Australia employment grew 90k in November, to 12.86m, much better than expectation of 50.0k. Over, the year, though, employment was still down -0.6% or -83.1k. Looking at some details, Full-time jobs rose 84.2k to 8.73m. Part-time jobs rose 5.8k to 4.14m.
Unemployment rate dropped -0.2% to 6.8%, better than expectation of 7.0%. Participation rate rose 0.3% to 66.1%. Hours worked rose 2.5% mom.
New Zealand GDP grew 14.0% qoq in Q3, stronger than expectation of 12.8% qoq. That’s also the largest quarterly rise on record. However, on an annual bases, GDP dropped -2.2% over the year. Growth in Q3 was not enough to fully makeup for the economic impact of the coronavirus pandemic and the responding measures.
Looking at some more details, Services industries rose 11.1% qoq. Goods-producing industries rose 26.0% qoq. Primary industries rose 4.6% qoq.
NZD/USD broke out to the upside after the release. Further rise is expected as long as 0.7054 minor support holds. Sustained trading above 61.8% projection of 0.5920 to 0.6797 from 0.6589 at 0.7131, could bring upside re-acceleration. Next target is 100% projection at 0.7466.
However, considering relatively weak upside momentum as seen in daily MACD, break of 0.7054 support will indicate rejection by 0.7131. That’s also an early sign of short term topping. Deep pull back could be seen back to 55 day EMA (now at 0.6883).
Dollar index is still holding on to 90 psychological support for the moment, even though the greenback is trading as the worst performing one for the week. The level coincides with 38.2% projection of 102.99 to 91.71 from 94.30 at 90.00. Though, as EUR/USD has already taken out 1.2177 resistance, selloff in Dollar could take off any time.
In the bearish case, next downside target will be 61.8% projection at 87.34. Though, rebound from current level, followed by break of 91.23 resistance should indicate short term bottoming and bring rebound. Down trend extension would then be delayed to the early part of Q1.
US stocks ended mixed overnight with NASDAQ closed at another record, but DOW edged down slightly. Fed left monetary policy as widely expected. FOMC noted, “path of the economy will depend significantly on the course of the virus,” and it pledged to “be prepared to adjust the stance of monetary policy as appropriate”. The commitment to maintain accommodative policy supported overall market sentiment. Additionally, there’s optimism that Congress inched close to compromising on a USD 900B fiscal stimulus package.
NASDAQ closed up 0.50% at 12658.18. Upside momentum is relatively unconvincing as seen in daily MACD. But there is no sign of topping yet. Further rise should be seen to 61.8% projection of 6631.42 to 12074.06 from 10822.57 at 12901.65. The projection level represents an important near term hurdle to clear. Decisive break there could prompt upside re-acceleration in early part of next year. Though, rejection there, followed by 12214.73 support would mix up the medium term outlook a bit, and at least bring deeper correction to 55 day EMA (now at 11853.94) first.
US retail sales dropped -1.1% mom to USD 546.5B in November, below expectation of -0.2% mom. Ex-auto sales dropped -0.9% mom, below expectation of 0.2% mom rise. Ex-gasoline sales dropped -0.9% mom. Ex-auto, ex-gasoline sales dropped -0.8% mom.
Canada CPI accelerated to 1.0% yoy in November, up from 0.7% yoy, above expectation of 0.8% yoy. Prices rose in six of the eight major components on a year-over-year basis. CPI common slowed to 1.5% yoy, down from 1.6% yoy, missed expectation of 1.6% yoy. CPI median was unchanged at 1.9% yoy, matched expectations. CPI trimmed slowed to 1.7% yoy, down from 1.8% yoy, missed expectation of 1.8% yoy.
Also from Canada, foreign securities purchases rose to CAD 6.92B in October. Wholesale sales rose 1.0% mom, versus expectation of 0.7% mom.
Sterling and Euro rise broadly today, partly based on progress in Brexit negotiations, and partly on stronger than expected PMIs. Strong risk-on market in Europe also pressures the green back.
In particular EUR/USD has taken out 1.2177 resistance to resume the whole up trend from 1.0635. Next target will be 61.8% projection of 1.0635 to 1.2011 from 1.1602 at 1.2452.
GBP/USD also breaches 1.3539 resistance, suggesting resumption of whole rise from 1.1409. Sustained trading above 1.3539 will pave the way to 61.8% projection of 1.1409 to 1.3482 from 1.2675 at 1.3956.
European Commission President Ursula von der Leyen said today that “we have found a way forward on most issues” in Brexit trade talks. But “two issues still remain outstanding: the level playing field and fisheries”. Still ” issues linked to governance now have largely been resolved. The next days are going to be decisive.”
“On standards, we have agreed a strong mechanism of non- regression. That’s a big step forward. And this is to ensure that our common high labour, social and environmental standards will not be undercut,” von der Leyen added,
“Difficulties still remain on the question of how to really future-proof fair competition. But I’m also glad to report that issues linked to governance by now are largely being resolved.”
UK PMI Manufacturing rose to 57.3, up from 55.6, above expectation of 55.9, 37-month high. PMI Services rose to 49.9, up from 47.6, below expectation of 50.5. PMI Composite rose to 50.7, up from 49.0.
Chris Williamson, Chief Business Economist at IHS Markit, said: “The UK economy returned to growth in December after the lockdown-driven downturn seen in November, adding to signs that the hit to the economy from the second wave of virus infections has so far been far less harsh than the first wave in the spring…. Business optimism about the year ahead also remained buoyant, reflecting the light at the end of the tunnel created by the roll-out of the COVID-19 vaccines. Optimism waned slightly compared to November, however, largely due to rising concerns over a no-deal Brexit.”
Eurozone PMI Manufacturing rose to 55.5 in December, up from 53.8, above expectation of 53.0, a 55-month high. PMI Services rose to 47.3, up from 41.7, well above expectation of 40.9. PMI Composite also rose to 49.8, up from 45.3.
Chris Williamson, Chief Business Economist at IHS Markit said: “The data hint at the economy close to stabilising after having plunged back into a severe decline in November amid renewed COVID- 19 lockdown measures. The fourth quarter downturn consequently looks far less steep than the hit from the pandemic seen earlier in the year, though the picture is very mixed by sector. Companies have also become increasingly optimistic about the year ahead, with vaccine rollouts expected to help restore businesses to more normal trading conditions as 2021 progresses.”
Germany PMI Manufacturing rose to 58.6 in December, up from 57.8, above expectation of 56.6, a 34-month high. PMI Services rose to 47.7, up from 46.0, above expectation of 44.0. PMI Composite rose to 52.5, up from 51.7.
Phil Smith, Associate Director at IHS Markit said: “German economy still on a relatively stable platform… However, the impending harder lockdown threatens to put pay to some of the resilience we’ve seen so far… Nevertheless, German manufacturers and their service sector counterparts are positive about the outlook for 2021, amid the imminent rollout of COVID vaccines.”
France PMI Manufacturing rose to 51.1 in December, up from 49.6, above expectation of 49.6. PMI Services rose to 49.2, up from 48.8, above expectation of 39.3. PMI Composite rose to 49.6, up from 40.6, a 4-month high.
Eliot Kerr, Economist at IHS Markit said: “With lockdown restrictions having eased this week and a clearer pathway to immunizing the population ahead, firms can now begin working back up towards pre-coronavirus levels of activity. That expansionary mindset was exemplified by the first increase in employment for ten months and confidence levels reaching their highest since January.”
UK CPI slowed sharply to 0.3% yoy in November, down from 0.7% yoy, missed expectation of 0.6% yoy. CPI core slowed to 1.1% yoy, down from 1.5% yoy, missed expectation of 1.4% yoy. RPI also slowed to 0.9% yoy, down from 1.3% yoy, missed expectation of 1.3% yoy.
PPI input came in at 0.2% mom, -0.5% yoy. PPI output was at 0.2% mom, -0.8% yoy. CPPI core output was at 0.0% mom, 0.9% yoy.
Fed should leave all the monetary policy measures unchanged today: Fed funds rate should stay unchanged at 0-0.25% and asset purchases at USD120B per month. The focus of the meeting will be on the adjustment of the forward guidance about the asset purchase program. It will be a qualitative, outcome-based guidance as “most” members favored.
Additionally, the statement will be accompanied by the updated economic projections and median dot plots about the policy rate outlook. For the former, thanks to the vaccine news, the Fed might upgrade GDP growth and inflation forecasts for 2021. We expect the majority of members would project no rate hike until end-2023. Yet, it is possible that more members would anticipate an increase before that, when compared with the last projections.
Some previews here:
Dollar is generally holding inside last week’s range for now, except against Yen. USD/JPY’s break of 103.51 temporary now put focus to 103.17 support. Decisive break there resume the down trend from 111.71 towards 101.18 low. If that happens, we might also see a break of 1.2177 temporary top in EUR/USD, and 90 psychological level in Dollar index.
Japan’s exports dropped -4.2% yoy to JPY 6.11T. Imports dropped -11.1% yoy to JPY 5.75T. Trade surplus came in at JPY 367B. In seasonally adjusted terms, Trade surplus widened to JPY 0.57T, slightly above expectation of JPY 0.55T.
The data marked the 24th straight month of year-over year decline in exports, longest streak on record since 1979. By destination, exports to the US contracted for the first time in three months, by -2.5% yoy. Exports to China rose 3.8% yoy, slowest pace in five months. Exports to Asia also dropped for the first time in two months, by -4.3% yoy. Exports to EU dropped -2.6% yoy.
Japan Jibun Bank PMI Manufacturing rose to 49.5 in December, up from 48.8. PMI Services dropped to 47.2, down from 47.8. PMI Composite dropped to 48.0, down from 48.1.
Usamah Bhatti, Economist at IHS Markit, said: “Despite the short-term disruption caused by a resurgence in coronavirus disease 2019 (COVID-19) cases, Japanese private sector businesses were optimistic that business conditions would improve in the year-ahead. Positive sentiment stemmed from the expectation that there would be an end to the pandemic which would fuel both domestic and international demand. Nevertheless, uncertainty surrounding the timing and pace of the economic recovery resulted in a softening of expectations.”
Australia Westpac-Melbourne Institute Leading Index rose from 3.77% to 4.38% in November. That’s the strongest growth rate in the sixty year history of the measure. Though, Westpac said “the gains still largely reflect the severity of the preceding contraction”. In level terms, the index has now “recouped 80%” of that fall.
Westpac expects RBA to introduce a second AUD 100B QE program in February meeting. That would be followed by two smaller program of AUD 50B each in the year to October 2022.
Australia CBA PMI Manufacturing rose to 56.0 in December, up from 55.8, hitting a 36-month high. PMI Services rose to 57.4, up from 55.1, a 7-month high. PMI Composite rose to 57.0, up from 54.9, a 5-month high.
Pollyanna De Lima, Economics Associate Director at IHS Markit, said: “Not only was the Australian economic recovery sustained in December, but growth also gathered momentum as the loosening of COVID-19 restrictions underpinned further improvements in demand for goods and services…. Both goods producers and service providers continued to hire extra staff, the former to the greatest extent in close to three years… Private sector companies were at their most optimistic in over two years…One area that failed to improve was exports… The latest fall in international sales was the eleventh in successive months.”
In a speech, BoC Governor Tiff Macklem said the economic recovery from the pandemic is “at a very difficult stage”. For the nears term, rising coronavirus infections will “dampen growth and could even deepen our economic hole” and uncertainty is “elevated”. The recovery is going to be “long and choppy”.
Nevertheless, he noted that “trade has bounced back faster than many economists had predicted” and are expected to be strong in 2021. News of vaccines also “puts a more certain timeline on the resurgence of global demand”. “As a country, we need to leverage the broad trade access we have and work with like-minded countries to foster a renewed spirit of open, rules-based trade that works for the 21st century.”
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for over a decade. Empowering the individual traders was, is, and will always be our motto going forward.
Contact us: contact@actionforex.com
© ActionForex.com © 2025 All rights reserved.
SNB keeps sight deposit rate at -0.75%, pandemic to be back under control in foreseeable future
SNB kept sight deposits rate unchanged at -0.75%. Also, “in light of the highly valued Swiss franc, the SNB remains willing to intervene more strongly in the foreign exchange market”.
In the baseline scenario, SNB expects the pandemic to be “brought back under control in the foreseeable future”. Global recovery should therefore “regain momentum in the course of next year”. But production capacity will be “unfertilized for some time” and inflation will remain modest in most countries.
For Swiss, SNB expects GDP to contract by around -3% this year. GDP will then grow 2.5% to 3.0% for 2021, but recovery remains “incomplete”. Conditional inflation forecast through the end of 2021 is revised slightly lower, “primarily due to the renewed deterioration in the economic situation as a result of the second wave of the pandemic”. Overall inflation would be at -0.7% in 2020, 0.0% in 2021, and 0.2% in 2022.
Full statement here.