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Into US session: GBP bounces from technical support, CHF downside breakout

    By
    ActionForex.com
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    Entering into US session, Sterling is the strongest one in a rather listless day so far. Technical support is seen as the major reason for the bounce. GBP/USD is close to 1.2960 key near term support. EUR/GBP is also “relatively” close to 0.8722 key near term resistance. Yen and Dollar are the next strongest ones, mainly thanks to sluggishness elsewhere.

    For now, Swiss Franc is the weakest one, as funds are flowing out of this safe haven. Rise in oil price is seen as a major factor. Technically, USD/CHF broke 1.0128 key resistance last week and medium term up trend has resumed for 1.0342 resistance. EUR/CHF also takes out 1.1444 key resistance today, indicating near term reversal. 1.1501 resistance is next and will likely be conquered with ease. Australian and New Zealand Dollar are the next weakest. The Aussie will be vulnerable to CPI release tomorrow.

    In Europe:

    • FTSE is up 0.45%.
    • DAX is down -0.23%.
    • CAC is down -0.14%.
    • German 10-year yield is up 0.0288 at 0.055.

    Earlier in Asia:

    • Nikkei rose 0.19%.
    • Hong Kong HSI dropped -0.00%.
    • China Shanghai SSE dropped -0.51%.
    • Singapore Strait Times dropped -0.13%.
    • Japan 10-year yield dropped -0.0025 to -0.029.

    NZD/USD resumes decline on RBNZ rate cut bets

      By
      ActionForex.com
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      New Zealand Dollar is among the weakest today, together with Australian and Canadian. Selloff in Kiwi picked up momentum last week after Q1 CPI release disappointed by slowing to 1.50%. There are increasing expectation that RBNZ could cut interest rate at the upcoming meeting on May 8.

      In the latest weekly commentary, Westpac noted that May’s meeting is a “close call”. A cut is supported by “continued low level of inflation and softness in business sector indicators”. However, “longer-term outlook for the economy is looking less worrying than it did a few months ago, especially given the recent news that there won’t be a capital gains tax.” On the other hand, ANZ “long-end yields have pre-empted a cut” in May. But they expected “another move lower once the first cut is delivered and markets open up to the possibility of a third. ”

      NZD/USD fall from 0.6938 resumes today by taking out 0.6666 temporary low and hits as low as 0.6659 so far. Further decline is expected as long as 0.6782 resistance holds, towards 0.6551 support. The corrective pattern from 0.6424 could have completed with three waves to 0.6938 already. Firm break of 0.6551 should add to the case of medium term down trend resumption through 0.6424 low. Nevertheless, rebound from 0.6551 will extend the corrective pattern with one more rising leg.

      ECB Coeure: Growth to return in H2, no grounds for overly gloomy thoughts

        By
        ActionForex.com
        -

        ECB Executive Board Member Benoit Coeure said in a newspaper interview that policymakers expected “growth to return in the second half of the year”. He told German daily Frankfurter Allgemeine Zeitung “there are no grounds for overly gloomy thoughts”. However, he admitted for now “it is very uncertain how long and how strong the downturn will be.”

        On monetary policy, Coeure sees no argument for tiered deposit rate. He urged banks to focus on their own costs, rather than blaming ECB’s negative rate for lower profits. Meanwhile, currently, markets are pricing in no rate cut until at least 2021. Coeure warned “we are not tied to such market expectations; they are an important input, but we are not led by them.” He added market pricing are merely reflecting “an assessment of the downside risks which is different to that of the Governing Council”.

        Maeda: BoJ ready to use combinations of measures to ease further if needed

          By
          ActionForex.com
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          Eiji Maeda, BoJ Executive Director of International Affairs, reiterated the central bank stands ready to ease monetary policy further if needed.

          He said in the Diet that “if the economy’s momentum for achieving our price target is threatened, we are ready to ease monetary policy as necessary”. And, “we’ll continue to take steps as needed, including a combination of them, with an eye on their effects and side-effects” on the financial system.

          Separately Finance Minister Taro Aso said there is no plan for the government to test a heterodox modern monetary theory. That is, countries issuing their own currencies can never run out of money”.

          Japans sees little impact from end of Iran oil sanction waiver

            By
            ActionForex.com
            -

            Japan is seeing limited impact as US ends the Iranian oil sanction waiver for the country. Trade and Industry Minister Hiroshige Seko said in a regular press conference that Japan has been lowering its reliance on Iranian oil import, which only accounts for 3%. And, there is no need to tap the national oil reserve with decision of the US.

            Though, he noted, “we will closely watch international oil markets and exchange views with Japanese companies involved in crude imports and may consider taking necessary measures.”

            The US decision to end the waiver will force eight countries, including China, Greece, India, Italy, Japan, South Korea, Taiwan and Turkey, to switch their oil supplies from Iran to other countries, starting May 2.

            US to end Iranian oil sanction waivers for China, Greece, India, Italy, Japan, South Korea, Taiwan and Turkey

              By
              ActionForex.com
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              Oil price jumps sharply today on news that US is preparing to stop all Iranian oil sanction waivers. The announce could be made as soon as on Monday. Currently, China, Greece, India, Italy, Japan, South Korea, Taiwan and Turkey are buying Iranian oil without facing US sanctions. But such waivers would expire on May 2 and US will not be renewing it them.

              WTI crude oil surges to as high 65.92 so far today. 61.8% retracement of 77.06 to 42.05 at 63.68 is considered completely got rid of. Near term outlook will stay bullish as long as 63.08 support holds. Further rise should be seen back to 77.06 key resistance.

              In the bigger picture, there is no clear sign of range break out yet. Rise from 42.05 is seen as just a leg inside the sideway pattern from 77.06. Thus, upside should be limited by 77.06 to bring another medium term fall.

              Dollar jumps on strong retail sales and jobless claims

                By
                ActionForex.com
                -

                Dollar surges broadly in early US session after generally positive economic data.

                Headline retail sales rose 1.6% mom in March versus expectation of 0.8% mom. That’s also the strongest rise since September 2017. Meanwhile, 12 of 13 major retail categories increased.  Ex-auto sales rose 1.2% mom versus expectation of 0.7% mom. Total sales from January through March rose 2.9% yoy.

                Initial jobless claims dropped -5k to 192k in the week ending April 13, below expectation of 207k. It’s also the lowest since September 6, 1969 when it was 182k. Four week moving average of initial claims dropped -6k to 201.25k, lowest since November 1, 1969. And the series seem to be trending down again. Continuing claims dropped -64k to 1.653m. Four week moving average of continuing claims dropped 022.75k to 1.713m.

                Philadelphia Fed Manufacturing Business Outlook, however, droppped to 8.5, down from 13.7 and missed expectation of 11.0.

                UK retail sales rose 1.1%, ex-auto sales rose 1.2%

                  By
                  ActionForex.com
                  -

                  Released from UK:

                  • Retail sales include auto and fuel rose 1.1% mom, 6.7% yoy in March versus expectation of -0.4% mom, 4.6% yoy.
                  • Retail sales exclude auto and fuel rose 1.2% mom, 6.2% yoy in March versus expectation of -0.3% mom, 4.0% yoy.

                  Full release here.

                  GBP/USD recovers mildly after the release but remains soft for 1.2960 support.

                  Eurozone PMIs: Disappointing start to Q2, suggest under 0.2% GDP growth

                    By
                    ActionForex.com
                    -

                    Eurozone PMI manufacturing rose to 47.8, up from 47.5 but missed expectation of 48.1. PMI services dropped to 52.5, down from 53.3 and missed expectation of 53.1. PMI composite dropped to 51.3, down from 51.6, and hit a 3-month low.

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

                    “The eurozone economy started the second quarter on a disappointing footing, with the flash PMI falling to one of the lowest levels seen since 2014. The data add to worries that the economy has failed to rebound with any conviction from one-off factors that dampened activity late last year, and continues to show only very modest growth in the face of headwinds from slower global demand growth and subdued economic sentiment.

                    “The surveys indicate that quarterly eurozone GDP growth has slowed to just under 0.2%. A similar 0.2% rate of expansion is being signalled for Germany but France stagnated and the rest of the region has moved closer to stalling.

                    “Manufacturing remained the key area of concern, with output continuing to contract at one of the fastest rates seen over the past six years. Forward -looking indicators showed some signs of improvement but remain deeply in negative territory to suggest the factory malaise has further to run.

                    “The slowdown also showed further signs of engulfing the service sector, where growth cooled again to one of the weakest rates seen since 2016. Some encouragement can be gleaned from an improvement in employment growth, although even here the pace of hiring is among the lowest seen for two-and-a-half years.

                    “The persistence of the business survey weakness raises questions over the economy’s ability to grow by more than 1% in 2019.”

                    Full release here.

                    Germany PMI manufacturing ticked up 0.4 from 69-month low to 44.5

                      By
                      ActionForex.com
                      -

                      Germany PMI manufacturing rose to 44.5 in April, up from 44.1 but missed expectation of 45.2. It’s staying deep in contraction below 50. PMI services rose to 55.6, up from 55.4, beat expectation of 55.0. PMI composite rose to 52.1, up from 51.4.

                      Commenting on the flash PMI data, Phil Smith, Principal Economist at IHS Markit said:

                      “The overall picture for Germany’s private sector has changed very little according to April’s flash data, with strong growth across the services economy continuing to counteract the export-led weakness in manufacturing. Though the PMI has ticked up from March’s 69-month low, it’s merely signalling the same modest rate of underlying growth as seen on average over the opening quarter of the year.

                      “Slight upticks in the manufacturing indices for output, new orders and employment saw the headline Manufacturing PMI post its first rise in nine months, albeit with the latest reading nonetheless the second-lowest since mid-2012. Amid reports of a declining car industry, strong competition across Europe and generally subdued global demand, the data showed another steep drop in German goods exports and the lowest confidence among manufacturers for six-and-a-half years.

                      “The survey continues to highlight strong job creation across the service sector, which is in turn supporting wage growth and means we should see consumer demand continue to rise during the second quarter.”

                      Full release here.

                      France PMI manfacutring dropped to 49.6, 32-month low, underlying slowdown in demand remains evident

                        By
                        ActionForex.com
                        -

                        France PMI manufacturing dropped to 49.6 in April, down from 49.7 and missed expectation of 50.0. That’s the lowest level in 32 months. PMI services, on the other hand, improved to 50.5, up from 49.1 and beat expectation of 49.8. PMI composite rose to 50.0, up from 48.9.

                        Commenting on the Flash PMI data, Eliot Kerr, Economist at IHS Markit said:

                        “The stabilisation of output in April is further evidence of the dwindling economic impact of the ‘gilets jaunes’ demonstrations. Protestor numbers have fallen to approximately 10% of their peak and the remaining disruption has been limited.

                        “However, protests aside, an underlying slowdown in demand remains evident in the French PMI data. New orders fell for the fifth month in a row during April, partly driven by a sixth consecutive contraction in exports. Although the rate of deterioration in new business eased, many panellists mentioned a decline in activity at their clients.

                        “More positively, firms were able to brush aside recruitment difficulties and increase staff numbers at a faster pace than in March. Although a mismatch between skills and open vacancies remains apparent, businesses continue to demonstrate the ability to overcome the adverse conditions.”

                        Full release here.

                        Japan PMI manufacturing improved to 49.5, remained stuck in its rut

                          By
                          ActionForex.com
                          -

                          Japan PMI manufacturing rose to 49.5 in April, up from 49.2 and beat expectation of 49.4. Nevertheless, it’s still the third straight month of sub-50 reading. Markit pointed out that weaker demand from domestic and international markets persists, leading output to fall further. But manufacturing employment remains resilient.

                          Commenting on the Japanese Manufacturing PMI survey data, Joe Hayes, Economist at IHS Markit, which compiles the survey, said:

                          “Japan’s manufacturing sector remained stuck in its rut at the start of Q2, with the factors which have prohibited any growth such as US-Sino relations, growth fears in China and the turn in the global trade cycle, all remaining prominent risks. Export orders dipped at a stronger rate in April, domestic demand for goods was similarly weak and firms cut their stocks and scaled back production. Yet again, the service sector will need to pick up any slack to help keep Japan’s economy afloat.”

                          Full release here.

                          Australia NAB business conditions continued broad based easing

                            By
                            ActionForex.com
                            -

                            Australia NAB Business Confidence dropped to -1 in Q1, down from 1. Current Business Conditions dropped to 4, down from 9. Business Conditions for the next two months dropped slightly to 22, down from 25. Capex plans dropped to 22, down from 25.

                            Alan Oster, NAB Group Chief Economist noted that easing of business conditions continued through 2018 into 2019. And they’re only “just above average”. Together with “negative conditions and forwards orders”, they suggest outlook “remains weak”. And the easing in conditions has been “broad based across most industries and all states”, in particular retail.

                            Oster also said: “For now, we will wait and see how leading indicators of the labour market evolve, though we think it is likely the RBA will act to cut the cash rate and bolster the economy should the labour market deteriorate on the back of weaker activity data”.

                            Full release here.

                            Australia employment rose 25.7k, no imminent need for RBA cut

                              By
                              ActionForex.com
                              -

                              Australia employment grew 25.7k in March, much better than expectation of 15.2k. Full time employment rose 48.3k while part time jobs dropped -22.6k. Unemployment rate rose from 4.9% to 5.0%, matched expectations. Participation rate also rose from 65.6% to 65.7%.

                              The largest increase in employment was in Queensland (up 10.4k), followed by Victoria (up 10.0k) and South Australia (up 8.5k). The largest decrease was in New South Wales (down 2.6k) followed by Tasmania (down 1.8k). The seasonally adjusted unemployment rate increased in Queensland (up 0.7 pts to 6.1%), South Australia (up 0.2 pts to 5.9%), Tasmania (up 0.2 pts to 6.7%), Western Australia (up 0.1 pts to 6.0%) and New South Wales (up 0.1 pts to 4.3%). The only decrease in the unemployment rate was observed in Victoria (down 0.1 pts to 4.6%).

                              The strong gain in full time jobs underlines the robustness in the employment market. However, unemployment rate rose in all regions, only except Victoria, which is a concern. At this point, there is no imminent push for an RBA rate cut in the first up. But situation could worsen ahead that trigger the expected two cuts in the second half. The key will lie in upcoming economic projections in May.

                              Full release here.

                              AUD/USD’s reaction to the data is rather muted. Further rise is in favor with 0.7139 minor support intact. But so far, AUD/USD bulls are continuing to hesitate to respond to positive news.

                              EU announced tariff lists countering unfair US subsides on Boeing

                                By
                                ActionForex.com
                                -

                                EU formally announced the list of US imports to be targeted for tariffs as countermeasures on US subsidies to Boeing. The list covers a range of items, from aircrafts to chemicals and agri-food products (including everything from frozen fish and citrus fruits to ketchup), that overall represent around USD20B of US exports into EU. The final list will take into account results of public consultation and WTO  arbitrator’s decision.

                                EU Trade Commissioner Cecilia Malmström said: “European companies must be able to compete on fair and equal terms. The recent WTO ruling on U.S. subsidies for Boeing is important in this respect. We must continue to defend a level-playing field for our industry. But let me be clear, we do not want a tit-for-tat. While we need to be ready with countermeasures in case there is no other way out, I still believe that dialogue is what should prevail between important partners such as the EU and the U.S., including in bringing an end to this long-standing dispute. The EU remains open for discussions with the U.S., provided these are without preconditions and aim at a fair outcome.”

                                Full statement here. List of products.

                                Canadian dollar jumps as core CPI accelerated in March

                                  By
                                  ActionForex.com
                                  -

                                  Canadian Dollar rises in early US session as core inflation came in higher than expected. Headline CPI rose 1.9% yoy in March, accelerated from 1.5% yoy but matched expectation. CPI core common was unchanged at 1.8% yoy, matched expectations. However, CPI core median accelerated to 2.0% yoy, up from 1.8% yoy and beat expectation os 1.8% yoy. CPI core trim rose to 2.1% yoy, up from 1.9% yoy and beat expectation of 1.8% yoy.

                                  Also from released, Canada trade surplus was smaller than expected at CAD 2.9B in February. US trade deficit narrowed to USD -49.4B in February.

                                  USD/CAD dips through 1.3284 support after the releases. But it’s staying above 1.3250 support. There is no change in the view that it’s in consolidation pattern from 1.3467. Rise from 1.3068 is expected to resume sooner or later.

                                  Into US session: AUD strongest on China data, German and US yields jump

                                    By
                                    ActionForex.com
                                    -

                                    Entering into US session, Australian Dollar remains the strongest one for today, as boosted by better than expected Chinese data. The data further suggests stabilization of slowdown, which is an important factor for the easing global economic risks. While the optimism is not so much reflected in the stock markets, bonds are clearly responding well. German 10-year yield is is now back at 0.08 level while US 10-year yield breaches 2.6 handle.

                                    Staying in the currency markets, Euro is the second strongest for today. German government halved 2019 growth forecast to just 0.5%. But it’s largely shrugged off. The key is, Eurozone economy as a whole will certainly be benefited if China could regain some momentum. Canadian Dollar is the third strongest, but could be dragged down by CPI release. On the other hand, New Zealand Dollar is the weakest one as poor Q1 CPI reading raises the chance of an imminent RBNZ cut at next meeting. Swiss Franc and Dollar are the next weakest. Sterling is mixed after slightly lower than expected March CPI.

                                    In Europe, currently:

                                    • FTSE is down -0.11%.
                                    • DAX is up 0.32%.
                                    • CAC is up 0.28%.
                                    • German 10-year yield is up 0.0111 at 0.082.

                                    Earlier in Asia:

                                    • Nikkei rose 0.25%.
                                    • Hong Kong HSI dropped -0.02%.
                                    • China Shanghai SSE rose 0.29%.
                                    • Singapore Strait Times rose 0.50%.
                                    • Japan 10-year JGB yield rose 0.01 to -0.01.

                                    Germany halves 2019 growth forecast to 0.5%

                                      By
                                      ActionForex.com
                                      -

                                      Germany’s Economy Ministry lowered 2019 growth forecast to a mere 0.5%, just half of January’s projection of 1.0% (downgraded from 1.8%).  If realized, that would be slowest growth in six years. For 2020m, growth is projected to pick up to 1.5%.

                                      Economy Minister Peter Altmaier said externally, slowing global growth, trade tensions and Brexit uncertainty are weighing on the economy. Internally, introduction of the new car emission regulations and  unusually low Rhine water levels are negative factors.

                                      The ministry also noted that global economy should regain some momentum ahead. Strong import would mean a negative contribution to growth in 2019, “purely mathematically”.

                                      Full release here.

                                      Eurozone CPI confirmed at 1.4%, core at 0.8%

                                        By
                                        ActionForex.com
                                        -

                                        Eurozone CPI was finalized at 1.4% yoy in March, unrevised, down from 1.5% yoy in February. Core CPI was finalized at 0.8% yoy, unchanged from February’s reading. EU28 inflation was confirmed at 1.6% yoy.

                                        The highest contribution to the annual euro area inflation rate came from energy (+0.52 percentage points, pp), followed by services (+0.51 pp), food, alcohol & tobacco (+0.34 pp) and non-energy industrial goods (+0.04 pp).

                                        EUR/USD attempts to rally earlier today but fails to take out 1.1324 resistance. It’s staying in range after the releases.

                                        UK CPI unchanged at 1.9%, core at 1.8%, Sterling steady

                                          By
                                          ActionForex.com
                                          -

                                          In March, UK CPI was unchanged at 1.9% yoy, below expectation of 2.0% yoy. Core CPI was also unchanged at 1.8% yoy, below expectation of 1.9% yoy. RPI slowed to 2.4% yoy, down from 2.5% yoy and miss expectation of 2.6% yoy.

                                          PPI input dropped -0.2% mom, rose 3.7% yoy, below expectation of 0.3% mom, 3.9% yoy. PPI output rose 0.3% mom, 2.4% yoy, versus expectation of 0.2% mom, 2.1% yoy. PPI output core rose 0.02% mom, 2.2% yoy versus expectation o f0.1% mom, 2.2% yoy..

                                          House price index rose 0.6% yoy in February, well below expectation of 1.3% yoy.

                                          EUR/GBP rises mildly today mainly due to Euro’s strength. Sterling’s reaction to the data set elsewhere is muted.

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