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China announced retaliations against US on HKHRDA

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    ActionForex.com
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    China’s Foreign Ministry announced today retaliations against US passage of the Hong Kong Human Rights Democracy Act. US military ships and aircrafts are banned from visiting Hong Kong. Also, sanctions are imposed against several US NGO, including the National Endowment for Democracy, the National Democratic Institute for International Affairs, the International Republican Institute, Human Rights Watch, and Freedom House.

    Spokeswoman Hua Chunying said “we urge the U.S. to correct the mistakes and stop interfering in our internal affairs. China will take further steps if necessary to uphold Hong Kong’s stability and prosperity and China’s sovereignty”. She added that the NGOs “shoulder some responsibility for the chaos in Hong Kong and they should be sanctioned and pay the price.”

    Separately, Axios reported on Sunday that trade negotiations between US and China “stalled” before of the “Hong Kong legislation”, referring to the HKHRDA.

    UK PMI manufacturing finalized at 48.9, signs of a two-speed economy persisted

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      ActionForex.com
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      UK PMI Manufacturing was finalized at 48.9 in November, revised up from 48.3, down from October’s 49.6. Markit noted that output, new orders and employment all declined. Stocks depleted and purchasing reduced following Brexit delay.

      Rob Dobson, Director at IHS Markit, which compiles the survey:

      “November saw UK manufacturers squeezed between a rock and hard place, as the uncertainty created by a further delay to Brexit was accompanied by growing paralysis ahead of the forthcoming general election. Downturns in output and new orders continued amid a renewed contraction in exports. The pace of job losses also hit a seven-year high as firms sought to reduce overheads in the face of falling sales. Destocking at manufacturers and their clients following the latest Brexit delay was a major contributor to the weakness experienced by the sector. Inflationary pressures meanwhile showed signs of moderating further, with input costs falling slightly for the first time since March 2016.

      “Signs of a two-speed economy persisted, with intensifying business uncertainty leading to a further steep drop in demand for machinery and equipment as firms cut back on investment, but rising demand for consumer goods suggests that households continue to provide some support to the economy.

      “Manufacturers across all sectors will be hoping that the New Year brings clarity on the political, trade and economic fronts, providing a more certain foundation to plan and rebuild as the next decade begins.”

      Full release here.

      Eurozone PMI Manufacturing finalized at 46.9, still a major drag on the economy

        By
        ActionForex.com
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        Eurozone PMI Manufacturing is finalized at 46.9 in November, up from October’s 45.9. Markit noted milder falls in new orders and output recorded during the month. But job losses sustained despite improve in confidence. Looking at the member states, Germany PMI Manufacturing improved to 5-month high of 44.1, but stayed well below 50 no-change mark. The Netherlands dropped to 49.6, a 77-month low. Only Greece and France were above 50.

        Commenting on the final Manufacturing PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

        “A further steep drop in manufacturing output in November means the goods-producing sector is likely to have acted as a major drag on the eurozone economy again in the closing quarter of 2019. The survey data for the fourth quarter so far are indicating a quarterly rate of contraction in excess of 1% for manufacturing.

        “Although still signalling a steep rate of decline, the manufacturing PMI nonetheless brings some encouraging signals which will fuel speculation that the worst is over for euro area producers, barring any new set-backs (notably in relation to Brexit and trade wars). In particular, November saw the rate of loss of export sales easing further from July’s recent record, helping pull other indicators such as output, employment, order books and purchasing off their recent lows.

        “Perhaps most promising is a marked upturn in business sentiment, particularly in Germany, with optimism about production in the year ahead hitting a five-month high in November. Producers’ renewed optimism in part reflects reduced concerns over trade wars. We nevertheless still need to see a further notable easing in the rate of loss of orders before getting too excited about the prospect of an imminent return to growth for manufacturing.”

        Full release here.

        New Zealand Treasury: GDP growth likely falls below budget forecasts

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          ActionForex.com
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          In its Monthly Economic Indicators report, New Zealand Treasury Department noted that November data were “fair mixed” with some pointing to “further slowing in GDP growth”. Others indicated growth may be “leveling out”. On balance, “weaker-than-forecast investment and services exports are likely to see overall New Zealand GDP growth fall below Budget forecasts”

          It’s also noted that news flow surrounding trade tensions “continues to seesaw”. But “prospects of a US-China trade agreement have generally supported sentiment over the last month”.

          Full report here.

          Also from New Zealand, terms of trade index rose 1.9% in Q3, above expectation of 1.1%.

          China Caixin Manufacturing PMI rose to 51.8, but business confidence remained subdued

            By
            ActionForex.com
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            China Caixin Manufacturing PMI rose slightly to 51.8 in November, up from 51.7 and beat expectation of 51.4. Markit noted there were solid increases in output and new business. Employment was broadly stable while inflationary pressures remained weak.

            Commenting on the China General Manufacturing PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said:

            “China’s manufacturing sector continued to recover in November, with both domestic and overseas demand rising and the employment subindex returning to expansionary territory for the second time this year.

            “However, business confidence remained subdued, as concerns about policies and market conditions persisted, and their willingness to replenish stocks remained limited. This is a major constraint on economic recovery, which requires continuous policy support. Currently, manufacturing investment may be lingering near a recent bottom. A low inventory level has lasted for a long time. If trade negotiations between China and the U.S. can progress in the next phase and business confidence can be repaired effectively, manufacturing production and investment is likely to see a solid improvement.”

            Full release here.

            Released over the weekend, the official PMI Manufacturing rose to 50.2 in November, up from 49.3 and beat expectation of 49.5. PMI Non-Manufacturing rose to 54.4, up from 52.8 and beat expectation of 53.1.

             

            Japan PMI manufacturing finalized 48.9, seventh month of contraction

              By
              ActionForex.com
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              Japan PMI Manufacturing was finalized at 48.9 in November, up from 48.4 in October. That’s the seven straight month of sub-50 reading, signalling a continuation of the downturn in the manufacturing sector. Jibun Bank noted that solid decline in new orders led to further output cutbacks. Economic weakness across Asia hit exports. Selling charges also decreased for the sixth month running.

              Commenting on the latest survey results, Joe Hayes, Economist at IHS Markit, said:

              “Japan’s manufacturing sector remains firmly stuck in contraction, with the same issues which have plagued the industrial world once again hitting firms where it hurts. In particular, export orders dropped at the fastest rate since mid-year amid reports of demand weakness at key trade destinations, namely China.

              “At the sub-sectors, it was intermediate and investment goods which were the primary sources of economic decline, whereas consumer goods makers observed improvements in business conditions.

              “Signs of how deeply-rooted this manufacturing downturn in Japan has become were seen in other survey data. Price discounting has been a trend in each of the past six months, highlighting that firms are now actively trying to tackle the sluggish demand conditions. Inventories of inputs also fell at a sharp rate, suggesting that firms are not expecting output requirements to rise anytime soon.”

              Full release here.

              Australia AiG manufacturing index dropped to 48.1, lowest since 2016

                By
                ActionForex.com
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                Economic data released from Australia are generally disappointing. AiG Performance Index dropped to 48.1 in November, down from 51.6. That’s also the lowest level since August 2016, and indicates contraction in the sector. AiG said: “. The faster rate of contraction of the new orders index in November suggests a weak Christmas period ahead for Australian manufacturers. However, some manufacturing sectors are reporting better conditions than others, with manufacturers in the large food and beverage sector continuing to report buoyant conditions.”

                Also released, company gross operating profits dropped -0.8% qoq in Q3 versus expectation of 1.0% qoq rise. Building permits dropped -8.1% mom in October, versus expectation of -1.0% mom. TD securities inflation rose 0.0% mom in November.

                Canada GDP grew 0.1% in Sep, 0.3% in Q3

                  By
                  ActionForex.com
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                  Canada GDP grew 0.1% mom in September, matched expectations. Increase in services (+0.2%) slightly outpacing the increase in goods (+0.1%). Growth was recorded in 13 of 20 industrial sectors.

                  For Q3, GDP growth slowed to 0.3%, down from Q2’s 0.9%. Expressed at annualized rate GDP grew 1.3%. Business investment rose 2.6% in the third quarter, the fastest pace since the fourth quarter of 2017. Growth in household spending accelerated to 0.4%, after rising 0.1% in the second quarter. These increases were moderated by a 0.4% decline in exports, while imports were flat.

                  Also from Canada, IPPI rose 0.1% mom in October, above expectation of 0.0% mom. RMPI dropped -1.9% mom, matched expectations.

                  Eurozone CPI rose to 1.0%, core up to 1.3%

                    By
                    ActionForex.com
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                    Eurozone CPI accelerated to 1.0% yoy in November, up from 0.7% yoy, beat expectation of 0.8% yoy. CPI core also accelerated to 1.3% yoy, up from 1.1% yoy, beat expectation of 1.2% yoy.

                    Germany unemployment dropped -16k in November, versus expectation of 5k rise. Unemployment rate was unchanged at 5%, matched expectations. Retail sales, however, dropped -1.9% mom, much worse than expectation of -0.2% mom.

                    Swiss KOF dropped to 93, economic outlook remains subdued

                      By
                      ActionForex.com
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                      Swiss KOF Economic Barometer dropped to 93.0 in November, down from 94.8, and missed expectation of 95.0. It’s also the lowest level since 2015. KOF said: “The downward movement, which has been observed since the beginning of the year, continues. The barometer is still well below its long-​term average. The outlook for the Swiss economy remains subdued.”

                      Also, “Several bundles of indicators are equally responsible for the decline. However, negative signals from hotel and catering activities and from the banking and insurance sector stand out slightly. Indicators regarding foreign demand and other services are also declining. On the other hand, indicators for the manufacturing sector remain almost unchanged.”

                      Full release here.

                      UK Gfk consumer confidence unchanged at -14, upcoming election an opportunity to move UK out of doldrums

                        By
                        ActionForex.com
                        -

                        UK GfK Consumer Confidence was unchanged at -14 in November, matched expectations. General Economic Situation index over the next 12 months improved by 3 pts from -37 to -34, two points lower than -32 a year ago. Joe Staton, Client Strategy Director at GfK, says: “In the face of Brexit and election uncertainty, consumers are clearly in a ‘wait-and-see’ mode…

                        “The general election is potentially an opportunity to move us out of the doldrums – but for this to happen there must be a clear result. A hung parliament could be very damaging for consumer confidence and would surely deepen the obvious malaise that we see month after month.”

                        Full release here.

                        Japan industrial production posted largest contraction in nearly two years

                          By
                          ActionForex.com
                          -

                          Japan industrial production dropped sharply by -4.2% mom in October, missing expectation of -2.1% mom. That’s also the worst decline in nearly two years since January 2018. Output was seen as negatively impacted by temporary shutdowns of factories due to typhoon. Also slowing productions of big-ticket items following sales tax hike also weighed.

                          METI also noted that according to the Survey of Production Forecast in Manufacturing, production is expected to decrease in November and increase in December. Finance Minister Taro Aso said the government would consider more funding or cashless support to secure the economy’s recovery trend.

                          Also from Japan, unemployment rate was unchanged at 2.4% in October, matched expectations. Tokyo CPI core edged up to 0.6% yoy in November, matched expectations.

                          BoJ Kuroda pushes deregulation and structural reforms

                            By
                            ActionForex.com
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                            BoJ Governor Haruhiko Kuroda told the parliament today that “a mix of fiscal and monetary policy isn’t enough” to boost the economy. It’s also important to “proceed with deregulation and structural reforms to heighten Japan’s medium- and long-term growth potential.”

                            Kuroda repeated his view that the ultra-look monetary policy could increase the effect of fiscal stimulus. However, he also emphasized “our monetary easing efforts are aimed at achieving our price target, not at helping fund government spending. There needs to be a clear line drawn on this point,”

                            Executive Director Eiji Maeda told the parliament that “current ultra-loose monetary environment is stimulating the economy by spurring capital expenditure and housing investment.” That will “push up” household income and asset prices. But policymakers are also “mindful” on the “excessive declines” in super-long yields. He warned that could ‘hurt public sentiment and economic activity by lowering the interest life insurers and pension funds earn from their investment”.

                            Eurozone economic sentiment imrpoved on consumer and retail trade

                              By
                              ActionForex.com
                              -

                              Eurozone Economic Sentiment rose to 101.3 in November, up from 100.8, beat expectation of 101.0. The improvement of sentiment resulted from slight increases in confidence among consumers (up 0.4 to -7.2) and retail trade managers (up 0.7 to -0.2). Confidence remained broadly unchanged in industry (up 0.3 to -9.2) and services (up 0.3 to 9.3).

                              Amongst the largest euro-area economies, the ESI increased in Spain (+0.7), France and Germany (both by +0.4), while it remained virtually unchanged in Italy (-0.1) and worsened in the Netherlands (−1.0).

                              Business Climate Indicator dropped to -0.23, down from -0.20, slightly better than expectation of -0.24. While managers’ assessments of overall order books and, in particular, past production deteriorated, their production expectations and assessments of the stocks of finished products improved. Managers’ assessment of their export order books remained broadly stable.

                              Swiss GDP 0.4% in Q3, but impact of subdued international environment felt

                                By
                                ActionForex.com
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                                Swiss GDP grew 0.4% qoq in Q3, accelerated from Q2’s 0.3% qoq and beat expectation of 0.1% qoq. SECO said: “Exports of chemical and pharmaceutical products and energy were key contributing factors. In other areas, the impact of the subdued international environment was felt more strongly. The economic slowdown is being borne out on the whole.”

                                Full release here.

                                BoJ Kuroda: YCC would make fiscal policy even more effective

                                  By
                                  ActionForex.com
                                  -

                                  BoJ Governor Haruhiko Kuroda said a mix of fiscal and monetary policy measures is a standard way to support the economy. The challenges Japan is facing, including recent natural disasters and impact from overseas slowdown, “should be better be addressed by government with fiscal policy and structural policies”.

                                  On monetary side, the yield curve control of BoJ, which intends to maintain short- and long-term rates quite low, “would make fiscal policy even more effective”. He added, “which intends to maintain short- and long-term rates quite low, would make fiscal policy even more effective.”

                                  YouGov predicts 68 Conservative majority in UK Dec elections

                                    By
                                    ActionForex.com
                                    -

                                    Sterling jumps broadly after YouGov projected that the Conservative Party is on track to win its biggest majority in more than three decades in the upcoming election on December 12. The results, if realized, would put UK on track for Brexit with a deal finally on January 31.

                                    According to the poll, Conservatives would win 359 seats, giving it a majority of 68. Labour is predicted to win 211 seats, SNP 43, and Lib Dems 13. “As expected, the key thing deciding the extent to which each of these seats is moving against Labour are how that seat voted in the European Union referendum,” said Chris Curtis, YouGov’s political research manager. “This is allowing the Tories to overturn quite substantial majorities.”

                                    GBP/CHF’s rally resumed by taking out 1.2892 resistance and hits as high as 1.2931 so far. Near term outlook will now remain bullish as long as 1.2673 support holds. Rise from 1.1674 is targeting 1.3399 key structural resistance next.

                                    Trump signed HKHRDA into law, China and Hong Kong government oppose

                                      By
                                      ActionForex.com
                                      -

                                      US President Donald Trump finally signed the bipartisan supported Hong Kong Human Rights and Democracy Act overnight. A second bill to ban export of crown-control munitions to Hong Kong was also signed. Trump said, “I signed these bills out of respect for President Xi, China, and the people of Hong Kong. They are being enacted in the hope that Leaders and Representatives of China and Hong Kong will be able to amicably settle their differences leading to long term peace and prosperity for all. ”

                                      Republican Senator Marco Rubio, a main driver and sponsor of the bill, said, “In an overwhelming display of bipartisan unity, Congress passed our Hong Kong Human Rights and Democracy Act, and I applaud President Trump for signing this critical legislation into law. I look forward to continuing to work with the administration to implement this law.” Democrat House Speaker Nancy Pelosi said, “If America does not speak out for human rights in China because of commercial interests, we lose all moral authority to speak out elsewhere”.

                                      The Chinese Foreign Ministry said the act “severely infringed on Hong Kong affairs, seriously interfered in China’s internal politics, and gravely violated international laws and the basic principles of international relations”. It added, “it is a blatant move of hegemony that the Chinese government and the Chinese people firmly oppose”. The China-appointed Hong Kong Government also said, “the two acts are unreasonable”, and they “will also send an erroneous signal to protesters, which is not conducive to alleviating the situation in Hong Kong”.

                                      The HKHRDA aims to back Hongkongers in defend of their autonomy, promised by China in the Sino-British Joint Declaration. Hong Kong’s status will be reviewed by the US State Department, annually, to justify continuation of the favorable trading terms. The law also threatens sanctions for human rights violations by Hong Kong Government officials.

                                      Market reactions are so far muted as the main risk remains on outcome of US-China trade deal phase one. Talks are ongoing and no one has eve dropped a hint on when it will be completed.

                                      Fed Beige Book: Modest expansion but manufacturing stagnant

                                        By
                                        ActionForex.com
                                        -

                                        In Fed’s Beige Book report, it’s noted that economic activity expanded “modestly” in the period. Most Districts reported “stable to moderately” growing consumer spending. More Districts reported expectation in manufacturing, but the “majority” continued to experience no growth.

                                        Employment continued to “rise slightly over all”. But reports were “mixed” in manufacturing employment, with reports of rising headcounts and layoffs. “Moderate wage growth” continued across move districts and wage pressures “intensified” for low-skill positions. Prices rose at a “moderate pace” and “firms generally expected higher prices going forward.

                                        Full report here.

                                        US PCE unchanged at 1.3%, core PCE slowed to 1.6%

                                          By
                                          ActionForex.com
                                          -

                                          US Personal Income rose less than 0.1% October while spending rose 0.3%. Headline PCE inflation was unchanged at 1.3% yoy, above expectation of 1.2% yoy. However, core PCE slowed to 1.6% yoy, below expectation of 1.7% yoy.

                                          Full release here.

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