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RBNZ Hawkesby said 50bps hike actively considered, NZD/USD jumps

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    ActionForex.com
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    RBNZ Assistant Governor Christian Hawkesby told Bloomberg that the decision to stand pat on OCR last week was mostly due to communications problem. It’s hard to explain the case when if the rate hike was delivered on the same day as New Zealand returned to pandemic lockdown.

    He added that the decision was not due to risks and the policy decisions “won’t be tightly linked” to COVID -19. Demand as proven to be more resilient than anticipated.

    Most surprisingly, Hawkesby also indicated that the central bank has considered a 50bps rate hike. “A 50 basis point move was definitely on the table in terms of the options that we actively considered,” he said.

    NZD/USD’s rebound form 0.6804 accelerated higher today but stays well below 0.7087 resistance so far. It’s too early to say that the corrective pattern from 0.7463 has completed, with NZD/USD staying even below 55 day EMA. NZD/USD could have another dip to 38.2% retracement of 0.5467 to 0.7463 at 00.6701 before resuming the medium term up trend.

    Gold back above 1800 as rebound resumed

      By
      ActionForex.com
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      Gold’s rebound from 1682.60 resumed last week and it’s now trading slightly above 1800 handle. From a bigger picture, it’s possible that gold has once again drew enough support from long term fibonacci level of 38.2% retracement of 1046.27 to 2074.84 at 1681.92 to form a bottom.

      However, we’d prefer to see, firstly, sustained trading above 1800 psychological level. Secondly, Gold will need to break through 1832.47 near term resistance. In that case, stronger rise could be seen at least to retest 1916.30 medium term resistance next. However, break of 1774.14 support will suggest that the rebound has completed and bring another test on 1681.92 fibonacci level again.

      NASDAQ hit new record after full FDA approval to Pfizer-BioNTech vaccine

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        ActionForex.com
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        Major US stock indexes closed higher after the Food and Drug Administration (FDA) granted full approval to the Pfizer-BioNTech’s COVID-19 vaccines. Pfizer shares also rose 2.4% while BioNTech stock rose 9.5%. Another vaccine maker Moderna also rose 7.5%. Both S&P 500 and NASDAQ closed at new record highs.

        The notable support from 55 day EMA in NASDAQ once again reaffirmed its near term bullishness. The index should be on track to 61.8% projection of 10822.57 to 14175.11 from 13002.53 at 15704.4, probably later this week. Sustained break there could prompt some upside acceleration to next target at 100% projection at 16355.1. In any case, outlook will stay bullish as long as 14423.2 support holds, even with an initial rejection by 15k handle.

        New Zealand retail sales rose 3.3% qoq in Q2, above expectations

          By
          ActionForex.com
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          New Zealand retail sales volume rose 3.3% qoq in Q2, above expectation of 2.0% qoq. 11 of 15 industries reported growth, and the largest increases were in electrical and electronic goods retailing (up 6.9%), food and beverage services (up 5.6%), motor vehicle and parts retailing (up 3.1%), pharmaceutical and other store-based retailing (up 7.5%), and accommodation (up 11.4%).

          “Most retail industries saw increases in spending, with rises across all regions. Spending on big ticket items such as electrical goods, housewares, and vehicles was a priority for many consumers during this June quarter,” retail trade manager Sue Chapman said.

          Full release here.

          US PMI manufacturing dropped to 61.2, services down to 55.2

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            ActionForex.com
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            US PMI Manufacturing dropped from 63.4 to 61.2 in August, below expectation of 63.0. PMI Services dropped from 59.9 to 55.2, below expectation of 59.9. PMI Composite dropped from 59.9 to 55.4.

            Chris Williamson, Chief Business Economist at IHS Markit, said:

            “The expansion slowed sharply again in August as the spread of the Delta variant led to a weakening of demand growth, especially for consumer-facing services, and further frustrated firms’ efforts to meet existing sales.

            “Not only have supply chain delays hit a new survey record high, but the August survey saw increasing frustrations in relation to hiring. Jobs growth waned to the lowest since July of last year as companies either failed to find suitable staff or existing workers switched jobs.

            “Prices charged for goods and services grew at an increased rate as demand once again ran ahead of supply, most notably in the manufacturing sector.

            “Prices look set to continue to rise sharply due to the persistent upward pressure on costs arising from shortages of materials and labor, though if demand continues to cool due to rising case numbers this should alleviate some of the inflationary pressures.”

            Full release here.

            Bundesbank: Output to rise sharply in summer

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              ActionForex.com
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              In the monthly report, Bundesbank said German economic output is “likely to rise sharply in summer 2021”, more strongly than in Spring. Industry was unable to take advantage of the growth in Q2 due to increased delivery bottlenecks. But there are initial signs that these delivery bottlenecks are “at least not worsening”. It remains to be seen if GDP could reach pre-crisis level in Summer or not until Autumn.

              Inflation is expected to continue to rise in Germany, but then “decrease noticeably again at the beginning of 2022”, as the base effect will then no longer apply. Though, inflation could still be over 2% until mid-2022.

              UK PMI manufacturing dropped to 60.1, services tumbled to 55.5

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                ActionForex.com
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                UK PMI Manufacturing dropped from 60.4 to 60.1 in August, above expectation of 59.5. PMI Services dropped notably from 59.6 to 55.5, below expectation of 59.0. PMI Composite dropped from 59.2 to 55.3.

                Chris Williamson, Chief Business Economist at IHS Markit, said: “Although the PMI indicates that the economy continues to expand at a pace slightly above the pre-pandemic average, there are clear signs of the recovery losing momentum in the third quarter after a buoyant second quarter… rising virus case numbers are deterring many forms of spending… Supplier delays have risen to a degree exceeded only once before… Prices have risen sharply again, albeit with the rate of inflation moving below July’s record high.

                “More positively, business expectations for the year ahead perked up in August, encouraging a record jump in employment as furloughed workers were brought back to the workplace. However, demand and supply availability need to improve further for this rise in employment to be sustained in coming months”

                Full release here.

                Eurozone PMI composite ticked down to 59.5, recovery retained impressive momentum

                  By
                  ActionForex.com
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                  Eurozone PMI Manufacturing dropped from 62.8 to 61.5 in August, below expectation of 62.0. PMI Services dropped from 59.8 to 59.7, below expectation of 59.8. PMI Composite dropped from 60.2 to 59.5.

                  Chris Williamson, Chief Business Economist at IHS Markit said: “The eurozone’s economic recovery retained impressive momentum in August, with the PMI dipping only slightly from July’s recent high to put its average in the third quarter so far at the highest for 21 years… Firms benefited from virus containment measures easing to the lowest since the pandemic began…

                  “Supply chain delays continue to wreak havoc… combined with surging demand, led to another near-record increase in average selling prices for goods and services, though there are some welcome signs that these inflationary pressures may have peaked for now. Encouragement comes from a second month of job creation at the strongest for 21 years… some upward movement on wage growth… which could feed through to higher inflation”.

                  Full release here.

                  Germany PMI composite dropped to 60.0, still firmly inside growth territory

                    By
                    ActionForex.com
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                    Germany PMI Manufacturing dropped from 65.9 to 52.7 in August, below expectation of 65.0. PMI Services dropped from 61.8 to 61.5, above expectation of 61.0. PMI Composite dropped from 62.4 to 60.6.

                    Phil Smith, Associate Director at IHS Markit said: “With August’s flash PMI still firmly inside growth territory, the recovery of the German private sector looks to be continuing at a healthy pace. Although growth has slowed down since July, the data are still pointing to a stronger economic expansion in the third quarter than the provisional 1.5% increase in GDP seen in the three months to June.”

                    Full release here.

                    France PMI composite dropped to 55.9, another strong month of growth

                      By
                      ActionForex.com
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                      France PMI Manufacturing dropped from 58.0 to 57.3 in July, matched expectations. PMI Services dropped from 56.8 to 56.4, below expectation of 57.0. PMI Composite dropped from 56.6 to 55.9.

                      Joe Hayes, Senior Economist at IHS Markit said: “Another strong month of growth across France was signalled by the flash PMI figure for August. Despite some of the challenges businesses are facing on the supply side, it’s encouraging to see PMI data consistently signalling robust expansion. Furthermore, given we’re now midway through the third quarter, the survey data up to this point suggest we could see another decent out turn in the corresponding GDP figure.”

                      Full release here.

                      Japan PMI composite dropped to 45.9 in Aug, weaker demand and sustained supply chain pressures

                        By
                        ActionForex.com
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                        Japan PMI Manufacturing dropped from 53.0 to 52.4 in August, below expectation of 53.4. PMI services dropped sharply from 47.4 to 43.5, worst in 15 months. PMI Composite dropped from 48.8 to 45.9, worst since August 2020.

                        Usamah Bhatti, Economist at IHS Markit, said: “The Japanese private sector economy saw business conditions deteriorate further midway through the third quarter of the year, with flash PMI data signalling a quicker decline in business activity in August. The latest contraction was the quickest recorded since August 2020, while incoming business was reduced at the sharpest pace for seven months. Survey respondents commonly attributed weaker demand to ongoing COVID-19 restrictions, coupled with sustained supply chain pressures.”

                        Full release here.

                        Australia PMI composite dropped to 15-month low, heavily impacted by restrictions

                          By
                          ActionForex.com
                          -

                          Australia PMI Manufacturing dropped from 56.9 to 51.7 in August, hitting a 14-month low. PMI Services dropped from 44.2 to 43.3, a 15-month low. PMI Composite dropped from 45.2 to 43.5, also a 15-month low.

                          Jingyi Pan, Economics Associate Director at IHS Markit, said: “Australia’s private sector remained stuck in decline in August… as activity remained heavily impacted by current mobility restrictions brought about by the spread of the COVID-19 Delta variant. Not only were demand and business activity hit, employment conditions also deteriorated, with private sector staffing levels falling for the first time since October 2020… The one bright spot had been an improvement in the outlook amongst Australian private sector firms in August, with hopes of an improvement in the COVID-19 situation expected to spark an eventual rebound for the Australian economy.”

                          Full release here.

                          Fed Kaplan might need to adjust view on tapering due to Delta

                            By
                            ActionForex.com
                            -

                            Dallas Fed President Robert Kaplan said the the economic impact from the Delta variant is “unfolding rapidly”. “So far it’s not having a material effect” on consumer activity, he added. But, “it is having an effect in delaying return to office, it’s affecting the ability to hire workers because of fear of infection,” and may be affecting production output.

                            Kaplan previously said he would like to start tapering asset purchases in October. But he might now need to adjust he views “somewhat” due to Delta.

                            Canada retail sales rose 4.2% mom in Jun, missed expectations

                              By
                              ActionForex.com
                              -

                              Canada retail sales rose 4.2% mom to CAD 56.2B in June, below expectation of 5.0% mom. Sales increased in 8 of 11 subsectors, representing 69.5% of retail trade. Core retail sales, excluding gasoline stations and motor vehicles and parts dealers, rose 4.6% mom. For Q2 as a whole, sales dropped -0.7% qoq. In the advance estimate, sales is expected to drop -1.7% mom in July.

                              Full release here.

                              UK retail sales dropped -2.5% mom in Jul, ex-fuel sales dropped -2.4% mom

                                By
                                ActionForex.com
                                -

                                UK retail sales dropped -2.5% mom in July, well below expectation of 0.4% mom. Ex-fuel sales dropped -2.4% mom. Over the last 12 months, retail sales rose 2.4% yoy, below expectation of 6.4% yoy. Ex-fuel sales rose 1.8% yoy.

                                Retail sales volumes over the last three months were up 11.1% on a year earlier.

                                Full release here.

                                CAD/JPY pressing 85.40 key support, completing head and shoulder top?

                                  By
                                  ActionForex.com
                                  -

                                  CAD/JPY is now pressing 85.40 key support level after this week’s steep decline. Sustained break of this support would carry rather bearish medium term implications. Firstly, that would complete a head and shoulder top reversal pattern (ls: 88.06, h: 91.16, rs: 88.44). Secondly, 55 week EMA (now at 85.24) would be firmly taken out. Thirdly, that could also confirm completion of whole rise from 73.80 (2020 low) at 91.16, as a leg in the sideway pattern that started at 74.80 (2016 low), after rejection by 91.62 key resistance (2017 high).

                                  Sustained break of 85.40 would push CAD/JPY to 100% projection of 91.16 to 85.40 from 88.44 at 82.68. That is close to 50 % retracement of 73.80 to 91.16 at 82.48.

                                  AUD/USD to draw strong support from 0.7 on next fall

                                    By
                                    ActionForex.com
                                    -

                                    Australian Dollar remains broadly pressured today. New South Wales reported another 644 new coronavirus infections and 4 deaths. Greater Sydney’s lockdown will be extended until the end of September. That is, the lockdown, which has already lasted for 8 weeks, will run for at least 13 weeks. Also, a curfew will be introduced for 12 local government areas of Sydney, as people there must stay stop between 9pm and 5am.

                                    While more downside is still in favor in AUD/USD for the immediate future, we’d start to looking for bottoming sign on next move. Oversold condition in daily MACD could start to slow the decline. 161.8% projection of 0.8006 to 0.7530 from 0.7890 at 0.7120 will be met. Additionally, AUD/USD should then enter a strong support zone around 0.7 psychological level, 0.6991 support, and 38.2% retracement of 0.5506 to 0.8006 at 0.7051. Let’s see if AUD/USD would at least turn into sideway trading.

                                    UK Gfk consumer confidence dropped to -8, GBP/CHF breaks near term support

                                      By
                                      ActionForex.com
                                      -

                                      UK Gfk consumer confidence dropped slightly from -7 to -8 in August, below expectation of -6. “Against a backdrop of cooling headline inflation and soaring house prices, the U.K. consumer confidence index is stable at minus 8 this August,” Joe Staton, GfK’s client strategy director, said.

                                      “Expectations for our personal financial situation for the coming 12 months are holding up and this positivity bodes well for the economy going forward this year and next,” Staton said. The index measuring changes in personal finances over the past 12 months is up one point at 0.

                                      Sterling is the weakest European major for the week, and is trading just better than commodity currencies. GBP/CHF drops through 1.2498 support to resume the choppy fall from 1.3070. Deeper decline is now expected as long as 1.2640 resistance holds. Such decline is seen as a correction to up trend from 1.1107. Next target is 38.2% retracement of 1.1107 to 1.3070 at 1.2320. Nevertheless, we’d look for strong support 1.2259 resistance turned support to bring rebound, at least on first attempt.

                                      Philly Fed manufacturing dropped to 19.4, but remained elevated

                                        By
                                        ActionForex.com
                                        -

                                        In the August Philadelphia Fed Manufacturing Business Outlook Survey diffusion index for currency activity dropped to 19.4 in August, down from 21.9, below expectation of 24.3. It’s also the fourth consecutive decline. 28% of the firms reported increases in current activity while 9% reported decreases.

                                        Philadelphia Fed said: “Responses to the August Manufacturing Business Outlook Survey suggest continued expansion for the region’s manufacturing sector. The indicators for current activity and shipments decreased from last month but remained elevated. Additionally, the firms reported increases in new orders and employment. The survey’s future indexes moderated this month but continue to suggest expected growth over the next six months.”

                                        Full release here.

                                        US initial jobless claims dropped to 348k, continuing claims at 2.82m

                                          By
                                          ActionForex.com
                                          -

                                          US initial jobless claims dropped -29k to 348k in the week ending August 14, better than expectation of 362k. That’s also the lowest level since March 14, 2020. Four-week moving average of initial claims dropped -19k to 378k, lowest since March 14, 2020 too.

                                          Continuing claims dropped -79k to 2820k in the week ending August 7, lowest since march 14, 2020. Four-week moving average of continuing claims dropped -111k to 2999k, lowest since March 21, 2020.

                                          Full release here.

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