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NIESR expects UK economy to contract -3.8% in Q1

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    ActionForex.com
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    NIESR said it expected the UK economy to contract by -3.8% in Q1 this year, “as stringent Covid-19 restrictions are expected remain elevated until early spring, along with the effects of post-Brexit adjustment”.

    “The level of GDP in the fourth quarter remained about 8 per cent below pre-pandemic levels even before a third lockdown became necessary in January 2021. With Covid-19 restrictions expected to remain elevated until early spring, we anticipate a sharp decline in activity during the first quarter of the year. Nevertheless, growth will pick up from the second quarter onwards as restrictions ease on the back of a successful vaccination programme.” Dr Kemar Whyte, Senior Economist – Macroeconomic Modelling and Forecasting.

    Full release here.

    Bitcoin hits new record but lacks follow through buying, more consolidations likely

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      ActionForex.com
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      Bitcoin hits new record high at 48944 earlier today but lags follow through buying so far. Upside momentum is also unconvincing with bearish divergence condition in hourly MACD. For now, we’d continue to expect some strong resistance around 50k psychological level to limit upside and bring near term correction first.

      But near term outlook will stay bullish as long as 43777 support holds. We’d expect current up trend to target 100% projection of 17629 to 41964 from 29283 at 53618 next, after completing the envisaged consolidations.

      UK GDP grew 1.2% mom in Dec, 1% qoq in Q4

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        ActionForex.com
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        UK GDP grew 1.2% mom in December, above expectation of 1.0% mom rise. Index of services rose 1.7% mom. Index of production rose 0.2% mom. Manufacturing rose 0.3% mom. Construction dropped -2.9% mom. Agriculture rose 0.3% mom.

        For Q4, GDP grew 1.0% qoq, well above expectation of 0.5% qoq. Index of services rose 0.6% qoq. Index of production rose 1.8% qoq. Manufacturing rose 3.3% qoq. Construction rose 4.6% qoq. Agriculture rose 0.7% qoq.

        For 2020, annual average GDP contracted -9.9%, largest yearly fall on record. Services dropped -8.9%. Production dropped -8.6%. Construction dropped -12.5%. Agriculture dropped -9.4%.

        Full release here.

        New Zealand BusinessNZ manufacturing rose to 57.5, encouraging with new orders leading the way

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          ActionForex.com
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          New Zealand BusinessNZ Performance of Manufacturing jumped a notable 9.2 pts to 57.5 in January. Looking at some details, Production rose from 52.3 to 59.1. Employment rose from 50.2 to 55.4. New Orders rose from 50.3 to 62.4. Finished stocks rose from 47.8 to 52.5. Deliveries also improved from 45.0 to 48.7.

          BusinessNZ’s executive director for manufacturing Catherine Beard said that the January result was a welcome start to 2021, with the result clearly above the long term average of 53.0 for the Index.

          BNZ Senior Economist, Craig Ebert said that “the 3-month average to January was 53.6, slightly above the long-term norm of 53.0.  Also, January’s improvement was encouraging in its composition, with New Orders leading the way”.

          Full release here.

          BoE Haldane: A decisive corner is about to be turned

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            ActionForex.com
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            In Daily Mail article, BoE chief economist Andy Haldane said the “rapid rollout of the vaccination programme” means “a decisive corner is about to be turned for the economy too, with enormous amounts of pent-up financial energy waiting to be released, like a coiled spring.”

            “People are not just desperate to get their social lives back, but also to catch up on the social lives they have lost over the past 12 months,” he expected.

            “So come the Spring, we can expect the UK economy to be firing on all three cylinders – households, companies and government,” he added. “A year from now annual growth could be in double-digits and inflation back on target.”

            “As its energies are released, the recovery should be one to remember after a year to forget.”

            Full article by Haldane here.

            Fed Harker doesn’t seen inflation roaring past 2% any time soon

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              ActionForex.com
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              Philadelphia Fed President Patrick Harker said in a CNBC interview that inflation is not a problem for now. “I don’t see it roaring past 2% anytime soon, so I’m not so worried about that risk right now,” he said. “In the medium or longer run, yeah, sure, it’s something we have to take into account. But not now.”

              “What I look at is not only the level of inflation but also is it accelerating or decelerating,” he said. “We’re clearly committed as to exceed 2% for a period of time, but it has to be sustainably above 2% for a period of time.”

              Separately, Richmond Fed President Thomas Barkin said, “I don’t think the economy requires herd immunity. Consumers who get vaccines, who have money in their pockets…are going to be free to spend”.

              AUD/JPY resumes up trend, NZD/JPY and CAD/JPY to follow?

                By
                ActionForex.com
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                AUD/JPY’s rally resumes after brief consolidation and reaches as high as 81.35 so far. On the other hand, NZD/JPY and CAD/JPY are both held below corresponding resistance. Ideally, one by one, we’d like to see these three Yen crosses to extend recent up trend to confirm each others’ underlying momentum.

                AUD/JPY’s current rise is part of the up trend from 59.89 and should target 61.8% projection of 59.89 to 78.46 from 73.13 at 84.60 next. Break of 80.63 support will bring some more consolidations but outlook will stay bullish as long as 79.18 support holds.

                 

                NZD/JPY also recovers after drawing support from 4 hour 55 EMA. But upside is limited below 76.12 temporary top. While more consolidations cannot be ruled out, outlook will stay bullish as long as 74.11 support holds. Break of 76.12 will resume the up trend from 59.49. Next target is 100% projection of 63.45 to 71.66 from 68.86 at 77.07.

                Similarly, CAD/JPY rebounds after drawing support from 4 hour 55 EMA, but stays below 82.69 temporary top. Consolidations might extend but outlook will stay bullish as long as 80.96 support holds. Break of 82.69 will resume the up trend from 73.80. Next target is 100% projection of 74.76 to 81.91 from 77.91 at 85.06

                US initial jobless claims dropped to 793k, continuing claims dropped to 4.55m

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                  ActionForex.com
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                  US initial jobless claims dropped -19k to 793k in the week ending February 6, above expectation of 775k. Four-week moving average of initial claims dropped 33.5k to 823k.

                  Continuing claims dropped -145k to 4545k in the week ending January 30. Four-week moving average of continuing claims dropped -158k to 4749k.

                  Full release here.

                  European Commission expects economy to return to pre-crisis levels earlier

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                    ActionForex.com
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                    In the Winter 2021 Economic Forecast, European Commission downgraded 2021 growth projection of EU to 3.7% (from Autumn’s 4.1%) and Eurozone to 3.8% (from 4.2%. But it upgraded 2022 growth projection of EU to 3.9% (from 3.0%) and Eurozone to 3.8% (from 3.0%).

                    Eurozone and EU economies are now expected to reach pre-crisis levels “earlier than anticipated” in Autumn, “largely because of the stronger than expected growth momentum projected in the second half of 2021 and in 2022.”. Growth is “set to resume in the spring and gather momentum in the summer as vaccination programmes progress and containment measures gradually ease.” Inflation, however, is set to remain subdued.

                    Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People said: “Today’s forecast provides real hope at a time of great uncertainty for us all. The solid expected pick-up of growth in the second half of this year shows very clearly that we are turning the corner in overcoming this crisis.”

                    Paolo Gentiloni, Commissioner for Economy said: “Europeans are living through challenging times. We remain in the painful grip of the pandemic, its social and economic consequences all too evident. Yet there is, at last, light at the end of the tunnel. As increasing numbers are vaccinated over the coming months, an easing of containment measures should allow for a strengthening rebound over the spring and summer.”

                    Full release here.

                    ECB Villeroy: Green central bank action is not about easing

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                      ActionForex.com
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                      ECB Governing Council member Francois Villeroy de Galhau said he proposed to “decarbonizing the ECB’s balance sheet with a pragmatic, progressive and targeted approach to all corporate assets whether they be held on the central bank’s balance sheet as purchases or taken as collateral.”

                      Villeroy noted that the stagflationary nature of climate change was the reason to take it into account. It could challenge the price stability mandate by pushing up prices while weighing on the economy.

                      Though, he also noted, “the greening of central bank action is not about additional monetary policy easing but recalibrating our tools”.

                      Gold recovery stalled after hitting 55 D EMA, staying bearish

                        By
                        ActionForex.com
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                        Gold’s recovery lost momentum with 4 hour MACD crossed below signal line. That came after hitting 55 day EMA, and well ahead of 1875.59 near term resistance. Overall outlook stays bearish that decline from 1959.16, as the third leg of the corrective pattern from 2075.18, is in favor to continue.

                        On the downside, break of 1818.66 minor support will bring retest of 1784.67 first. Break will target 1764.31 and then 38.2% retracement of 1160.17 to 2075.18 at 1725.64. Nevertheless, break of 1875.59 will argue that the falling leg form 1959.16 has completed and bring stronger rebound.

                        RBA Harper: Still plenty of excess capacity in the economy

                          By
                          ActionForex.com
                          -

                          RBA board member Ian Harper said there’s “still plenty of excess capacity in the economy”. The tendency for monetary stimulus to product an asset-price bubble is “way off where we’re presently headed”. Policymakers indeed wanted asset prices to be increasing to speed up investment. Harper added, “the bank can continue to buy bonds for as long as it likes, there’s no obstacle to that.”

                          “The recent changes that the Fed made, well that was to bring them up to where we are basically,” he said. “We’ve never religiously or rigidly interpreted the timeframe over which we would seek the inflation rate to be within the target band.”

                          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.

                            US oil inventories dropped -6.6m barrels, WTI rally lost momentum but further rise still in favor

                              By
                              ActionForex.com
                              -

                              US commercial crude oil inventories dropped -6.6m barrels in the week ending February 5, smaller than expectation of -0.9m barrels. At 469.0m barrels, oil inventories are just about 2% above the five year average for this time of year. Gasoline inventories rose 4.3m barrels. Distillate inventories dropped -1.7m barrels. Propane/propylene inventories dropped -4.5m barrels. Commercial petroleum inventories dropped -11.2m barrels.

                              WTI oil price rally continued this week and met 100% projection of 47.24 to 53.92 from 51.58 at 58.26 already. Though, upside momentum diminished mildly since then, as seen in 4 hour MACD. For now, further rise is still expected as long as 57.18 minor support holds. Sustained break of 58.26 will confirm underlying momentum. Some upside acceleration could then be seen to 161.8% projection at 62.38. However, break of 57.18 will indicate short term topping and bring deeper pull back.

                              ECB Panetta: Innovations not well designed can become a source of financial disruption

                                By
                                ActionForex.com
                                -

                                ECB Executive Board member Fabio Panetta said in a speech that “a digital euro represents a natural evolution in response to this transformation – not only to underpin efficiency and innovation, but also to preserve the role of the central bank in offering safe means of payment”.

                                A key goal of digital euro should “should therefore be to preserve a fine balance between sovereign and private money to ensure payments remain stable and efficient.” However, “if innovations in central bank money are not well designed, they can become a source of financial disruption.”

                                Panetta added that ECB will publish the consultation replies on digital euro in the spring. That would provided the input to the decision on, towards the middle of the year, about whether or not to formally launch a digital euro preparation project.

                                Full speech here.

                                US CPI unchanged at 1.4% yoy in Jan, core CPI slowed to 1.4% yoy

                                  By
                                  ActionForex.com
                                  -

                                  US CPI rose 0.3% mom in January, matched expectations. Core CPI rose 0.0% mom, below expectation of 0.2% mom. Annually, headline CPI was unchanged at 1.4% yoy, below expectation of 1.5% yoy. Core CPI slowed to 1.4% yoy, down from 1.6% yoy, missed expectation of 1.6% yoy.

                                  Full release here.

                                  GBP/USD accelerates up as 10-yr Gilt yield approaches 0.5 psychological level

                                    By
                                    ActionForex.com
                                    -

                                    Sterling’s rally gains strong upside momentum again today, with the support of rise in UK treasury yields. 10-year Gilt yield is currently up 0.016% at 0.48%. It’s now pressing an important psychological zone around 0.50%., which was the floor before the pandemic.

                                    4 hour MACD in GBP/USD suggests that the rally in accelerating. Focus is now on 61.8% projection of 1.1409 to 1.3482 from 1.2675 at 1.3956. Decisive break there will bring further rally to 1.4376 (2018 high). But to do that, we’d probably need 10-year Gilt yield to break through 0.50% decisively. We’ll keep an eye on both developments.

                                    France industrial output dropped -0.8% mom in Dec, manufacturing output down -1.7% mom

                                      By
                                      ActionForex.com
                                      -

                                      France industrial output dropped -0.8% mom in December, second straight month of decline. Manufacturing output dropped -1.7% mom, first contraction since April 2020. Compared to prepandemic levels, industrial output were down -4.9% comparing to February, manufacturing output down -5.7%.

                                      Full release here.

                                      BoJ Nakamura: Prolonged holding of assets could affect market functions

                                        By
                                        ActionForex.com
                                        -

                                        BoJ board member Toyoaki Nakamura said the March policy review will seek ways to make the easing framework more “effective” and “sustainable”. The review will also looking into whether the asset purchases and various tools are “exerting intended effects”.

                                        Nakamura maintained that ETF purchases “will remain a necessary tool” to eradicate the deflationary mindset”. But “this is not just about ETFs but by buying huge amounts of assets and holding onto them for a prolonged period, the BOJ could affect market functions. That is something we need to be mindful of”.

                                        Australia Westpac consumer sentiment rose to 1.9%, remains extraordinarily confident

                                          By
                                          ActionForex.com
                                          -

                                          Australia Westpac consumer sentiment rose 1.9% to 109.1 in February. The index hit a 10-year high at 112.0 in December, then retreated to 107.0 in January. February’s bound-back “signals that consumer remains extraordinarily confident”, noted Westpac.

                                          Westpac said RBA’s move to extend the QE program by AUD 100B in February, not in March, “emphasises the Board’s commitment to providing as much support as necessary to assist the economy in closing the output gap that has opened up during the pandemic.”

                                          It expects further extensions of QE after RBA’s next program completes in October.

                                          Full release here.

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