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US ADP jobs grew 571k, services led, large companies fueled

    By
    ActionForex
    -

    US ADP private employment grew 571k in October, above expectation of 400k. By company size, small businesses added 115k, medium businesses added 114, large businesses added 342k. By sector, goods-producing jobs grew 113k, service-providing jobs grew 458k.

    “The labor market showed renewed momentum last month, with a jump from the third quarter average of 385,000 monthly jobs added, marking nearly 5 million job gains this year,” said Nela Richardson, chief economist, ADP. “Service sector providers led the increase and the goods sector gains were broad based, reporting the strongest reading of the year. Large companies fueled the stronger recovery in October, marking the second straight month of impressive growth.”

    Full release here.

    ECB Lagarde: Conditions for rate hike very unlikely to be satisfied next year

      By
      ActionForex
      -

      In speech, ECB President Christine Lagarde said, “in our forward guidance on interest rates, we have clearly articulated the three conditions that need to be satisfied before rates will start to rise.”

      “Despite the current inflation surge, the outlook for inflation over the medium term remains subdued, and thus these three conditions are very unlikely to be satisfied next year,” she added.

      She also noted, “market interest rates have risen over the past weeks, mainly as a result of greater market uncertainty about the inflation outlook, spillovers from abroad to policy rate expectations in the euro area, and some questions about the calibration of asset purchases in a post-pandemic world.

      Full speech here.

      Eurozone unemployment rate dropped to 7.4% in Sep, EU down to 6.7%

        By
        ActionForex
        -

        Eurozone unemployment rate dropped to 7.4% in September, down from August’s 7.5, matched expectations. EU unemployment rate also dropped to 6.7%, down from 6.9%.

        Eurostat estimates that 14.324 million men and women in the EU, of whom 12.079 million in the Eurozone, were unemployed in September. Compared with August, the number of unemployed decreased by 306 000 in the EU and by 255 000 in the euro area. Compared with September 2020, unemployment decreased by 2.054 million in the EU and by 1.919 million in the euro area.

        Full release here.

        UK PMI composite finalized at 57.8, cost inflation and prices charged accelerated up

          By
          ActionForex
          -

          UK PMI Services was finalized at 59.1 in October, up sharply from September’s 55.4. PMI Composite was finalized at 57.8, up from September’s 54.9. Markit said cost inflation accelerated to its strongest in over 25 years. Average prices charged also increased at survey-record pace.

          Tim Moore, Economics Director at IHS Markit: “Looser international travel restrictions and greater domestic mobility helped to lift the UK service sector recovery out of its recent malaise in October. Business activity expanded at the fastest pace since July, driven by the first acceleration in new order growth for five months. The latest survey also pointed to the best month for export sales since June 2018.

          “Tight labour market conditions persisted in October… Average prices charged increased at a survey-record pace, reflecting across the board pressures on operating expenses… Record rates of input price and output charge inflation appear to have dampened business optimism, which eased to its lowest since January.”

          Full release here.

          Fed to announce tapering, some previews

            By
            ActionForex
            -

            FOMC monetary policy decision is the major focus today, as Fed should finally make a formal announcement on QE tapering. As the September minutes indicates, the pace would be “monthly reductions in the pace of asset purchases, by US$10B in the case of Treasury securities and US$5B in the case of agency mortgage-backed securities (MBS)”. The would eventually lead to completion of entire asset purchases by mid -2022. But, a hawkish surprise – monthly reduction at a faster pace – cannot be ruled out given the inflationary pressure.

            Also, September’s dot plot revealed that half of the members had anticipated a rate hike in 2022. Meanwhile, the market has priced in futures have priced in over 60% of a rate hike by June next year. But Fed Chair Jerome Powell would likely reiterate that decision on interest rate is complete separated from that of asset purchases. There wouldn’t be any new hint on the timing of rate hike until December’s dot plot.

            Suggested readings on Fed

            China Caixin PMI services rose to 53.8, composite rose to 51.5

              By
              ActionForex
              -

              China Caixin PMI Services rose to 53.8 in October, up from 53.4, above expectation of 53.6. PMI Composite ticked up to 51.5, from 51.4.

              Wang Zhe, Senior Economist at Caixin Insight Group said: “As the number of new Covid-19 cases dropped from late September to the middle of October, related disruption faded and market demand recovered while supply was relatively weak. Manufacturing was significantly weaker than services.

              “Supply strains became the paramount factor affecting the economy. Shortages of raw materials and soaring commodity prices, combined with electricity supply problems, created strong constraints for manufacturers. Those factors also had a significant impact on services enterprises.

              “Input costs for manufacturers have risen much faster than their output prices for several months. The growth rate of input costs for service providers was also higher than that for prices they charged, putting pressure on downstream enterprises.”

              Full release here.

              New Zealand unemployment dropped to record low 3.4% in Q3

                By
                ActionForex
                -

                New Zealand employment rose 2.0% qoq in Q3, much better than expectation of 0.4% qoq. Growth was largely driven by full-time jobs, which increased 2.3% qoq or 50k, while part-time jobs dropped slightly. Unemployment rate dropped sharply from 4.0% to 3.4%, better than expectation of 3.9%. The total employment matched the lowest level on record, reached last time in 2007. Labor force participation rate rose 0.7% to 71.2%.

                “The fall in the unemployment rate is in line with reports of difficulty finding workers and high labour turnover, and continued travel restrictions on international arrivals, which put pressure on domestic labour supply,” work and wellbeing statistics senior manager Becky Collett said.

                Full release here.

                Australia AiG construction rose to 57.6, healthy leap in activity

                  By
                  ActionForex
                  -

                  Australia AiG Performance of Construction rose 4.3 pts to 57.6 in October. Looking at some details, activity rose 15.4 to 65.2. Employment dropped -0.2 to 56.8. New orders dropped -0.2 to 58.7. Supplier deliveries dropped -1.3 to 41.3. Input prices dropped -1.2 to 97.2. Selling prices dropped -0.5 to 78.3. Average wages dropped -1.5 to 75.1.

                  Ai Group Head of Policy, Peter Burn, said: “The healthy leap in activity levels across the Australian construction sector in October is a taste of what is expected to be a strong rebound for the broader economy over the next few months as New South Wales, Victoria and the ACT, liberated from COVID restrictions, catch up with the rest of the country and as barriers to the movement of people within Australia are removed.”

                  Full release here.

                  NASDAQ extending record run, pressing projection level at 15665

                    By
                    ActionForex
                    -

                    NASDAQ extends recent record run today, together with other major US indexes. Daily MACD’s break of the falling trend line suggests upside acceleration. Focus is now on 61.8% projection of 13002.53 to 15403.43 from 14181.69 at 15665.44. Decisive break there will likely bring acceleration to 100% projection at 16582.59. That would also solidify near term bullishness that would probably last for the rest of the year.

                    Meanwhile, rejection by 15665.44 would bring corrective pull back. But outlook will stay bullish as long as 55 day EMA (now at 14936.75) holds, even in case of deep correction.

                    Eurozone PMI manufacturing finalized at 58.3, worsening supply chain situation

                      By
                      ActionForex
                      -

                      Eurozone PMI Manufacturing was finalized at 58.3 in October, slightly down from September’s 58.6. But that’s still the lowest level since February. Readings of individual states remained generally strong: Netherlands at 62.5, Ireland at 62.1, Italy at 61.1, Austria at 60.0, Greece at 58.9, Germany at 57.8. Spain at 57.4, France at 53.6.

                      Chris Williamson, Chief Business Economist at IHS Markit said:

                      “Eurozone manufacturers reported a worsening of the supply chain situation in October, which curbed production growth sharply during the month. Average delivery times for raw materials lengthened at a rate exceeded only twice in almost a quarter of a century of survey data as companies reported demand once again running ahead of supply for a wide variety of inputs and components. Production constraints at suppliers were reported alongside a growing list of logistical issues. These include a lack of shipping containers and inadequate freight capacity, port congestion, driver shortages and broader transport delays linked mainly to the pandemic.

                      “These shortages have led to the weakest rise in factory output since the recovery began in July of last year, and also pushed inflationary pressures to new survey highs, raising further questions about just how transitory the recent spike in inflation will be.

                      “Business confidence also lost some ground to hit a one-year low in October, as increasing numbers of producers grew concerned about the supply situation and the impact of rising costs and prices, adding to the indications that manufacturers face some challenging months ahead.”

                      Full release here.

                      Germany PMI manufacturing finalized at 57.8, output shackled by supply bottlenecks

                        By
                        ActionForex
                        -

                        Germany PMI Manufacturing was finalized at 57.8 in October, down from September’s 58.4, lowest level in nine months. Markit said that material shortages restrained output and new orders. Surging input costs drove record rise in factory gate charges. There was further slowdown in job creation as optimism waned.

                        Phil Smith, Associate Economics Director at IHS Markit, said:

                        “Output levels across the manufacturing sector are being increasingly shackled by supply bottlenecks. According to surveyed businesses, the well-documented slowdown in autos production is dragging down other parts of the manufacturing economy with it, as firms in that sector scale back orders for components and materials.

                        “However, while producers of intermediate goods have recorded a sustained drop in new orders, we’re still seeing some pockets of robust strength in demand, particularly for investment goods. Backlogs continued to rise across each of the main industrial groupings, suggesting this is still mainly a supply-side issue.

                        “Worryingly, the supply problems took a turn for the worse in October, with lead times on purchases lengthening to the greatest extent for three months. Adding to this, the rate of cost inflation has crept back up towards the record highs seen in the summer, leading to an unprecedented rise in factory gate prices and putting more inflationary pressure into the system.

                        “Manufacturers lost further confidence that these issues will be resolved sooner rather than later, with business expectations now at their lowest since August 2020.”

                        Full release here.

                        France PMI manufacturing finalized at 53.6, difficult to imagine the situation improving any time soon

                          By
                          ActionForex
                          -

                          France PMI Manufacturing was finalized at 53.6 in October, down from September’s 55.0, hitting the lowest level since January. Markit said output level declined as firms struggled to secure necessary materials. Demand conditions showed signs of weakening amid supply constraints. Lead times lengthened at near-record pace and cost inflation were at decade high.

                          Joe Hayes, Senior Economist at IHS Markit, said:

                          “The supply chain issues we’ve been documenting for some months have been somewhat restrained to the supply-side of the economy, at least until now.

                          “Rapid rates of inflation have ensued, but production has still continued to grow and order books fill up. In October, French manufacturers recorded lower output volumes for the first time since January, while new business intakes fell for the first time in 2021.

                          “Because firms cannot secure the inputs needed to make their products, orders are now also falling as clients are facing lengthy delays on orders or are unable to get components and other items needed to turn semi-finished goods into finished goods.

                          “It’s difficult to imagine the situation improving any time soon. Prudent inventory management will be crucial for businesses hoping to keep production lines going.”

                          Full release here.

                          Swiss CPI rose to 1.2% yoy in Oct, retail sales rose 2.5% yoy in Sep

                            By
                            ActionForex
                            -

                            Swiss CPI came in at 0.3% mom, 1.2% yoy in October, above expectation of 0.1% mom, 1.1% yoy. Annual rate also accelerated from September’s 0.9% yoy. The 0.3% increase compared with the previous month is due to several factors including rising prices for heating oil. Gas also recorded a price increase, as did fuel. In contrast, prices for salads and fruiting vegetables decreased.

                            Retail sales rose 2.5% yoy in September, above expectation of 1.4% yoy.

                            AUD/JPY dips as consolidation from 86.24 extends with another leg

                              By
                              ActionForex
                              -

                              Aussie drops notably after even though RBA abandoned yield curve control, and signaled that interest rate could be raised earlier than previously expected. Yet, it’s clear that RBA would hold their hands, probably after well into 2023, before making a decision, if inflation is not out of control. That is, it will still lag behind some other major central banks in stimulus removal.

                              AUD/JPY is now extending the consolidation pattern from 86.24 short term top with another falling leg. 84.59 support would provide the first defense. As long as this level holds, the consolidation should be relatively brief, and we’d expect a break of 86.24 high to come sooner rather than later. In that case, the medium term up trend would continue to 61.8% projection of 59.85 to 85.78 from 77.88 at 93.90 next.

                              However, break of 84.59 will bring deeper correction to 38.2% retracement of 78.82 to 86.24 at 83.40 first, or even to 55 day EMA (now at 82.80), before up trend resumption.

                              RBNZ Orr views level of house prices as unsustainable

                                By
                                ActionForex
                                -

                                In a speech, RBNZ Governor Adrian Orr warned, “it will come as no surprise to you that in our forthcoming Financial Stability Report we will again elaborate on why we view the level of house prices as unsustainable, and why this matters.”

                                “At the source of the financial stability risk is the inability of housing supply to respond in a timely fashion to changes in demand, and the drivers that lead to a bias towards housing as an investment choice beyond simply a place to reside,” he said.

                                “There is no one agency or silver bullet. House prices and housing affordability are affected by both supply and demand factors, ranging across immigration, tax policy, government benefits or transfers, land availability, building standards, infrastructure, and training programmes,” he added”

                                “Ultimately, it is access to land and space that has recently proved to be the biggest challenge to enabling a smooth functioning housing market”

                                Full speech here.

                                RBA abandons yield curve control, hints on earlier hike

                                  By
                                  ActionForex
                                  -

                                  RBA kept cash rate target unchanged at 0.10% as widely expected today. The asset purchase program, however, will continue at AUD 4B per week until at least February 2022. However, without much surprise, it discontinue 0.10% target for April 2024 government bonds, effectively abandoning yield curve control.

                                  As for forward guidance, RBA maintain that cash rate won’t be raised until actual inflation is “sustainably within the 2 to 3 per cent target range”. But now, it forecasts inflation to be no higher than 2.50% at the end of 2023, hinting that rate hike could come earlier than that.

                                  In the new economic projection, RBA expects GDP growth to b 3% in 2021, 5.50% in 2022, and 2.50% in 2023. Unemployment rate is expected to trend lower to 4.25% at the end of 2022 and 4.00% at the end of 2023. Inflation is projected to be at 2.25% over 2021 and 2022, and pick up to 2.20% over 2023.

                                  Full statement here.

                                  US ISM manufacturing ticked down to 60.8, corresponds to 5% annualized GDP growth

                                    By
                                    ActionForex
                                    -

                                    US ISM Manufacturing dropped to 60.8 in October, down from 61.1, but beat expectation of 60.4. Looking at some details, new orders dropped from 66.7 to 59.8. Production dropped from 59.4 to 59.3. Employment rose from 50.2 to 52.0. Prices rose from 81.2 to 85.7.

                                    ISM said: “The past relationship between the Manufacturing PMI and the overall economy indicates that the Manufacturing PMI for October (60.8 percent) corresponds to a 5-percent increase in real gross domestic product (GDP) on an annualized basis.”

                                    Full release here.

                                    Bitcoin in second leg of corrective pattern, to retest 66982 high

                                      By
                                      ActionForex
                                      -

                                      Bitcoin is still extending the corrective pattern from 66982. The first leg should have completed at 57762, and rise fro there should be the second leg. Break of 62954 resistance will target at test on 66982 high. For now, we’re not expecting a firm break there in the first attempt. Instead, we’d expect one more falling leg before the corrective pattern completes. Still, in that case, we’d expect strong support from 38.2% retracement of 39559 to 66982 at 56506 to contain downside to bring rebound.

                                      UK PMI manufacturing finalized at 57.8, low growth environment met with inflationary pressures

                                        By
                                        ActionForex
                                        -

                                        UK PMI Manufacturing was finalized at 57.8 in October, slightly up from September’s 57.1. That’s, nonetheless, the first rise in five months. Market said new order growth ticked higher despite dropped in new export work. But selling prices rose at record pace.

                                        Rob Dobson, Director at IHS Markit, said: ” Strained global supply chains are disrupting production schedules, while staff shortages and declining intakes of new export work are also stymieing the upturn. This low growth environment is occurring in tandem with a severe upshot in inflationary pressures, with manufacturers reporting both a near-record increase in input costs and record rise in selling prices.”

                                        Full release here.

                                        China Caixin PMI manufacturing rose to 50.6, supply strains became the paramount factor

                                          By
                                          ActionForex
                                          -

                                          China Caixin PMI Manufacturing rose to 50.6 in October, up from 50.0, above expectation of 50.6. Caixin noted total new work had the strongest increase in four months. Production fell modestly amid rising costs and reduced power supply. Average lead times rose at fastest rate since March 2020.

                                          Wang Zhe, Senior Economist at Caixin Insight Group said: “To sum up, manufacturing recovered slightly in October from the previous month. But downward pressure on economic growth continued. We noticed that the pandemic’s impact on manufacturing faded from late September to mid-October as the number of new Covid-19 cases dropped, which boosted demand.

                                          “However, supply strains became the paramount factor affecting the economy. Shortages of raw materials and soaring commodity prices, combined with electricity supply problems, created strong constraints for manufacturers and disrupted supply chains. Input costs for manufacturers have risen much faster than output prices for several months, putting a lot of pressure on downstream enterprises.”

                                          Full release here.

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