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New Zealand BusinessNZ manufacturing rebounded to 51.4

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    ActionForex
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    New Zealand BusinessNZ Performance of Manufacturing rebounded strongly from 39.7 to 51.4 in September. Looking at some more details, production rose from 27.2 to 49.9. Employment ticked up from 54.3 to 54.5. New orders rose from 44.1 to 54.3. Finished stocks rose from 45.9 to 50.1. Deliveries also jumped from 33.1 to 47.8.

    BNZ Senior Economist, Craig Ebert stated that “the rebound the PMI experienced in September was encouraging, although the survey is not without some still‐frayed parts.  Credit where it’s due though, as the NZ PMI traced much less of a contraction, and quicker stabilisation, compared to what it went through during the initial outbreak of COVID‐19.”

    Full release here.

    Japan Cabinet Office said exports increasing at a slower pace

      By
      ActionForex
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      In the October Monthly Economic Report, Japan’s Cabinet Office downgraded assessment on exports to “increasing at a slower pace”, from “continue to increase moderate”. That’s the first downgrade in seven months.

      Overall, the economy is “picking up although the pace has weakened in a severe situation due to the Novel Coronavirus.” Private consumption “shows weakness further”. Business investment is “picking up”. Industrial production is “picking up”. Corporate profits are “picking up”. Employment situation “shows steady movements in some components”. Consumer prices show “steady movements”.

      As the government lifted state emergency, it will “develop a new economic stimulus package” to address the issues of reopening. It expects BoJ to “pay careful attention to the economic impact of the infections and conduct appropriate monetary policy management”.

      Full report here.

      BoC Macklem: Inflation probably taking a little longer to come back down

        By
        ActionForex
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        BoC Governor Tiff Macklem said yesterday that supply bottlenecks are “not easing as quickly as expected”. Global inflation is “probably going to take a little longer to come back down”.

        But he also added, the central bank’s job is “to make sure that these one-off price increases don’t become ongoing inflation.” He maintained, “there’s good reasons to believe that these are one-off price increases. They won’t create ongoing inflation.”

        On the job market, Macklem said returning to the prepandemic employment level “is an important milestone, but it’s not the destination”. He added, “it is still the case though that low-wage workers are well below their prepandemic level, whereas other workers have slowly recovered. So there still is some space there.”

        Fed Harker not expecting rate hike until late 2022 or early 2023

          By
          ActionForex
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          Philadelphia Fed President Patrick Harker said yesterday he’s in the camp that believes it will “soon be time” to start tapering asset purchases “begin slowly and methodically — frankly, boringly”.

          He added that FOMC can then evaluate interest rates after tapering is complete. “I wouldn’t expect any hikes to interest rates until late next year or early 2023, unless the inflation picture changes dramatically,” he said.

          Harker expects the economy to grow by 5.5% this year and 3.5% next. Inflation is expected to be around 4% for 2021, “a bit over” 2% in 2022, and “right at” 2% in 2023.

          US PPI jumped to 8.6% yoy in Sep, highest on record

            By
            ActionForex
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            US PPI for final demand rose 0.5% mom in September, matched expectations. For the 12-month, PPI accelerated to 8.6% yoy, up from 8.3% yoy, below expectation of 8.8% yoy. But that’s still the largest 12-month advance on record since 2010. PPI core rose 0.2% mom, 6.8% yoy, versus expectation of 0.4% mom, 7.1% yoy.

            Full release here.

            US initial jobless claims dropped to 293k, continuing claims blow 2.6m

              By
              ActionForex
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              US initial jobless claims dropped -36k to 293k in the week ending October 9, much better than expectation of 325k. That’s the lowest level since March 14, 2020. Four-week moving average of initial claims dropped -10.5k to 334k, lowest since March 14, 2020.

              Continuing claims dropped -134k to 2593k, lowest since March 14, 2020. Four-week moving average of continuing claims dropped -30.5k to 2738k, lowest since March 21, 2020.

              Full release here.

              ECB Lagarde: No evidence of significant second-round effects of inflation

                By
                ActionForex
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                ECB President Christine Lagarde repeated today, “we continue to view this upswing as being largely driven by temporary factors. The impact of these factors should fade out of annual rates of price changes in the course of next year, dampening annual inflation.”

                “So far, there is no evidence of significant second-round effects through wages and inflation expectations in the euro area remain anchored, but we continue to monitor risks to the inflation outlook carefully,” she added.

                On the other hand, Governing Council Member Olli Rehn said, “due to persistent production bottlenecks, it is possible that an increase in energy prices has a longer-lasting impact on consumer price. We analyze this development carefully at the Governing Council and at the Bank of Finland.” He noted that medium-term inflation expectations have increased to around 1.9%, which is in line with the European Central Bank’s strategy.

                BoE Tenreyro: Self-defeating to try to respond to short-lived effects on inflation

                  By
                  ActionForex
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                  BoE MPC member Silvana Tenreyro said, “part of increasing inflation we have seen so far is arithmetic base effects compared to a low level of prices last year.” And that in part has seen “driven by global prices in energy and other commodities which push up on inflation”. And, “these effects in general tend to be short-lived.

                  Additionally, there were “temporary supply disruptions caused by the various imbalances in the global economy as it recovers from Covid”, with some countries still in lockdown. Demand was also boosted “far more by fiscal stimulus in some countries than others”, like the US.

                  “So typically, for short-lived effects on inflation, such as the big rises in the prices of semiconductors or energy prices, it would be self-defeating to try to respond to their direct effects,” she said. “By the time interest rates were having a major effect on inflation the effects of energy prices would already be dropping out of the inflation calculation. If some effects were to prove more persistent it would be important to balance the risks from a period of above target inflation with the cost of weaker demand.”

                  CAD/JPY upside breakout, pressing 91.62 long term resistance

                    By
                    ActionForex
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                    CAD/JPY’s rally continues this week and the break of 91.16 resistance should confirm resumption of medium term up trend from 73.80 (2020 low). Current development argues that whole down trend from 106.48 (2014 high) has completed with three waves down to 73.80. That is, rise from 73.80 is developing into the third wave of the pattern from 68.38 (2009). It’s itself a medium to long term up trend that has the prospect of surpassing 106.48 eventually.

                    Of course, CAD/JPY will have to sustain above 91.62 resistance first, and then accelerate further up through 61.8% projection of 73.80 to 91.16 from 84.65 at 95.37, to give us more confidence on this long term bullish case. By anyway, for now, further rise is expected as long as 88.99 support holds, in case of retreat.

                    Australia employment dropped -138k in Sep, back below pre-pandemic levels

                      By
                      ActionForex
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                      Australia employment dropped -138k in September, worse than expectation of -120k. Full-time jobs grew 26.7k while part-time jobs lost -164.7. Unemployment rate rose 0.1% to 4.6%, better than expectation of 4.8%. Participation rate dropped sharply by -0.7% to 64.5%.

                      Bjorn Jarvis, head of labour statistics at the ABS, said: “Extended lockdowns in New South Wales, Victoria and the Australian Capital Territory have seen employment and hours worked both drop back below their pre-pandemic levels.

                      “There were large falls in employment in Victoria (123,000 people) and New South Wales (25,000 people, following the 173,000 decline in August). This was partly offset by a 31,000 increase in Queensland, as conditions there recovered from the lockdown in early August.”

                      “The low national unemployment rate continues to reflect reduced participation during the recent lockdowns, rather than strong labour market conditions.”

                      Full release here.

                      BoJ Noguchi: Economic recovery will become clearer at the end of year

                        By
                        ActionForex
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                        BoJ board member Asahi Noguchi said the central bank should continue with the currency easing “patiently” because it takes a long time to achieve the 2% inflation target. But he’s optimistic that economic recovery will become clearer at the end of the year and onwards, as vaccinations help to ease the pandemic impacts.

                        Separately, Governor Haruhiko Kuroda said in a G20 finance meeting that some emerging economies are still facing downward pressure form the pandemic. But the overall impact on the global economy will “gradually subside”.

                        Fed Bowman: Asset purchases have essentially served their purpose

                          By
                          ActionForex
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                          Fed Governor Michelle Bowman said in a speech yesterday that she’s “mindful that the remaining benefits to the economy from our asset purchases are now likely outweighed by the potential costs.”

                          “Provided the economy continues to improve as I expect, I am very comfortable at this point with a decision to start to taper our asset purchases before the end of the year and, preferably, as early as at our next meeting in November,” she added.

                          Bowman also noted that the asset purchases have “essentially served their purpose.” She’s particularly concerned that “asset purchases could now be contributing to valuation pressures, especially in housing and equity markets.” The loose monetary policy could now “pose risks to the stability of longer-term inflation expectations.”

                          Full speech here.

                          Gold extends rebound, heading back to 1833 resistance

                            By
                            ActionForex
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                            Gold rises strongly today after Dollar failed to ride on strong consumer inflation data to rally. The break of 1787.02 resistance now argues that pull back from 1833.79 has completed at 1721.46 already. The break above 55 day EMA is also a near term bullish signal.

                            Further rise is now in favor back to 1833.79 resistance. That’s a key near term level to overcome and firm break there would resume the rise from 1682.60 to 1916.30 resistance. That, if happens, could be a signal of deeper pull back in Dollar. We’ll pay very close attention to the reaction from 1833.79.

                            NIESR expects UK GDP to grow 1.5% in Q3, 0.8% in Q4

                              By
                              ActionForex
                              -

                              NIESR said supply constraints are growing and likely to persist through in Autumn. It forecasts UK GDP to grow 1.5% in Q3, followed by 0.8% in Q4. That included an estimated 0.4% mom growth in GDP in September.

                              Rory Macqueen Principal Economist, NIESR: “The reopening of the economy continued to support growth in August, with the popularity of domestic holidays contributing to 23 per cent month-on-month growth for hotels and campsites in particular. The fact that consumer-facing services remain 5 per cent below their peak suggests ample room for future catch-up in future too. Elsewhere a further fall in construction output may have been down in part to a reported increase in input costs: something likely to affect the economy more broadly if shortages lead to more generalised price rises over the autumn. The coming months could see something of a two-speed recovery, with sectors most affected by shortages in decline while others continue to recover.”

                              Full release here.

                               

                              US CPI ticked up to 5.4% yoy in Sep, CPI core unchanged at 4.0% yoy

                                By
                                ActionForex
                                -

                                US CPI rose 0.4% mom in September, above expectation of 0.3% mom. CPI core rose 0.2% mom, matched expectations. For the 12-month period, CPI ticked up to 5.4% yoy, above expectation of 5.3% yoy. It’s back at the highest level since January 1991. CPI core was unchanged at 4.0% yoy, matched expectations.

                                Full release here.

                                Eurozone industrial production dropped -1.6% mom in Aug, EU down -1.5% mom

                                  By
                                  ActionForex
                                  -

                                  Eurozone industrial production dropped -1.6% mom in August, matched expectations. Production of capital goods fell by -3.9%, durable consumer goods by -3.4%, intermediate goods by -1.5% and non-durable consumer goods by -0.8%, while production of energy rose by 0.5%.

                                  EU industrial production dropped -1.5% mom. Among Member States for which data are available, the largest monthly decreases were registered in Malta (-6.3%), Germany and Estonia (both -4.1%) and Slovakia (-3.8%). The highest increases were observed in Denmark (+3.5%), Lithuania (+2.9%) and Luxembourg (+2.1%).

                                  Full release here.

                                  UK GDP grew 0.4% mom in Aug, still -0.8% below pre-pandemic level

                                    By
                                    ActionForex
                                    -

                                    UK GDP grew 0.4% mom in August, slightly below expectation of 0.5% mom. Services grew 0.3%. Production rose 0.8% mom. Construction contracted by -0.2% mom. In the three months to August, GDP grew 2.9% 3mo3m, mainly due to the performance of services, largely reflects gradual reopening.

                                    Comparing to pre-pandemic levels in February 2020, overall GDP was still down -0.8%. Services was down -0.6%. Production was down -1.3%. Manufacturing was down -2.4%. Construction was down -1.5%.

                                    Full GDP release here.

                                    Also from the UK, goods trade deficit widened to GDP -14.9B in August, versus expectation of GBP -11.9B.

                                    New Zealand ANZ business confidence dropped slightly to -8.6 in Oct

                                      By
                                      ActionForex
                                      -

                                      New Zealand ANZ business confidence dropped slightly to -8.6 in October’s preliminary reading, down from September’s -7.2. Own activity outlook rose strongly from 18.2 to 26.2. Export intentions rose from 7.4 to 9.2. Investment intentions rose from 9.2 to 14.3. Employment intentions dropped from 14.1 to 12.1. Cost expectations rose form 84.2 to 84.9. Inflation expectations also ticked up from 3.02% to 3.04%.

                                      ANZ said the survey is telling a story of “remarkable resilience”, with most forward-looking activity indicators holding up or improving. Inflation pressures remain “intense” and cost pressures are “extreme”.

                                      Full release here.

                                      Australia Westpac consumer sentiment dropped to 104.6, still more optimists

                                        By
                                        ActionForex
                                        -

                                        Australia Westpac-Melbourne Institute consumer sentiment dropped -1.5% to 104.6 in October, down from September’s 106.2. There continued to be a clear majority of optimists nationally, even at state level – NSW (103.4); Victoria (105.4); Queensland (105.3) and Western Australia (105.4).

                                        Westpac expects RBA to “almost certainly maintain its policy settings” at November 2 meeting. Instead, the next change is likely to be another round of tapering in February. Looking forward, Westpac expects a rate hike in Q2 of 2023, while RBA has repeated said the conditions of hike won’t be met until 2024.

                                        Full release here.

                                        Fed Bullard advocates starting tapering in Nov, finishing it in Q1

                                          By
                                          ActionForex
                                          -

                                          St. Louis Federal Reserve President James Bullard told CNBC, “I’d support starting the taper in November.” He added, “I’ve been advocating trying to get finished with the taper process by the end of the first quarter next year because I want to be in a position to react to possible upside risks to inflation next year as we try to move out of this pandemic.”

                                          But he also emphasized “there’s no reason for us to commit one way or another at this point,” regarding interest rate hike. “I just want to be in a position in case we have to move sooner that we’re able to do so next year in the spring or summer if we have to do so.”

                                          He noted that a supply shock alone cannot cause inflation”. But, “a supply shock being accommodated by very easy monetary policy, it’s those two things that lead to the inflation.” Yet, he’s not concerned with the risk of a 1970s-style stagflation since “the probability of recession is exceptionally low at this point.”

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