US PPI for final demand rose 0.8% mom in February, below expectation of 1.0% mom. On an unadjusted basis, final demand prices moved up 10.0 yoy for the 12 months ended in February, matched expectations.
Prices for final demand goods was up 2.4% mom while prices for final demand services was unchanged.
German ZEW Economic Sentiment tumbled sharply from 54.3 to -39.3 in March, well below expectation of 10.3. That -93.6 pts decline was the largest on record, since the survey began in December 1991. That’s even worse than the -58.2 pts fall at the beginning of the pandemic. Current Situation Index dropped from -8.1 to -21.4, slightly better than expectation of -22.5.
Eurozone ZEW Economic Sentiment dropped from 48.6 to -38.7, below expectation of 49.3. Current Situation Index dropped 22.5 pts to -21.9.
Inflation expectations indicator stands at jumped sharply from -35.1 to 69.5. 76.5 per cent of the experts expect the inflation rate to increase in the next six months.
“A recession is becoming more and more likely. The war in Ukraine and the sanctions against Russia are significantly dampening the economic outlook for Germany. The collapsing economic expectations are accompanied by an extreme rise in inflation expectations. The experts therefore expect a stagflation in the coming months. The worsened outlook affects practically all sectors of the German economy, but especially the energy-intensive sectors and the financial sector,” comments ZEW President Achim Wambach on current expectations.
Eurozone industrial production rose 0.0% mom in January, below expectation of 0.4% mom. Production of non-durable consumer goods rose by 3.1%, while production of intermediate goods and energy both fell by -0.3%, durable consumer goods by -0.5% and capital goods by -2.4%.
EU industrial production rose 0.4% mom. Among Member States for which data are available, the largest monthly increases were registered in Austria (+6.2%), Czechia (+3.1%) and Poland (+3.0%). The highest decreases were observed in Estonia (-6.1%), Portugal (-5.0%) and Greece (-4.1%).
UK number of payrolled employees rose 275k in February. Comparing with prepandemic level in February 2020, number of payrolled employees was up 662k. Claimant count dropped -48.1k, versus expectation of 20.3k rise.
In the three months to January, unemployment rate dropped from 4.1% to 3.9% in the three months to January, better than expectation of 4.0%.
Average earnings including bonus rose 4.8% 3moy in January, above expectation of 4.6%. Average earnings excluding bonus rose 3.8% 3moy, also above expectation of 3.7%.
Gold’s pull back from 2070.06 picks up momentum today. The break of 1960.83 minor support should confirm short term topping, after initial rejection by 2074.84 high. Deeper decline is now expected as long as 2008.87 minor resistance holds, towards 55 day EMA (now at 1882.52).
The pull back from 2070.06 could either be a correction to rise from 1682.60 only. Or it could be the third led of the corrective pattern from 2074.84 high. Strong rebound from 55 day EMA will favor the former case, and bring upside breakout through 2074.84 sooner. However, sustained break of 55 day EMA will favor the latter case, and bring deeper fall back to 1676.65 support.
New Zealand BNZ Performance of Services Index rose slightly from 46.0 to 48.6 in February. Activity/sales rose from 44.6 to 50.7. Employment dropped from 47.0 to 45.0. New orders/business rose from 41.2 to 53.6. Stocks/inventories rose from 48.0 to 50.0. Supplier deliveries dropped from 43.4 to 34.4.
BNZ Senior Economist Doug Steel said that “February marks the PSI’s seventh consecutive month below the breakeven 50 mark. Pain is accumulating. While there were some overs and unders in the components, all remain below their respective long-term averages.”
In the minutes of March 1 meeting, RBA reiterated that it will not hike cash rate “until actual inflation is sustainably within the 2 to 3 per cent target band. Now, it was “too early to conclude that” inflation is “sustainably within the target band”.
There were “uncertainties about how persistent the pick-up in inflation”. Wage growth “remained modest”, and “it was likely to be some time before aggregate wages growth would be at a rate consistent with inflation being sustainably at target.”
Thus, RBA is “prepared to be patient” on lifting interest rate.
For the two months of January and February, China industrial production grew 7.5% yoy, well above expectation of 3.9% yoy. That’s the fastest pace since June 2021. Retail sales rose 6.7% yoy, also well above expectation of 3.0% yoy, also the fastest since June 2021. Fixed asset investment rose 12.2% yoy, above expectation of 5.0% yoy, highest since July 2021.
Separately, PBoC unexpectedly kept the rate of CNY 200B worth of one-year medium term lending facility (MLF) loans to some financial institutions unchanged at 2.85%. The operation resulted in a net injection of CNY 100B funds to the market. The central bank said it is for “maintaining banking system liquidity reasonably ample”.
Selloff in Yen continues today, lifted by global benchmark treasury yields. US 10-year yields resumes the medium term up trend and breaches 2.1 handle. Germany 10-year yield is up at above 0.35, breaking above February’s high. UK 10-year gilt yeas is also above 1.59, and should make a similar upside breakout soon.
CAD/JPY is benefiting from Yen’s weakness. With 92.16 resistance taken out, CAD/JPY is resuming the rise from 87.42. Immediate focus is now on 93.00 high, Firm break there will resume larger up trend from 73.80. Next near term target is 61.8% projection of 87.42 to 92.16 from 89.21 at 93.95. Decisive break there could prompt upside acceleration to 161.8% projection at 96.83. Nevertheless, break of 91.46 minor support will delay the bullish case and bring pull back first.
Chinese stocks plunged notably today on worries that continued surge of coronavirus cases would impose downside risks to the economy, at least for the near term.
More local symptomatic cases are reported so far this year than the whole of 2021. The even bigger question is on the vulnerability of people there against Omicron, as they’re given locally development vaccine by the government only. Import of common vaccines like Astrazeneca and Pfizer Biontech are banned.
Massive lockdown is imposed in the southern technology hub of Shenzhen, including suspension of public transports start today. Meanwhile, the financial hub of Shanghai is also locking down some housing and office complexes.
The Shanghai SSE closed down -2.60%, or -86.21 pts, at 3233.53. The recovery started last week could turn out to be very brief as the medium term decline from 3731.68 is set to continue downward as long as 3500.28 resistance holds.
In the picture, current development argues that whole up trend from 2440.90 (2018 low) has already complete with three waves up to 3731.68. Fall from there should at least have a take on 61.8% retracement at 2933.97 which is close to 3000 handle.
Swiss SECO export growth lowered 2022 GDP growth forecast from 3.0% to 2.8%. It said, “higher inflation and the Ukraine conflict are slowing the pace of recovery.” It added, “the war in Ukraine poses major risks for the global economy.” For 2023, growth projection is kept unchanged at 2.0%.
Recent appreciation of the Swiss Franc is ” helping to contain price pressures within Switzerland, but higher inflation rates are still to be expected on the domestic front.” 2022 inflation forecasts was raised sharply from 1.1% to 1.9, then slowed to 0.7% in 2023. .
SECO said: “The direct impact of the Ukraine conflict on Switzerland is likely to be limited, given the relatively low level of economic ties with Russia and Ukraine. Nonetheless, significant indirect effects are to be expected. World prices of key exports from Russia and Ukraine – energy resources as well as certain food staples and industrial metals – have soared. Global inflationary pressures will therefore remain high for now. ”
Ethereum is struggling in tight range above 2500 in quiet Asian session. It’s staying in the consolidation pattern from 2157, probably in form of a triangle. That is another rising leg could be seen as before the consolidation completes. But judging from current price actions, upside should be limited by 55 day EMA (now at 2852).
The whole down trend from 4863 is expected resume later. Break of 2293 support will be the first sign of downtrend resumption. Further break of 2157 low will pave the way through 2000 to 1715 support next.
Bitcoin carries the same picture. It’s trading in range around 38000 for now. Overall, it’s seen as extending the triangle consolidation pattern from 33000. Such pattern should complete after another rising leg. Break of 34264 will be the first sign of resumption of down trend from 68986. Further break of 33000 will target 29261 support next.
Stocks in Hong Kong and China are in selloff mode again today while other parts of Asia are mixed. A batch of factors are weighing on sentiments. The Financial Times and Washington Post reported on Sunday that Russia has asked China for help on military equipment for its invasion of Ukraine. But the spokesperson for China’s embassy in Washington said he’s “never heard of that”.
Separately, fresh lockdown was announced in China’s key technology hub in Shenzhen. Last week, the US SEC named its first batch of Chinese stocks as part of a crackdown on foreign firms that refuse to open their books to U.S. regulators. Didi Global suspended its listing in HK after failing to appease the Chinese government’s regulatory demands.
At the time of writing, Hong Kong HSI is down -3.81%, or -782.32 pts for the day, breaking through 20k psychological level. Near term outlook will stay bearish as long as the bottom of the gap last week holds, at 21321.79. However, downside might be “relatively limited” as it will enter into a long term support zone between 18278.80 (2016 low), and lower channel support. Also, both daily and weekly RSI are clearly in deep oversold region.
Canada added a massive 337k jobs in February, well above expectation of 123k. Full time jobs grew 122k while parti time jobs rose 215k. Goods-producing jobs rose 44k and producing jobs rose 293k.
Unemployment rate dropped sharply from 6.5% to 5.5%, better than expectation of 6.2%. The level was now below pre-pandemic rate at 5.7% in February 2020, and similar to record lower of 5.4% back in May 2019.
Total hours worked also rose 3.6%, exceeding pre-pandemic level for the first time. Employment rate rose 1% to 61.8%. Labor force participation rate rose 0.4% to 65.4%.
ECB Governing Council member Francois Villeroy de Galhau reiterated to BFM business radio, “we have said that if the rise in interest rates were to start, it would be very gradual. We have decided to lift our foot off the accelerator … but there is not the automaticity we seen in other central banks.”
Villeroy also dismissed the idea that rising commodity prices could drag Eurozone into recession. He said, “growth remain positive, there is no recession.” Meanwhile, he expected inflation to “get back down to around 2%” from from the current 5.1% level.
Another Governing Council member Olli Rehn echoed, “any adjustments to the key ECB interest rates will take place some time after the end of the APP net purchases and will be gradual.”
UK GDP grew 0.8% mom in January, well above expectation of 0.2% mom. All sectors grew in the month, with services up 0.8% mom, production up 0.7% mom, and construction up 1.1% mom.
GDP is now 0.8% above pre-conronavirus level in February 2020. Services is 1.3% above the pre-coronavirus level, construction 1.4% above. But production remains -2.0% below the level.
Also released, industrial production rose 0.7% mom, 2.3% yoy in January, versus expectation of 0.3% mom, 1.9% yoy. Manufacturing production rose 0.8% mom, 3.6% yoy, versus expectation of 0.2% mom, 3.1% yoy. Goods trade deficit widened to GBP -26.5B, versus expectation of GBP -12.6B.
New Zealand BNZ Performance of Manufacturing Index rose from 52.3 to 53.6 in February. Looking at some details, Production rose from 51.1 to 52.1. Employment rose from 49.5 to 51.7. New Orders rose from 53.6 to 58.2. Finished stocks dropped from 52.5 to 50.0. Deliveries dropped from 54.0 to 53.5.
BNZ Senior Economist, Craig Ebert stated that “underlying unease will certainly be piqued by the sustained high COVID case numbers as we go into March. The next PMI result may also see fallout from the Russia/Ukraine conflict, whose global impacts will be felt far and wide.”
RBA Governor Philip Lowe said it’s “plausible” for interest to be lifted from the current 0.1% this year. “It would be prudent to plan for an increase,” he added. “For many borrowers that’s going to come as quite an unwelcome development, although I know from the letters that I get every day when I turn up at work that many depositors have a different view,”
Meanwhile, he said “I don’t feel mounting pressure,” on raising rates. “We do what we think is the right thing at each of our meetings, so the pressure, it’s great for media stories, but I don’t feel that myself.”
IMF Managing Director Kristalina Georgieva told CNBC yesterday, “we think that we would be downgrading our growth projections as a result of the crisis (in Ukraine), but we still expect the world to be in positive growth territory.”
In the January outlook IMF projected global growth of 4.4% in 2022. For now, it’s unsure how the global economy would be affected by Russia invasion on Ukraine. “Obviously, how long this war goes is the main uncertainty factor we face,” Georgieva said.
Separately, Georgieva also said, sanctions on Russia for its invasion of Ukraine would cause an abrupt contraction of the Russian economy. Russia is facing a “deep recession” this year, and sovereign debt default is no longer seen as “improbable”.
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for over a decade. Empowering the individual traders was, is, and will always be our motto going forward.
Contact us: contact@actionforex.com
© ActionForex.com © 2025 All rights reserved.
Canada manufacturing sales rose 0.6% mom in Jan
Canada manufacturing sales rose 0.6% mom to CAD 64.8B in January, below expectation of 1.3% mom. That’s nonetheless the fourth consecutive month of increase. Sales rose in 14 of 21 industries, led by the petroleum and coal (+6.8%) and wood (+6.5%) product industries. The gain was partially offset by lower sales of motor vehicles (-17.5%).
Full release here.