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BoJ Suzuki: Desirable to constrain pace of increase in ETFs and J-REITs purchases

    By
    ActionForex
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    BOJ board member Hitoshi Suzuki said in a speech that it’s important for the central to “conduct purchases of ETFs and J-REITs while paying attention to its financial soundness.” As the EFT and J-REIT holdings increase, “the impact on the Bank’s balance sheet will become large.”

    Hence, “it is desirable for the Bank to constrain the paces of increase in their amounts outstanding as much as possible by conducting the purchases flexibly; it will decisively conduct them on a large scale during times of heightened market instability while refraining from conducting them during normal times.”

    Full speech here.

    NZD/USD and NZD/JPY upside breakout as RBNZ signals Sep 2022 rate hike

      By
      ActionForex
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      New Zealand Dollar surges sharply after RBNZ kept monetary policy unchanged, but signaled that a rate hike could occur as soon as in September 2022. Governor Adrian Orr also said he felt comfortable using OCR projection as guidance. Though, the projections are “very highly conditional”, and will only be realized if economy pans out as expected.

      NZD/USD break through 0.7304 resistance today and resumes the rally from 0.6942. Notable support was seen from 55 day EMA which affirms near term bullishness. Further rise is now expected as long as 0.7153 support holds. Retest of 0.7463 high should be seen next. Break there will resume larger up trend from 0.5467.

      NZD/JPY breaks through 79.40 resistance as up trend form 59.49 resumes. Near term outlook will now remain bullish as long as 77.91 support holds. Next target is 61.8% projection of 68.86 to 79.19 from 75.61 at 81.99.

       

      US consumer confidence dropped slightly to 117.2, but remain resilient as vaccination rates climb

        By
        ActionForex
        -

        US Conference Board Consumer Confidence Index dropped slightly to 117.2 in May, down from 117.5, below expectation of 119.9. Present Situation Index rose from 131.9 to 144.3. Expectations Index dropped from 107.9 to 99.1.

        “After rebounding sharply in recent months, U.S. consumer confidence was essentially unchanged in May,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.

        “Consumers’ assessment of present-day conditions improved, suggesting economic growth remains robust in Q2. However, consumers’ short-term optimism retreated, prompted by expectations of decelerating growth and softening labor market conditions in the months ahead.

        “Consumers were also less upbeat this month about their income prospects—a reflection, perhaps, of both rising inflation expectations and a waning of further government support until expanded Child Tax Credit payments begin reaching parents in July.

        “Overall, consumers remain optimistic, and confidence should remain resilient in the short term, as vaccination rates climb, COVID-19 cases decline further, and the economy fully reopens.”

        Full release here.

        Fed Evans: Recent rise in inflation is not precursor of persistent movement

          By
          ActionForex
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          Chicago Fed President Charles Evans said in a speech that an “accelerationist view” was on the minds of those who warned about an outbreak of inflation. But to him, “this risk is low”.

          “It is important to emphasize that the recent increase in inflation does not appear to be the precursor of a persistent movement to undesirably high levels of inflation,” he added. “I have not seen anything yet to persuade me to change my full support of our accommodative stance for monetary policy or our forward guidance about the path for policy.”

          Full speech here.

           

          ECB Stournaras: Not the right to think about transition from PEPP to APP

            By
            ActionForex
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            ECB Governing Council member Yannis Stournaras said that “I cannot say we are out of the woods yet”, as “there has been an acceleration in vaccinations but there are still travel restrictions ”

            Also, there is no reason to make any change to the PEPP purchases at the moment. It’s not the right time yet to shift from PEPP to APP purchases. He added, “of course, at some point in the future this will occur, there’s no doubt about that. We have to think about a smooth transition from PEPP to APP.”

            He also talked down the threat of inflation and said, “as the economy gets out of the pandemic, supply-side bottlenecks make their appearance but this is expected to smooth out over time.”

            Germany Ifo business climate rose to 99.2, economy is picking speed

              By
              ActionForex
              -

              Germany Ifo business climate rose to 99.2 in May, up from 96.8, above expectation of 98.1. That’s the highest level since May 2019. Current assessment index rose to 95.7, up from 94.1, above expectation of 95.5. Expectations index rose to 102.9, up from 99.5, above expectation of 101.0.

              Looking at different sectors, manufacturing rose from 25.1 to 25.7. Services rose from 3.5 to 13.7. Trade rose from -0.5 to 8.4. Construction rose from 0.7 to 2.8.

              Ifo said: “Companies were more satisfied with their current business situation. They are also more optimistic regarding the coming months. The German economy is picking up speed.”

              Full release here.

              Germany Q1 GDP contraction finalized at -1.8% qoq, still down -5% from pre-pandemic level

                By
                ActionForex
                -

                Germany Q1 GDP contraction was finalized at -1.8% qoq. It’s down -3.4% yoy on price-adjusted bases, down -3.1% yoy on price- and calendar-adjusted bases. Comparing prepandemic level in Q4 2019, GDP was still down -5.0%.

                Looking at some details, household final consumption expenditure was down -9.1% yoy. Gross fixed capital formation did not contribute to year-on-year growth. Fixed capital formation in machinery and equipment dropped -0.7% yoy, and in construction by -1.6% yoy. Government final consumption rose 2.5% yoy. Exports of goods and services dropped -0.6% yoy. Total imports dropped -3.0% yoy.

                All sectors were down on a year earlier. In particular, services dropped -13.9% yoy. Gross value of manufacturing was still down -1.2% yoy despite improvement in the second half. Information and communications was the only sector that saw noticeable growth of 0.7% yoy.

                Full release here.

                Australia exports rose to record high in Apr, on metalliferous ores

                  By
                  ActionForex
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                  According preliminary estimates, Australia export of goods rose AUD 13m (0% mom) to AUD 35.95B in April, hitting a record high. Import of goods dropped AUD -1.9B, (-7% mom) to AUD 25.81B. Trade surplus widened to AUD 10.14B, up from March’s AUD 8.23B, the third highest on record.

                  ABS said, “following strong exports in March 2021, metalliferous ores increased another 1 per cent in April 2021 to record a historic high of $16.5 billion, driving record high exports”. The increase in coal exports was driven by thermal coal, up $203 million, with an increase of $116 million to India. Australian coal exports to India have been steadily rising since mid-2020, following a substantial reduction in Chinese demand for Australian coal.

                  Full release here.

                  Fed George not inclined to dismiss inflation signals

                    By
                    ActionForex
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                    Kansas City Fed President Esther George said she’s “not inclined to dismiss today’s pricing signals or to be overly reliant on historical relationships and dynamics in judging the outlook for inflation.” But she didn’t explicitly indicated whether she’s ready to adjust monetary policy for now.

                    “The structure of the economy changes over time, and it will be important to adapt to new circumstances rather than adhere to a rigid formulation of policy reactions,” she said. “With a tremendous amount of fiscal stimulus flowing through the economy, the landscape could unfold quite differently than the one that shaped the thinking”.

                    Fed Bullard: We’re not quite there yet

                      By
                      ActionForex
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                      St. Louis Fed President James Bullard said yesterday that “we’re not quite there yet” to scale back the monetary stimulus. Vaccinations are bringing the economy “closer and closer” to the pre-pandemic state. “I think there will come a time when we can talk more about changing the parameters of monetary policy, I don’t think we should do it when we’re still in the pandemic,” he added.

                      Bullard also said, “we’ll see if the demand really flows through to a lasting increase in inflation or if this is just temporary. I think it’s mostly temporary but then some of it will flow through to inflation expectations.” He expected inflation to rise above 2% in 2021 and into 2022.

                      BoE Bailey: Transitory inflation developments have few direct medium term implications

                        By
                        ActionForex
                        -

                        BoE Governor Andrew Bailey told the parliament’s Treasury Committee that the “transitory developments” inflation should have “few direct implications for inflation over the medium term”. Though, policymakers are still “going to have to be looking at the entrails of the inflation evidence very carefully from now onwards.”

                        MPC member Michael Saunders also said, long term inflation is “likely to continue to be restrained for some time by spare capacity in the labour market, with relatively weak underlying wage growth and subdued service sector inflation”.

                        On the other hand, Chief Economist Andy Haldane emphasized, “the situation we need to avoid like the plague is one where inflation expectations adjust before we do, or where we wait for proof positive that effects on inflation are not transitory before acting.”

                        Fed Brainard: Fed is stepping up reaching and engagement on CBDCs

                          By
                          ActionForex
                          -

                          Fed Governor Lael Brainard said in a speech that “the pandemic accelerated the migration to contactless transactions and highlighted the importance of access to safe, timely, and low-cost payments for all.”

                          “With technology platforms introducing digital private money into the U.S. payments system, and foreign authorities exploring the potential for central bank digital currencies (CBDCs) in cross-border payments,” she added, “the Federal Reserve is stepping up its research and public engagement on CBDCs.”

                          Full speech here.

                          NABE: Survey panelists anticipate inflation easing in H2

                            By
                            ActionForex
                            -

                            According to a survey by the National Association of Business Economists, US GDP is estimated to growth by 8.5% annualized in Q2, much higher than March survey median forecast of 5.2%. The median real GDP growth estimate for the whole 2021 is 6.7%, compared to March forecast of 4.8%. Respondents expected inflation to accelerate strongly in 2021, before cooling in 2022. CPI is forecast to be 2.8% yoy in Q4, 2021. Core PCE inflation is expected to be at 2.2% in Q4 2021.

                            “NABE panelists expect near-term inflation pressure, but anticipate it being short-lived,” added Survey Chair Holly Wade, executive director, NFIB Research Center. “Inflation expectations moved up significantly from those in the March survey, but panelists anticipate inflation easing in the second half of 2021, with no resurgence in 2022.

                            Full release here.

                            BoJ Kuroda: We’re beginning to see the light at the end of the pandemic tunnel

                              By
                              ActionForex
                              -

                              In a speech, BoJ Governor Haruhiko Kuroda said “we are beginning to see the light at the end of this pandemic tunnel, but the light does not clearly reveal the shape of the society and economy we are approaching”.

                              “Given the considerable uncertainty we face, it is only natural that we will have different views on the relative importance of the issues involved and the direction our discussions should take.”

                              For the time being, we do not have to agree on all the details; the important thing is for participants from central banks, international institutions, and academia to present their views and share their ideas.

                              Full speech here.

                              NZD/JPY and NZD/USD soften but stay above near term support

                                By
                                ActionForex
                                -

                                New Zealand Dollar weakens mildly today despite much stronger than expected retail sales data. While RBNZ rate decision is a focus this week, it’s unlikely to provide any market moving surprises. Kiwi is currently just following broad market developments.

                                NZD/JPY edged higher to 79.40 earlier this month, but quickly retreated. There is no confirmation of bearish reversal yet. But upside momentum was clearly diminishing as seen in both 4 hour and daily MACD. Sustained break of 77.68 support will also have 55 day EMA firmly taken out. That would argue that NZD/JPY is already in correction to, at least, the rise from 68.86. Deeper decline could be seen back to 75.61 support and possibly below. Nevertheless, rebound from current level would retail near term bullishness for another high above 79.40 first.

                                NZD/USD weakened after hitting 0.7304. Sustained break of 0.7114 support will also have 55 day EMA firmly taken out. That would suggest that recovery from 0.6942 has completed. Corrective pattern form 0.7463 should have then started the third leg. Deeper fall could then be seen through 0.6942 support to 0.6797 resistance turned support and below, to correct whole up trend from 0.5469. Nevertheless, strong rebound from current level, followed by break of 0.7304, will bring retest of 0.7463 high next.

                                New Zealand retail sales rose 2.5% qoq in Q1

                                  By
                                  ActionForex
                                  -

                                  New Zealand retail sales rose 2.5% qoq in Q1, much better than expectation of -1.8% qoq. 10 of the 16 regions showed higher sales values. Ex-auto sales rose 3.2% qoq, also well above expectation of -1.0% qoq.

                                  Electrical and electronic goods had the largest increase, up 8.4 percent followed by recreational goods, up 16 percent in the March 2021 quarter.

                                  “Higher spending in the electrical industry coincides with falling prices for computers and phones during the first quarter of 2021,” retail business manager Sue Chapman said.

                                  Full release here.

                                  Canada retail sales rose 3.6% mom in March, up in 10 of 11 subsectors

                                    By
                                    ActionForex
                                    -

                                    Canada retail sales rose 3.6% mom in March, to CAD 57.6B, above expectation of 2.3% mom. Ex-auto sales rose 4.3% mom, above expectation of 4.0% mom too. Sales increased in 10 of 11 subsectors, representing 79.1% of retail trade. For Q1, sales were up 1.8%, the third quarterly increase.

                                    Advance estimates indciates that retail sales dropped -5.1% mom in April. This unofficial estimate was calculated based on responses received from 46% of companies surveyed.

                                    Full release here.

                                    Bundesbank: German services second should increase again significantly

                                      By
                                      ActionForex
                                      -

                                      Germany’s Bundesbank said in its monthly report, “as soon as the corona protective measures are gradually loosened, activity in the service areas affected should increase again significantly.”

                                      Also, “as in the summer quarter of 2020, private consumption should recover quickly as soon as the restrictions are broadly and sustainably withdrawn”.

                                      “The industry is benefiting from strong demand, even if production is likely to be slowed down by bottlenecks in preliminary products in the near future,” it added.

                                      Full release here.

                                      UK PMI composite rose to new record, an unprecedented growth spurt

                                        By
                                        ActionForex
                                        -

                                        UK PMI Manufacturing jumped to 66.1 in May, up from 60.9, well above expectation of 60.0. That’s another record high since 1992. PMI Services rose to 61.8, up from 61.0, below expectation of 62.0. But that’s still a 91-month high. PMI Composite Rose to 62.0, up from 60.7, record high since 1998.

                                        Chris Williamson, Chief Business Economist at IHS Markit, said: “The UK is enjoying an unprecedented growth spurt as the economy reopens. Factory orders are surging at a record pace as global demand for goods continues to revive, and the service sector is reporting near-record growth as the opening up of the economy allows more businesses to trade. Business confidence has meanwhile hit an all-time high as concerns about the impact of the pandemic continue to fade…

                                        “A direct consequence of demand running ahead of supply was a steep rise in prices, hinting strongly that consumer price inflation has much further to rise after lifting to 1.5% in April. However, the inflationary spike could prove temporary, as many of the price hikes have reflected surcharges on shipping and other shortage-related issues emanating from the pandemic. As these constraints ease, price pressures should abate, but there remains a great deal of uncertainty as to how long it will take for global business and trade to return to normal functioning, especially if new virus variants appear.”

                                        Full release here.

                                        Eurozone PMI composite rose to 56.9, a 39-month high

                                          By
                                          ActionForex
                                          -

                                          Eurozone PMI Manufacturing edged down to 62.8 in May, down from 62.9, above expectation of 62.4. PMI Services surged to 55.1, up from 50.2, above expectation of 52.0, a 35-month high. PMI Composite rose to 56.9, up from 53.8, a 39-month high.

                                          Chris Williamson, Chief Business Economist at IHS Markit said: “Demand for goods and services is surging at the sharpest rate for 15 years across the eurozone as the region continues to reopen from covid-related restrictions. Virus containment measures have been eased in May to the lowest since last October, facilitating an especially marked improvement in service sector business activity, which has been accompanied by yet another near-record expansion of manufacturing.

                                          “Growth would have been even stronger had it not been for record supply chain delays and difficulties restarting businesses quickly enough to meet demand, especially in terms of re-hiring. The shortfall of business output relative to demand is running at the highest in the survey’s 23-year history.

                                          “This imbalance of supply and demand has put further upward pressure on prices. How long these inflationary pressures persist will depend on how quickly supply comes back into line with demand, but for now the imbalance is deteriorating, resulting in the highest-ever price pressures for goods recorded by the survey and rising prices for services.”

                                          Full release here.

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