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Canada CPI rose to 3.6% yoy in May, highest since 2011

    By
    ActionForex
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    Canada CPI accelerated to 3.6% yoy in May, up from 3.4% yoy, above expectation of 3.5% yoy. That’s the largest increase since May 2011. Excluding gasoline, CPI rose 2.5% yoy. Looking at some details, prices rose in every major component on a year-over-year basis. Shelter prices rose 4.2% yoy, largest since September 2008. Durable goods prices rose 4.4% yoy, largest since 1989.

    CPI common rose to 1.8% yoy, up from 1.7% yoy, matched expectations. CPI median rose to 2.4% yoy, up from 2.3% yoy, matched expectations. CPI trimmed rose to 2.7% yoy, up from 2.3% yoy, above expectation of 2.4% yoy.

    Full release here.

    Ifo lowers Germany GDP forecast to 3.3% in 2021, upgrades to 4.3% in 2022

      By
      ActionForex
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      The Ifo institute lowers Germany growth forecast for 2021 to 3.3%, down from March forecast of 3.7%. 2022 GDP growth is now estimated to be 4.3%, upgraded from prior projection of 3.2%. Unemployment rate is expected to drop from 5.9% in 2020 o 5.8% in 2021, and then 5.2% in 2022. CPI is expected to accelerate from 0.5% in 2020 to 2.6% in 2021, but slowed to 1.9% in 2022.

      “With falling infection rates and progress in vaccination against Covid-19, the existing economic restrictions should gradually be lifted,” it said. “There are no longer any obstacles to an economic recovery in trade and contact-intensive services by the end of 2021.” However, “in the short term, bottlenecks in the supply of intermediate products will have a dampening effect, so the manufacturing boom is likely to cool somewhat in its further course.”

      Full release here.

      UK CPI jumped to 2.1% in May, core CPI rose to 2.0%

        By
        ActionForex
        -

        UK CPI accelerated to 2.1% yoy in May, up from 1.5% yoy, above expectation of 1.8% yoy. Core CPI jumped to 2.0% yoy, up from 1.3% yoy, above expectation of 1.3% yoy. RPI also jumped to 3.3% yoy, up from 2.9% yoy, above expectation of 2.4% yoy.

        ONS Chief Economist Grant Fitzner said: “The rate of inflation rose again in May and is now above 2% for the first time since the summer of 2019. This month’s rise was led by fuel prices which fell this time last year, but have jumped this year thanks to rising crude prices. Clothing prices also added upward pressure as the amount of discounting fell in May.”

        Also released, PPI input came in at 1.1% mom, 10.7% yoy versus expectation of 1.1% mom, 9.0% yoy. PPI output was at 0.5% mom, 4.6% yoy, versus expectation of 0.4% mom, 4.5% yoy. PPI output core was at 0.4% mom, 2.7% yoy, versus expectation of 0.2% mom, 2.9% yoy.

        No tapering talks expected from Fed, some previews

          By
          ActionForex
          -

          Fed is widely expected to leave all monetary policy measures unchanged today. The Fed funds rate target will stay at 0-0.25%. The asset purchases program would also remain unchanged at USD 120B per month. It’s not expected to start talking about tapering yet, and could wait until the Jackson Hole Symposium to give a more solid indication.

          The main focuses would be on the updated economic projections, which would reflect Fed’s view on the path of inflation, as well as policy rates. Back in March, the dot plot indicated that the majority of policymakers forecast that the first hike would come in 2024. There were 4 members anticipating a rate hike next year and 7 by end -2023. While it might not be easy to push forward the forecast to 2023 (3 more members are needed), just 2 more could leave it balanced (9 vs 9) on whether it is 2023 or later.

          Some suggested previews here:

          Westpac: RBA unlikely to rate until 2025 to hike rates

            By
            ActionForex
            -

            Australia Westpac-MI leading index dropped eased from 2.86% to 1.47% in May. That’s the six-month annualized growth rate , which indicates the likely pace of economic activity relative to trend, three to nine months into the future. The index has moderated form just under 5% six months ago.

            Westpac said that given the “improved pulse” of economic data as signalled by the leading index, “it seems unlikely that the Board would expect to have to wait until 2025 before it achieves the objectives necessary to justify the first cash rate increase since November 2010.” Also, it expects RBA to not extend the yield curve target from April 2024. RBA would decide to maintain the policy of AUD 5B of asset purchases per week, without setting a final target, to allow maximum flexibility.

            Full release here.

            Japan exports rose 49.6% yoy in May, imports rose 27.9% yoy

              By
              ActionForex
              -

              Japan exports rose 49.6% yoy to JPY 6261B in May. That’s the largest rise since 1980. Imports rose 27.9% yoy to JPY 6448B. Trade surplus came in at JPY 187B, comparing with JPY 857B a year ago.

              Looking at some details, exports to China rose 23.6% yoy to JPY 1393B. That was led by growth in chip production equipment, hybrid cars, and scrap copper. Exports to the US rose 87.9% yoy to JPY 1104B. Cars and auto parts led the growth to US-bound exports.

              In seasonally adjusted terms, exports rose 0.0% mom to JPY 6860B. Imports rose 0.7% mom to JPY 6817B. Trade surplus narrowed to JPY 43B, down from JPY 84B.

              US PPI rose 0.8% mom, 6.6% yoy in May, record rise

                By
                ActionForex
                -

                US PPI for final demand rose 0.8% mom in May, above expectation of 0.6% mom. Annually, PPI accelerated to 6.6% yoy, up from 6.2% yoy, above expectation of 6.4% yoy. That’s also the largest increase since 12-month data were first calculated in November 2010.

                PPI less foods, energy and trade services, rose 0.7% mom, above expectation of 0.5% mom. For the 12-month ended in May, PPI accelerated to 5.3% yoy. That’s the largest increase since 12-month data were first calculated in August 2014.

                Full release here.

                US retail sales dropped -1.3% in May, ex-auto sales dropped -0.7%

                  By
                  ActionForex
                  -

                  US retail sales dropped -1.3% mom to USD 620.2B in May, worse than expectation of -0.4% mom. Ex-auto sales dropped -0.7% mom, worse than expectation of 0.5% mom rise. Ex-gasoline sales dropped -1.5% mom. Ex-auto, ex-gasoline sales dropped -0.8% mom.

                  Total sales for March through May period were up 36.2% from the same period a year ago.

                  Full release here.

                  ECB Rehn sees no signs of rise in broader price pressures

                    By
                    ActionForex
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                    ECB Governing Council member Olli Rehn said that recent rise in inflation is due to “one-off and temporary factors” only. He added there are currently “no signs of a rise in broader price pressures”, and “slack remains high”. Policymakers need to “look through short-term variation in inflation”.

                    For now, the ECB “need to continue with significant purchases under PEPP”. The program will be conducted in “flexible manner” and “accommodative financing conditions are key to support euro are recovery”. He added that ECB did not discuss the issue of transitioning away from PEPP yet.

                    Eurozone exports rose 4.32% yoy, imports rose 37.4% yoy in Apr

                      By
                      ActionForex
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                      Eurozone exports rose 43.2% yoy to EUR 193.8B in April. Imports rose 37.4% yoy to EUR 18.2B. Trade surplus came in at EUR 10.9B, comparing to EUR 2.3% a year ago. Intra-Eurozone trade rose 61.9% yoy to EUR 178.9B.

                      In seasonally adjusted terms, Eurozone exports dropped -2.4% mom to EUR 193.4B. Imports rose 2.4% mom to EUR 184.0B. Trade surplus narrowed to EUR 9.4B, down from EUR 18.3B, below expectation of EUR 15.2B. Intra-Eurozone trade rose from EUR 171.7B to EUR 177.5B.

                      Full release here.

                      Swiss SECO upgrades 2021 GDP forecasts to 3.6%

                        By
                        ActionForex
                        -

                        Swiss government’s Expert Group upgraded GDP growth forecast for 2021 to 3.6% (from March’s 3.0%), as “easing of coronavirus measures has triggered a swift recovery in the domestic economy”. That also means, GDP would climb “well above the pre-crisis level” in H2. Unemployment rate is expected to come to an annual average of 3.1% (March forecast at 3.3%).

                        For 2022, The Expert Group expect another year of “above-average growth” at 3.3% (unchanged forecast”. It added that foreign trade is set to “stimulate growth substantially again” while services trade such as tourism is “likely to gather pace”. Unemployment rate is expected to drop further to an annual average of 2.8% (March forecast 3.0%).

                        Full release here.

                        UK unemployment rate dropped to 4.7% in Apr, still 0.8% above pre-pandemic level

                          By
                          ActionForex
                          -

                          UK unemployment rate dropped to 4.7% in the three months to April, down from 4.8%, matched expectations. That’s still 0.8% higher than the level before the pandemic Nevertheless, it’s -0.3% lower than the previous quarter. Average earnings excluding bonus rose 5.6% 3moy, above expectation of 5.3% 3moy. Average earnings including bonus rose 5.6% yoy, above expectation of 4.9% 3moy. Claimant count dropped -92.6k in May.

                          Full release here.

                          NASDAQ closed at record, heading to 15000 next

                            By
                            ActionForex
                            -

                            Both NASDAQ and S&P 500 closed at new record highs overnight. NASDAQ’s consolidation form 14175.11 should have completed at 13002.52, and the long term up trend should be resuming. Based on yesterday’s strong close, buying momentum might accelerate further this week, subject to reactions to FOMC statement and projections. We’re now looking at next medium term target at 61.8% projection of 10822.57 to 14175.11 from 13002.53 at 15074.39. In any case, outlook will stay bullish as long as 55 day EMA (now at 13660.23) holds.

                            As for S&P 500, it’s staying healthily in medium term up trend, well inside channel and above rising 55 day EMA. Outlook will also stay bullish as long as 55 day EMA (now at 4135.30) holds. Next target is 100% projection of 2191.86 to 3588.11 from 3233.94 at 4630.19.

                            RBA discussed four options on bond purchases

                              By
                              ActionForex
                              -

                              RBA reiterated in the June minutes that it will make the decision on 3-year yield target and government bond purchase program at the July meeting. It emphasize “a return to full employment as a priority for monetary policy that would assist with achieving the inflation target”.

                              It will consider whether to extend the 3-year yield target from April 2024 bond to November 2024 bond. A key considering would be the prospect of having inflation sustainably within the 2-3% target rate some time in 2024.

                              Four options regarding future bond purchases after completion of the second AUD 100B of purchases in early September were discussed. The options included ceasing the purchases, repeating the AUD 100 purchases for another 6 months, scaling back the amount or spreading over a longer period, and moving to an approach where pace of purchases is reviewed more frequently.

                              Full minutes here.

                              Canada manufacturing sales dropped -2.1% mom in Apr

                                By
                                ActionForex
                                -

                                Canada manufacturing sales dropped -2.1% mom to CAD 57.1B in April, much worse than expectation of 3.0% mom rise. Sales declined in 11 of 21 industrials, and much of the decline was attributable to lower sales of transportation equipment and petroleum and coal products.

                                Full release here.

                                Eurozone industrial production rose 0.8% mom in Apr, EU up 0.5% mom

                                  By
                                  ActionForex
                                  -

                                  Eurozone industrial production rose 0.8% mom in April, above expectation of 0.4% mom. Production of durable consumer goods rose by 3.4% mom, energy by 3.2% mom, capital goods by 1.4% mom and intermediate goods by 0.8% mom, while the production of non-durable consumer goods fell by -0.3% mom.

                                  EU industrial production rose 0.5% mom. Among Member States for which data are available, the highest increases were registered in Belgium (+7.4%), Malta (+5.6%) and Estonia (+4.4%). The largest decreases were observed in Denmark (-3.8%), Hungary (-3.2%) and Lithuania (-2.4%).

                                  Full release here.

                                  ECB Lagarde: We’re heading firmly towards a return to pre-COVID-19 level

                                    By
                                    ActionForex
                                    -

                                    ECB President Christine Lagarde said in a Politco interview, “you don’t remove the crutches from a patient unless and until the muscles have started rebuilding sufficiently so that the patient can walk on his or her own two legs. ”

                                    “The same applies to the economy,” She added. “We are at a turning point where, bearing in mind alternative variants, we are on that recovery path, heading firmly towards a return to the pre-COVID-19 level.

                                    She also reiterated that ECB has indicated the PEPP program will continue “until at least March 2022 and, in any case, until the Governing Council judges that the pandemic crisis phase is over.” Eurozone seems to be “heading in the right decision”. But it’s “far too early to debate” ending the PEPP program.

                                    Full interview here.

                                    Gold heading to 1855 and below as consolidation extends

                                      By
                                      ActionForex
                                      -

                                      Much volatility was seen in Gold last week but overall outlook is unchanged. We’re viewing price actions from 1916.30 as developing into a corrective pattern, that’s still in progress. Today’s fall suggests that it’s already in the third leg. Break of 1855.30 support will target 55 day EMA (now at 1838.82) and possibly below.

                                      At this point, we’re still viewing larger correction from 2075.18 as completed with three waves down to 1676.65. Hence, we’d expect strong support from 38.2% retracement of 1676.65 to 1916.30 at 1824.75 to contain downside, and bring rise resumption. We’d expect rise from 1676.65 to resume at a later stage, to retest 2075.18 high.

                                      WTI breaches 71 handle, on track to 74.5 target

                                        By
                                        ActionForex
                                        -

                                        WTI crude oil’s up trend continues today and breaches 71 handle. There are some concerns that OPEC might not be able to raise the pace of production increase to meet the rebound in demand later this year. Indeed, the Paris-based IEA urged on Friday, “OPEC+ needs to open the taps to keep the world oil markets adequately supplied”.

                                        Overall, the medium term up trend in WTI crude oil looks healthy, with notable support form 55 day EMA. Outlook remains bullish as long as 68.33 support holds. Current rise is on track to 38.2% projection of 33.80 to 67.83 from 61.51 at 74.50.

                                        Bitcoin extending rebound, on track to 43967 target

                                          By
                                          ActionForex
                                          -

                                          Bitcoin jumped over the weekend and breached 39481 resistance today. The strong support from 4 hour 55 EMA affirms near term bullishness. The development also affirms our view that whole decline from 64828 has completed with five waves down to 31073 (with the last as a failure fifth).

                                          Near term outlook will now stay bullish as long as 35816 support holds. Next target is 38.2% retracement of 64828 to 31073 at 43967 at least. It’s a bit early. But we’d pencil in the prospect for further rise to 61.8% retracement at 51933.

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