the temporary stabilisation on the energy markets, this leads to a significant improvement in the economic outlook,” comments ZEW President Professor Achim Wambach on current expectations.

              Full release here.

              Swiss SECO downgrades 2022 and 2023 inflation forecasts

                By
                ActionForex
                -

                Swiss State Secretariat for Economic Affairs SECO revised down inflation forecasts for 2022 and 2023. For 2022, CPI is projected to be at 2.9% (comparing with September forecast of 3.0%). 2023 CPI is estimated to be 2.2%, (down from 2.3%.

                2022 GDP growth forecast was left unchanged at 2.0%. 2023 GDP growth forecast was downgraded slightly from 1.1% to 1.0%. SECO said, “this would point to sluggish growth for the Swiss economy, but not a severe recession”.

                SECO added, “Europe’s energy situation is projected to gradually normalize after a tense 2023/24 winter. At the same time, inflation rates will likely ease worldwide and the global economy should gradually gain momentum”. That would trigger a recovery in Switzerland, with 1.6% GDP growth in 2024, and inflation back below average at 1.5%.

                Full release here.

                UK payrolled employees rose 107k in Nov, unemployment rate rose to 3.7% in Oct

                  By
                  ActionForex
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                  In November, UK payrolled employees rose 107k or 0.4% mom to 29.9m. That also means a rise of 777k or 2.7% yoy over the 12-month period. Early estimates indicate that median monthly pay rose 8.0% yoy. Claimant count rose 30.5k comparing to expectation of 3.5k.

                  In the three months to October, unemployment rate rose 0.1% to 3.7%, matched expectations. Employment rate rose 0.2% to 75.6%. Economic inactivity rate dropped -0.2% to 21.5%. Average earnings excluding bonus rose 6.1% 3moy, versus expectation of 5.9%. Average earnings including bonus rose 6.1% 3moy, below expectation of 6.2%.

                  Full release here.

                  Australia NAB business conditions hold up, but confidence turned negative

                    By
                    ActionForex
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                    Australia NAB Business Confidence dropped from 0 to -4 in November, below zero for the first time since December 2021. Business Conditions dropped from 22 to 20, but remained elevated. Looking at some details, trading conditions dropped from 30 to 28. Profitability conditions dropped from 21 to 20. Employment conditions dropped from 14 to 13.

                    NAB Chief Economist Alan Oster. “There was a slight softening across a number of industries but the level of business conditions really still remains elevated across the board including in key consumer-facing sectors such as retail and recreation & personal services, and across the states.”

                    “Confidence is now negative, for the first time this year, despite the strength in conditions,” said Oster. “The gap between current business conditions and business confidence is now at a record level in the history of the survey – with the exception of March 2020 – pointing to heightened concerns about the resilience of the economy in the period ahead as inflation and higher rates begin to weigh on consumers.”

                    Full releases here.

                    Australia Westpac consumer sentiment bounced from near record low

                      By
                      ActionForex
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                      Australia Westpac Consumer Sentiment Index bounced from near record low and rose 3% from 78.0 to 80.3 in December. But the level remains comparable to the lows see during the pandemic and the Global Financial Crisis.

                      Concerns over inflation remained dominant among respondents, followed by budget and taxation, economic conditions and interest rates.

                      Westpac expects RBA to continue to deliver on its “strong tightening bias” in February and hike by 25bps, and signal that there is still more work to be done.

                      Full release here.

                      BoC Macklem: Higher interest rates are working to rebalance the economy

                        By
                        ActionForex
                        -

                        BoC Governor Tiff Macklem said in a speech yesterday, “Higher interest rates are working to rebalance the economy. Domestic demand is slowing, and we expect growth in gross domestic product will be close to zero through to the middle of next year as the economy adjusts to higher interest rates. This will relieve domestic price pressures, and inflation will come down.”

                        He reiterated the position that the central bank will be considering “whether there is a need to increase the policy rate further”. He explained, “This means that decisions to raise the rate or to pause and assess the impact of past rate increases will depend on incoming data and our judgments about the outlook for inflation.”

                        Macklem also said BoC is “watching very closely to see how the economy is responding to higher interest rates”. It is looking at an job market data, how supply chains are resolving, how business are passing on costs, measures of core inflation, and inflation expectations.

                        Full speech here.

                        NIESR: UK GDP to remain flat in Q4

                          By
                          ActionForex
                          -

                          NIESR said the 0.5% mom growth in UK GDP in October “largely reflects the weakness in September” resulting from additional Bank Holiday for the State Funeral of HM Queen Elizabeth II. The risks of GDP contraction in Q4 “remains elevated”. It expects GDP to remain flat in Q4.

                          Paula Bejarano Carbo Associate Economist, NIESR said:

                          “Monthly GDP grew by 0.5 per cent in October, in line with our forecast last month, driven by a strong pick-up in wholesale and retail trade, and repair of motor vehicles and motorcycles, which seem to have been strongly affected by the additional September bank holiday.

                          “Despite this positive outlook from the monthly growth figure, there are still strong downside risks to GDP in the fourth quarter of this year due to high inflation and interest rates –which continue to suppress demand –and supply chain disruptions, as well as work backlogs due to industrial action and a tight labour market –which continue to weigh on business growth. We still expect GDP to remain flat in the fourth quarter of this year.”

                          Full release here.

                          UK GDP grew 0.5% mom in Oct, driven by services

                            By
                            ActionForex
                            -

                            UK GDP grew 0.5% mom in October, better than expectation of 0.4% mom. Services grew 0.6% mom and was the main driver of growth in GDP. Production was broadly flat for the month. Construction grew 0.8% mom. GDP is estimated to be 0.4% above is pre-coronavirus levels in February 2020.

                            In the three months to October, compared with the three months to July, GDP contracted -0.3%. Services was down -0.1%. Production dropped -1.7%. Construction rose 1.1%.

                            Full GDP released here.

                            Also released, industrial production came in at 0.0% mom, -2.4% yoy, versus expectation of -0.3% mom, -4.2% yoy. Manufacturing was at 0.7% mom, -4.6% yoy, versus expectation of -0.1% mom, -6.3% yoy. Goods trade deficit narrowed to GBP -14.5B, versus expectation of GBP -15.0B.

                            Japan PPI slowed to 9.3% yoy in Nov, global commodity prices easing

                              By
                              ActionForex
                              -

                              Japan corporate goods price index, PPI,  slowed from 9.4% yoy to 9.3% yoy in November, above expectation of 8.9% yoy. The index, at 118.5, was a record high. Yen-based import price index slowed notably from 42.3% yoy to 28.2% yoy.

                              “Companies were passing on rising raw material costs for a broad range of goods. But some goods saw the impact of recent easing of global commodity prices,” a BOJ official told a briefing.

                              Full release here.

                              Also from Japan, MoF’s Business Survey Index for all large industries rose from 0.4 to 0.7 in Q4. BSI large manufacturing, however, dropped from 1.7 to -3.6. BSI large non-manufacturing improved form -0.2 to 2.7. BSI medium all industries rose from -2.2 to 4.7. BSI small all industries rose from -15.9 to -6.0.

                              US PPI up 0.3% mom, 7.4% yoy in Nov

                                By
                                ActionForex
                                -

                                US PPI for final demand rose 0.3% mom in November, above expectation of 0.1% mom. PPI services rose 0.4% mom while PPI goods rose 0.1% mom. PPI less foods, energy, and trade services rose 0.3% mom.

                                For the 12 months ended in November, PPI rose 7.4% yoy, down from October’s 8.1% yoy, matched expectations. PPI less foods, energy, and trade services rose 4.9% yoy,

                                Full release here.

                                China CPI slowed to 1.6% yoy in Nov, core CPI down -0.6% yoy

                                  By
                                  ActionForex
                                  -

                                  China CPI slowed from 2.1% yoy to 1.6% yoy in November, below expectation of 1.7% yoy. Core CPI, excluding food and energy, was down -0.6% yoy, unchanged from October. Food prices slowed from 7.0% yoy to 3.7% yoy. Non-food prices were unchanged at 1.1% yoy.

                                  “In November, due to the domestic epidemic, seasonal factors, and a higher base of comparison in the same period last year, CPI turned from rising to falling month on month and fell back year on year,” said chief NBS statistician Dong Lijuan.

                                  PPI was unchanged at -1.3% yoy, above expectation of -1.5% yoy. “In November, PPI rose slightly month on month as a result of price increases in coal, oil and non-ferrous metals, and continued to fall year on year due to a high base of comparison from the same period last year,” added Dong.

                                  BoC Kozicki: We will be considering whether to increase rates further

                                    By
                                    ActionForex
                                    -

                                    BoC Governor Deputy Governor Sharon Kozicki said in speech yesterday, “going forward, we will be considering whether to increase rates further”.

                                    “By that, we mean that we expect our decisions will be more data-dependent,” she said. “If we are surprised on the upside, we are still prepared to be forceful. But we recognize that we have raised interest rates rapidly and that their effects are working their way through the economy.”

                                    “In other words, we are moving from how much to raise interest rates to whether to raise interest rates,” she added.

                                    Full speech here.

                                    US initial jobless claims rose to 230k, below expectations

                                      By
                                      ActionForex
                                      -

                                      US initial jobless claims rose 4k to 230k in the week ending December 3, below expectation of 245k. Four-week moving average of initial claims rose 1k to 230k.

                                      Continuing claims rose 62k to 1671k in the week ending November 26. Four-week moving average of continuing claims rose 43k to 1582k.

                                      Full release here.

                                      Gold fails 1800 handle for now

                                        By
                                        ActionForex
                                        -

                                        Gold’s rally halted after hitting 1809.80 earlier in the week, but failed to sustain above 1800 handle and turned into consolidations. Dollar’s recovery is capping Gold’s strength. Traders in the currency markets are generally cautious ahead of next week’s FOMC rate decision, and more importantly, the new dot plot.

                                        Technically, Gold is feeling some support from 4 hour 55 EMA, which is a positive sign. Break of 1809.80 will resume the rise from 1616.51 to 61.8% projection of 1616.51 to 1786.83 from 1728.48 at 1833.73. However, sustained trading below 4 hour 55 EMA (now at 1772.44) will at least bring deeper fall back to 1728.48 support for a test.

                                        Australia trade surplus little change at AUD 12.22B in Oct

                                          By
                                          ActionForex
                                          -

                                          Australia exports of goods and services dropped -0.9% mom to AUD 60.01B in October. Imports dropped -0.7% mom to AUD 47.85B. Trade surplus narrowed slightly from AUD 12.44B to AUD 12.22B, slightly above expectation of AUD 12.10B.

                                          Looking at some details, the decline in exports was driven mainly by AUD -0.6B fall in gold while imports decline was driven by AUD -0.5B fall in energy. Fuel exports, dominated by LNG, rose AUD 0.3B to AUD 11.2B, and hit a new record high. Rural goods exports rose AUD 0.1B to AUD 7.2B, also a record high.

                                          Full release here.

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