Eurozone PMI manufacturing finalized at 54.8, solid expansion continued

    Eurozone PMI Manufacturing was finalized at 54.8 in January, down from December’s 55.2. Markit said the marked gains in new orders and output sustained. But delivery delays intensified, leading to rapid rise in purchase prices. Looking at some member states, the Netherlands hit 28-month high at 58.8. Germany retreated to 4-month low at 47.1. Italy hit 34-month high at 55.1. Australia hit 26-month high at 54.2. France recovered to 6-month-high at 51.6. But Spain contracted at 49.3, 7-month low.

    Chris Williamson, Chief Business Economist at IHS Markit said: “Eurozone manufacturing output continued to expand at a solid pace at the start of 2021, though growth has weakened to the lowest since the recovery began as new lockdown measures and supply shortages pose further challenges to producers across the region… While future prospects brightened, with manufacturers’ optimism striking a three-year high in January to sound a reassuring note of confidence at the start of the year, any potential delays to the vaccine roll-outs will add an additional layer of uncertainty to the outlook.”

    Full release here.

    GBP/CHF upside breakout, USD/CHF following

      GBP/CHF hits as high as 1.2271 so far today. The break of 1.2259 resistance is tentatively seen as signal of resuming whole rebound from 1.1102. Further rise is now expected as long as 1.2145 minor support holds. Next target is 61.8% projection of 1.1102 to 1.2259 from 1.1683 at 1.2398. Firm break there would bring upside acceleration to 100% projection at 1.2840.

      USD/CHF’s break of 0.8925 also suggests resumption of rebound from 0.8756. Further rise should be seen to 0.8998 support turned resistance first, which is close to 100% projection of 0.8756 to 0.8925 from 0.8837. Firm break there will argue that rebound from 0.8756 is indeed correcting the whole down trend from 0.9901 to 0.8756, and target 38.2% retracement at 0.9193.

      Silver accelerating towards 30 after gap up, next is 33.1

        Silver’s rally accelerates after gapping up today and hits as high as 29.22 so far. The strong break of 27.91 resistance confirms resumption of near term rise from 21.88. Next target is 100% projection of 21.88 to 27.91 from 24.12 at 30.15, which is close to 29.84 high.

        We’re indeed looking at resumption of whole medium term up trend from 11.67, as consolidation pattern from 29.84 has apparently completed at 21.88. Decisive break of 29.84/30.15 will confirm this bullish case. Stronger upside acceleration should then be seen to 61.8% projection of 11.67 to 29.84 from 21.88 at 33.10.

        Japan PMI manufacturing finalized at 49.8, but short-term prospects turning a corner

          Japan PMI Manufacturing was finalized at 49.8 in January, slightly down from December’s 50.0.

          Usamah Bhatti, Economist at IHS Markit, said: “The Japanese manufacturing sector slipped back into contraction territory at the start of the year… as a rise in COVID-19 infections and issuance of a state of emergency dampened operating conditions… Manufacturers indicated a renewed fall in output levels… firms were further discouraged to replace voluntary leavers in the sector as staffing levels reduced.

          “Nonetheless, the short-term prospects for the Japanese manufacturing sector appear to be turning a corner, with firms reporting a stable level of new orders. Businesses were also optimistic that the pandemic would subside over the coming year, triggering a wider economic recovery in Japan which would boost output levels. IHS Markit estimates industrial production will grow 7.1% in 2021, although this is from a lower base and does not fully recover the output lost in 2020.”

          Full release here.

          China Caixin PMI manufacturing dropped to 51.5, dragged by subdued overseas demand

            China Caixin PMI Manufacturing dropped to 51.5 in January, down from 53.0, missed expectation of 52.7. That’s also the lowest reading in seven months. Markit said that production and new orders both expanded at notably slower rates at the start of the year. There was fresh decline in new export business. Input costs and output prices both rose sharply.

            Wang Zhe, Senior Economist at Caixin Insight Group said: “Overall, the manufacturing sector continued to recover in January, but the momentum of both supply and demand weakened, dragged by subdued overseas demand. The gauge for future output expectations was the lowest since May last year though it remained in positive territory, showing manufacturing entrepreneurs were still worried about the sustainability of the economic recovery. In addition, the weakening job market and the sharp increase in inflationary pressure should not be ignored.”

            Full release here.

            Released over the weekend, the official PMI manufacturing dropped to 51.3 in January, down from 51.9, below expectation of 51.5. PMP non-manufacturing dropped sharply to 52.4, down from 55.7, missed expectation of 55.1.

            Australia AiG manufacturing rose to 55.3, 5 of 6 sectors reported positive conditions

              Australia AiG Performance of Manufacturing rose to 55.3, up from 52.1, indicating a stronger improvement in conditions over the summer holiday period. Five of the six manufacturing sectors reported positive trading conditions (results over 50 in trend terms), with the strongest results reported from manufacturers in machinery & equipment and chemicals, pharmaceuticals, cleaning, rubber, petroleum & related products.

              Full release here.

              US personal income rose 0.6% mom in Dec, spending dropped -0.2% mom

                US personal income rose 0.6% mom, or USD 116.6B in December, well above expectation of 0.1% mom. Spending dropped -0.2% mom, or USD -27.9B, versus expectation of -0.40% mom. Headline PCE pride index accelerated to 1.3% yoy. Core PCE price index accelerated to 1.5% yoy.

                Full release here.

                Canada GDP grew 0.7% mom in Nov, above expectations

                  Canada GDP grew 0.7% mom in November, above expectation of 0.4% mom. This is the seventh consecutive monthly gain. Total economic activity was still around -3% below the pre-pandemic level in February. Good-producing industries grew 1.2% mom while services-producing industries rose 0.5% mom. 14 of 20 industrial sectors posted gains. Meanwhile, preliminary information indicates an approximate 0.3% mom GDP growth in December.

                  Full release here.

                  Also released, Canada IPPI rose 1.5% mom in December versus expectation of 1.4% mom. RMPI rose 3.5% mom versus expectation of 2.5% mom.

                  Bitcoin ready for new high with triangle consolidation completed

                    Bitcoin’s strong rally today, with 34899 resistance firmly taken out, suggests that the five-wave triangle consolidation pattern has completed at 29283. That’s slightly early than expected, leaving 28989 support untested. Anyway, for now, further rise should be seen to 40000/41964 resistance zone.

                    We’d expect this resistance zone to be taken out to resume the larger up trend to 61.8% projection of 17629 to 41964 from 29283 at 44322. The move out of a triangle pattern could be a terminal fifth wave. Hence, we’d look for strong resistance around 44322, to limit upside to form a “real” top. We’ll hold on to this bullish view as long as 31987 support holds.

                    German GDP grew 0.1% qoq in Q4, down -5% for whole 2020

                      Germany GDP grew 0.1% qoq in Q4, above expectation of 0.0% qoq. DeStatis said in Q4, “the recovery process slowed due to the second coronavirus wave and another lockdown imposed at the end of the year. This affected household consumption in particular, while exports of goods and gross fixed capital formation in construction supported the economy. ” For the year 2020 as a whole, GDP dropped -5.0%.

                      Full release here.

                      Also from Germany, unemployment dropped -41k in December versus expectation of 7k rise. Unemployment rate was unchanged at 6.0%. Import price index rose 0.6% mom in December, versus expectation of 1.0% mom.

                      Swiss KOF dropped to 96.5, gloomy economic prospects at beginning of the year

                        Swiss KOF Economic Barometer dropped to 96.5 in January, down from 104.1, missed expectation of 101.5, and back below long-term average of 100. KOF said, “after reaching an interim pandemic high in September, COVID-​19 is now weighing more heavily on the economy again. The pandemic is causing gloomy economic prospects at the beginning of the year.”

                        “Responsible for the decline are in particular the indicator bundles for accommodation and food service activities as well as other services,” KOF added. “But the outlook for manufacturing, financial and insurance services and private consumer demand is also less favourable than before. The outlook for construction is stable and foreign demand could provide a stronger impulse.”

                        Full release here.

                        France GDP dropped -1.3% qoq in Q4 on lockdown and curfews

                          France GDP contracted -1.3% qoq in Q4, better than expectation of -3.9% qoq. GDP was -5% below its level a year ago. Insee said that “the loss of activity this quarter was marked by the lockdown in effect from the end of October to mid-December and by the curfews put in place during the months of October and December”. Over the full 2020, GDP dropped -8.3%.

                          Looking at some details, household consumption dropped -5.4%. Gross fixed capital formation grew 2.4%. Total domestic demand dropped -2.7%. Exports 4.8%, more than imports’s 1.3%. Foreign trade made a positive contribution to GDP growth, added 0.9%. Change in inventories also made a positive contribution by 0.4%.

                          Full release here.

                          Japan industrial production dropped -1.6% mom in Dec, but rebound expected in Jan

                            Japan industrial production dropped -1.6% mom in December, below expectation of -1.5% mom. Though, on the bright side, manufacturers surveyed by the Ministry of Economy, Trade and Industry (METI) expected output to rebound 8.9% in January and decline 0.3% in February. The government also maintained that industrial production was picking up.

                            Also from Japan, unemployment rate was unchanged at 2.9% in December, better than expectation of a tick up to 3.0%. Tokyo CPI core improved to -0.4% yoy in January, up from -0.9% yoy, above expectation of -0.6% yoy.

                            BoJ Opinions: Downward pressure strong but moderate improving trend maintained

                              In the Summary of Opinions at BoJ’s January 20-21 meeting, it’s noted, “the impact of the reinstatement of the state of emergency for 11 prefectures… should be monitored carefully given that private consumption in these prefectures accounts for nearly 60 percent of Japan’s.” While downward pressure is “likely to be strong for the time being”, the economy is expected to “maintain its moderate improving trend”.

                              BoJ also noted, “this year, it is necessary to closely monitor the broad impact of political developments overseas, such as the change of government in the United States and the replacement of the Chancellor of Germany, on economic activities and financial conditions at home and abroad.”

                              On monetary policy, one member said, “in terms of yield curve control and purchases of assets such as exchange-traded funds (ETFs), it is crucial for the Bank to conduct them more flexibly in a prioritized manner while maintaining the current policy framework.”

                              Full Summary of Opinions here.

                              US initial jobless claims dropped to 847k, continuing claims down to 4.77m

                                US initial jobless claims dropped -67k to 847k in the week ending January 23, below expectation of 875k. Four-week moving average of initial claims rose 16.3k to 868k.

                                Continuing claims dropped -203k to 4771 in the week ending January 16. Four-week moving average of continuing claims dropped -106.8k to 4998k.

                                Full release here.

                                US GDP grew 4% annualized in Q4, missed expectations

                                  According to advance estimate, US GDP grew at an annual rate of 4.0% in Q4, below expectation of 4.2%. BEA said: “The increase in real GDP reflected increases in exports, nonresidential fixed investment, personal consumption expenditures (PCE), residential fixed investment, and private inventory investment that were partly offset by decreases in state and local government spending and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased”.

                                  Full release here.

                                  Eurozone economic sentiment dropped to 91.5, led by retail trade

                                    Eurozone Economic Sentiment Indicator dropped to 91.5 in January, down from 92.4, above expectation of 88.7. The ESI’s decrease was driven by sliding confidence in retail trade and smaller losses in services and consumer confidence. Amongst the largest euro-area economies, the ESI dropped in France (-2.6) and Germany (-2.3), while it improved in Spain (+2.4), the Netherlands (+0.6) and Italy (+0.4)

                                    Look at some details, services confidence dropped from -17.1 to -17.8. Consumer confidence dropped from -13.8 to -15.5. Retail trade confidence dropped sharply from -12.9 to -18.9. Construction confidence improved slightly from -8.0 to -7.7. Employment Expectations Indicator dropped from 90.4 to 88.8.

                                    Full release here.

                                    ECB Rehn: Eurozone inflation outlook is too low for my taste

                                      ECB Governing Council member Olli Rehn said an a Bloomberg TV interview, that Eurozone’s inflation outlook is “too low for my taste, and more importantly, too low for our aim”.

                                      But, “I would not enter into a speculation on one or another instrument in our monetary toolbox. I would just say we are indeed ready to use and adjust all our instruments as appropriate,” he said.

                                      “We are closely monitoring developments in the exchange rate, especially regarding the inflation outlook,” he added.

                                      GBP/AUD accelerates up on risk selloff, pressing 1.7923 near term resistance

                                        GBP/AUD’s rebound from 1.7412 accelerated this week on the back of steep risk pull back, and resilience in Sterling. The cross hits as high as 1.7944 so far and stays firm.

                                        Immediate focus is now on 1.7923 resistance. Decisive break there will argue that fall from 1.8523 has completed. Rise from 1.7412 could indeed be correcting whole down trend from 2.0840 to 1.7412. In this case, stronger rally would be seen through 1.8523 to 38.2% retracement of 2.0840 to 1.7412 at 1.8721 in short to medium term.

                                        However, rejection by 1.7923 will retain near term bearishness. Break of 1.7700 support will bring retest of 1.7412 low.

                                        Gold down mildly but holding on to 1832 support

                                          Gold weakened mildly following Dollar’s strength but still stays above 1832.40 support. Outlook is unchanged that price actions from 1810.07 is seen as a corrective move, even though another rise cannot be ruled out. Firm break of 1832.40 will bring retest of 1810.07. Break will resume whole fall from 1959.10.

                                          The decline from 1959.16 is seen as the third leg of the corrective pattern from 2075.18. Deeper fall is expected through 1764.31 before completing the pattern.