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WTI crude oil in deep retreat, short term top in place ahead of 50

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    ActionForex.com
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    WTI crude oil drops sharply today, following broad based risk aversion. Considering bearish divergence condition in 4 hour MACD, and the proximity to 50 psychological level, a short term top could be formed at 49.25. Break of 45.66 support will confirm this case. Deeper correction would be seen to cluster support level at 43.50, 38.2% retracement of 33.50 to 49.25 at 43.23. Nevertheless, strong support from 45.66 could set the stage for another take on 50 before topping.

    PBoC left 1-yr LPR unchanged at 3.85%, USD/CNH recovers in consolidation

      By
      ActionForex.com
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      China’s PBoC left the one-year loan prime rate (LPR) unchanged at 3.85% today. The five-year LPR was held at 4.65%. These benchmark lending rates for corporate and household loans were kept unchanged for the eight straight months. Some economists saw that with the economic recovery on the right track, PBoC policy focus would gradually shift away from supporting growth. Keeping LPRs unchanged would provide the base for the central bank to hike its policy rates next year.

      Offshore Yuan trades a little weaker today, mainly as dollar recovers. USD/CNH continues to consolidate above 6.4968 temporary low. Near term outlook stays bearish, with another fall expected, as long as 6.5968 resistance holds. USD/CNH could have a take on 61.8% retracement of 6.0153 to 7.1953 at 6.4661 before forming a bottom.

      Japan Cabinet approves record budget for fiscal 2021

        By
        ActionForex.com
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        Japan’s Cabinet approved today a record JPY 106.61T draft budget for fiscal 2021. New bond issuances would soar JPY 11.04T from the current JPY 43.60T finance the budget. That’s the first year-on-year rise on an initial basis since fiscal 2010.

        “Amid the coronavirus spread, the hardest part was that we had to strike a balance among preventing infections from spreading, revitalizing the economy and restoring fiscal health,” Finance Minister Taro Aso said. He added that it’s “regrettable” that bond dependency ratio would rise again.

        GBP/CHF gapped down as Brexit trade negotiation missed another deadline

          By
          ActionForex.com
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          Sterling gaps lower as Brexit trade negotiation missed yet another deadline. European Parliament wouldn’t have time to scrutinize and approve the texts even if a deal could be reached in the next few days. Both sides have to make preparations for a “no-deal period” at least, as the end of the transition looms.

          Additionally, a new variant of the coronavirus virus has plunged south-east England into a tier-4 lockdown. Countries including France, Germany, Italy, Ireland and the Netherlands introduced bans on arrivals from the UK.

          While GBP/CHF gapped down today and stayed pressured through the Asian session, it’s still comfortably trading around the mid-point of recently established range. No special technical development was made as traders are, understandably, refusing to commit to a direction.

          Canada retail sales rose 0.4% in Oct, up in 6 of 11 subsectors

            By
            ActionForex.com
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            Canada retail sales rose 0.4% mom to CAD 54.6B in October, above expectation of 0.1% mom. That’s the sixth consecutive monthly increase since the record decline in April. Retail sales increased in 6 of 11 subsectors, representing 50.9% of retail trade. Core retail sales, excluding gasoline stations and motor vehicle and parts dealers, edged up 0.3% mom.

            Full release here.

            EU Barnier: Path to Brexit trade agreement is very narrow

              By
              ActionForex.com
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              EU chief Brexit negotiation Michel Barnier told the European Parliament, “It’s the moment of truth. There is a chance of getting an agreement but the path to such an agreement is very narrow.”

              “We find ourselves in a very serious and sombre situation,” he added. “We have very little time remaining, just a few hours to work through these negotiations in a useful fashion if we want this agreement to enter into force on the first of January.”

              “That is where we get to one of the most difficult issues at the moment. Fisheries being part and parcel of the trade relationship,” said Barnier. “We have to be prepared for all eventualities.”

              Separately, UK Prime Minister Boris Johnson said, “obviously the UK’s position is always that we want to keeping talking if there’s any chance of a deal… But we’ve also got to recognise that the UK’s got to be able to control its own laws, it’s what people voted for, and we’ve also got to be able to control our waters and fishing rights.”

              He added: “our door is open, we’ll keep talking but I have to say things are looking difficult. There’s a gap that needs to be bridged.”

              Germany Ifo business climate rose to 92.1, overall economy showing resilience

                By
                ActionForex.com
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                Germany Ifo Business Climate rose to 92.1 in December, up from 90.7, above expectation of 90.5. Current Assessment index rose to 91.3, up from 90.0, above expectation of 89.3. Expectations index rose to 92.8, up from 91.5, matched expectations. By sector, manufacturing rose markedly from 4.0 to 8.9. Services rose from -3.1 to -0.3. Trade rose from -4.0 to 0.3. Construction was unchanged at -0.5.

                Ifo said: “Companies were more satisfied with their current business situation. They were also less skeptical about the coming six months. While the lockdown is hitting certain sectors hard, overall the German economy is showing resilience.

                Full release here.

                UK retail sales dropped -3.8% mom in Nov, ex-fuel sales dropped -2.6% mom

                  By
                  ActionForex.com
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                  UK retail sales dropped -3.8% mom in November, worse than expectation of -3.3% mom. Ex-fuel sales dropped -2.6% mom, also below expectation of -2.3% mom. Over the year, headline retail sales rose 2.8% yoy versus expectation of 2.8% yoy. Ex-fuel sales rose 5.6% yoy versus expectation of 6.2% yoy.

                  Full release here.

                  New Zealand imports tumbled -17% in Nov, exports dropped -0.2%

                    By
                    ActionForex.com
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                    New Zealand goods exports dropped -0.2% yoy to NZD 5.2B in November. Goods imports dropped -17% yoy in NZD 5.0B. Monthly trade balance was a surplus of NZD 252m, slightly above expectation of NZD 250m. That’s the first November surplus since 2013.

                    There were contrasting movements in exports to top destinations. Exports to China, US and EU were up. Exports to Australia and Japan were down. Imports were down from all top trading partners, including China, EU, Australia, US and Japan.

                    Full release here.

                    New Zealand ANZ business confidence rose to 9.4, first positive since 2017

                      By
                      ActionForex.com
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                      New Zealand ANZ Business Confidence jumped to 9.4 in December, up from-6.9. That’s the first positive reading since August 2017. Own Activity index rose to 21.7, up from 9.1, highest since March 2018.

                      ANZ added, “the New Zealand economy is showing impressive resilience. After a 14% bounceback in the September quarter, the economy is the same size it was pre-COVID.” Nevertheless, “it’s not the same shape” with “some real stresses and strains, in both overheated sectors like construction, and chilled ones like tourism.” Also, “we expect a technical recession in Q4 and Q1 as the policy-fuelled bounce fades and the tourism hole hurts”.

                      Full release here.

                       

                      Japan government upgrades fiscal 2021 GDP growth forecast to record 4%

                        By
                        ActionForex.com
                        -

                        Japan’s government upgraded fiscal 2021 (starting in April) GDP growth forecast to 4.0%, up form July estimate of 3.4%. If realized, that would be the largest expansion since data became comparable in 1995. Also, real GDP in March quarter of 2022 would be around the pre-pandemic level in December quarter of 2019.

                        The government’s newly approved JPY 74 trillion policy package would “underpin the economy and boost private demand such as capital expenditures”, said a Cabinet official.

                        Policymakers need to keep a close watch “on downside risks to the economy in Japan and overseas from the pandemic and impacts from moves in financial capital markets,” he added.

                        BoJ stands pat, to conduct assessment on monetary easing

                          By
                          ActionForex.com
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                          BoJ announced to extend the during of the Special Program to Support Financing in Response to the Novel Coronavirus (COVID-19) by 6 months. Other than that, monetary policy was kept unchanged. Under the yield curve control framework, short term interest rate target was held at -0.1%. 10-year JGB yield target is held at around 0%, with unlimited purchase of government bonds.

                          Also, BoJ will “conduct an assessment for further effective and sustainable monetary easing, with a view to supporting the economy and thereby achieving the price stability target of 2 percent”. Nevertheless, the framework of QQE with YCC has been “working well to date” and thus there is “no need to change it. The results of the review will likely be be published in March.

                          The central bank said Japan’s economy is “likely to follow an improving trend” with gradual waning of COVID-19 impact. But pace of improvement is expected to be “only moderate”. Year-on-year rate of core CPI is “likely to be negative for the time being”. But it’s expected to turn positive and then increase gradually.

                          Full statement here.

                          US initial jobless claims rose to 885k, continuing claims dropped to 5.5m

                            By
                            ActionForex.com
                            -

                            US initial jobless claims rose 23k to 885k in the week ending December 12, well above expectation of a fall to780k. Four-week moving average of initial claims rose 34.3k to 812.5k.

                            Continuing claims dropped -273k to 5508k in the week ending December 5. Four-week moving average of continuing claims dropped -215.5k to 5726k.

                            Also released, housing starts rose to 1.55m annualized rate in November. Building permits rose to 1.64m. Philly Fed manufacturing index dropped sharply to 11.1, down from 26.3, missed expectation of 20.0.

                            BoE stands pat, Q4 a little weaker than expected due to coronavirus

                              By
                              ActionForex.com
                              -

                              BoE judged that “the existing stance of monetary policy remains appropriate”. Bank Rate was held unchanged at 0.10%. Total target stock of asset purchase were also kept at GBP 895B. Both decisions were unanimous.

                              It also pledged to “stands ready to take whatever additional action” if inflation outlook weakens. Also, it maintained “the Committee does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably.”

                              The central bank noted that the roll out of coronavirus vaccines is “likely to reduce the downside risks to the economic outlook from Covid”. But Q4 GDP is likely to be a “little weaker than expected” due to increase in Covid cases and associated re-imposition of restrictions

                              Outlook remains “unusually uncertain”, depending of “revolution of the pandemic and measures taken to protect public health, as well as the nature of, and transition to, the new trading arrangements between the European Union and the United Kingdom”.

                              Full statement here.

                              AUD/CAD breaks 0.9696 resistance, resuming up trend from March low

                                By
                                ActionForex.com
                                -

                                Australia Dollar powers up today and it’s currently trading as the strongest one. Much better than expected job data is a bullish factor for the Aussie. Also, traders are seeing the impact from China’s import restrictions as having little impact to the Australian economy.

                                AUD/CAD finally follws AUD/USD, and breaks 0.9696 key resistance. Sustained trading above there will confirm resumption of whole rebound from 0.8066 low. Next near term target will be 38.2% projection of 0.8066 to 0.9696 from 0.9247 at 0.9870. Sustained break there could prompt further upside acceleration.

                                Eurozone CPI finalize at -0.3% in Nov, EU at 0.2%

                                  By
                                  ActionForex.com
                                  -

                                  Eurozone CPI was finalized at -0.3% yoy in November, core CPI at 0.2% yoy. The highest contribution to the annual euro area inflation rate came from food, alcohol & tobacco (+0.36%), followed by services (+0.25 pp), non-energy industrial goods (-0.07 pp) and energy (-0.82 pp).

                                  EU CPI was finalized at 0.2% yoy. The lowest annual rates were registered in Greece (-2.1%), Estonia (-1.2%), Slovenia and Cyprus (both -1.1%). The highest annual rates were recorded in Poland (3.7%), Hungary and Czechia (both 2.8%). Compared with October, annual inflation fell in fourteen Member States, remained stable in four and rose in nine.

                                  Full release here.

                                  Gold breaks 1875 resistance and 55 D EMA, stronger rally ahead

                                    By
                                    ActionForex.com
                                    -

                                    Gold surges to as high as 1883.12 so far today. Break of 1875.27 resistance confirms resumption of whole rebound from 1764.31. Further rise is now expected as long as 1844.78 support holds. Next near term target is 61.8% projection of 1764.31 to 1875.27 from 1819.05 at 1887.62. Break will target 100% projection at 1930.01.

                                    More importantly, the strong break of 55 day EMA reaffirms the bullish case that correction from 2075.18 has completed with three waves down to 1764.31. Break of 1965.50 resistance would resume long term up trend for new record high.

                                    SNB keeps sight deposit rate at -0.75%, pandemic to be back under control in foreseeable future

                                      By
                                      ActionForex.com
                                      -

                                      SNB kept sight deposits rate unchanged at -0.75%. Also, “in light of the highly valued Swiss franc, the SNB remains willing to intervene more strongly in the foreign exchange market”.

                                      In the baseline scenario, SNB expects the pandemic to be “brought back under control in the foreseeable future”. Global recovery should therefore “regain momentum in the course of next year”. But production capacity will be “unfertilized for some time” and inflation will remain modest in most countries.

                                      For Swiss, SNB expects GDP to contract by around -3% this year. GDP will then grow 2.5% to 3.0% for 2021, but recovery remains “incomplete”. Conditional inflation forecast through the end of 2021 is revised slightly lower, “primarily due to the renewed deterioration in the economic situation as a result of the second wave of the pandemic”. Overall inflation would be at -0.7% in 2020, 0.0% in 2021, and 0.2% in 2022.

                                      Full statement here.

                                      Australia employment grew 90k in Nov, unemployment rate dropped to 6.8%

                                        By
                                        ActionForex.com
                                        -

                                        Australia employment grew 90k in November, to 12.86m, much better than expectation of 50.0k. Over, the year, though, employment was still down -0.6% or -83.1k. Looking at some details, Full-time jobs rose 84.2k to 8.73m. Part-time jobs rose 5.8k to 4.14m.

                                        Unemployment rate dropped -0.2% to 6.8%, better than expectation of 7.0%. Participation rate rose 0.3% to 66.1%. Hours worked rose 2.5% mom.

                                        Full release here.

                                        New Zealand GDP grew record 13% qoq in Q3, NZD/USD upside breakout

                                          By
                                          ActionForex.com
                                          -

                                          New Zealand GDP grew 14.0% qoq in Q3, stronger than expectation of 12.8% qoq. That’s also the largest quarterly rise on record. However, on an annual bases, GDP dropped -2.2% over the year. Growth in Q3 was not enough to fully makeup for the economic impact of the coronavirus pandemic and the responding measures.

                                          Looking at some more details, Services industries rose 11.1% qoq. Goods-producing industries rose 26.0% qoq. Primary industries rose 4.6% qoq.

                                          Full release here.

                                          NZD/USD broke out to the upside after the release. Further rise is expected as long as 0.7054 minor support holds. Sustained trading above 61.8% projection of 0.5920 to 0.6797 from 0.6589 at 0.7131, could bring upside re-acceleration. Next target is 100% projection at 0.7466.

                                          However, considering relatively weak upside momentum as seen in daily MACD, break of 0.7054 support will indicate rejection by 0.7131. That’s also an early sign of short term topping. Deep pull back could be seen back to 55 day EMA (now at 0.6883).

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