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UK unemployment rate unchanged at 4%, weekly earnings ex-bonus accelerated to 3.4%

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    ActionForex.com
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    UK average weekly earnings including bonus grew 3.4% 3moy in December, unchanged from prior month and missed expectation of 3.5% 3moy. Weekly earnings excluding bonus rose 3.4% 3moy, up from 3.3% 3moy and matched expectations. Unemployment rate was unchanged at 4.0% staying at the lowest since 1970s. Also released, jobless claims rose 14.2k in January, above expectation of 12.3k. Claimant count rate was unchanged at 2.8%.

    Full release here.

     

    German Altmaier: Most difficult part in US trade talks to follow

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      ActionForex.com
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      German Economy Minister Peter Altmaier told Deutschlandfunk radio today that “for some weeks and months now, we’re observing with concern that the U.S. is tightening its trade policies, that tensions are increasing.” And, “the impact can already be seen in the world economy, global growth has slowed.”

      Regarding the trade talks between EU and US, Altmaier said “We are not yet where we want to be. We might have made one-third of the way and the most difficult part will be now”. Though he added he was in favor of lowering auto tariffs, “ideally to zero percent”.

      But Altmaier also reiterated EU’s position that agriculture will not be included in any trade talks. He said “agriculture is a very sensitive topic, so we don’t want to talk about this in the current situation.”

      Asian update: Dollar & Yen higher as trade optimism turns into cautiousness

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        ActionForex.com
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        Yen and Dollar regain some growth today as Asian markets turned mixed. The lift from trade optimism on investor sentiments was rather brief. US-China trade talk will resume today. Traders could turn cautious and wait for real concrete progresses by the end of the week. Meanwhile, Australian Dollar is leading New Zealand Dollar lower after RBA minutes showed more concerns on housing markets. Sterling follows too, ahead of job data today. Euro is mixed ahead of German ZEW economic sentiment.

        In other markets,

        • Nikkei is trading up 0.15% for now, and is set to end with slight gain.
        • Hong Kong HSI is down -0.31%.
        • China Shanghai SSE is down -0.43%.
        • Singapore Strait Times is up 0.08%.
        • Japan 10-year JGB yield is down -0.002 at -0.022. .

        RBA minutes: Further decline in house prices could result in lower GDP, higher unemployment and lower inflation

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          ActionForex.com
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          RBA reiterated its rate views in the February meeting minutes but sounded more cautious regarding the downturn in housing markets. The central bank maintained that “given that further progress in reducing unemployment and lifting inflation was a reasonable expectation, members agreed that there was not a strong case for a near-term adjustment in monetary policy.”

          And, the minutes echoed Governor Philip Lowe’s comments too. That is, “there were significant uncertainties around the forecasts, with scenarios where an increase in the cash rate would be appropriate at some point and other scenarios where a decrease in the cash rate would be appropriate.” Most importantly, “the probabilities around these scenarios were now more evenly balanced than they had been over the preceding year, when an eventual increase in the cash rate had appeared more likely.”

          RBA tied the subdued consumption growth in Q4 to the possibility of being influenced by “lower housing prices and reduced housing market activity”. On housing, RBA admitted that “dwelling investment was also expected to decline more sharply than previously expected, consistent with the decline in residential building approvals and the fall in housing prices”.

          And, “members observed that if prices were to fall much further, consumption could be weaker than forecast, which would result in lower GDP growth, higher unemployment and lower inflation than forecast.”

          Full minutes here.

          BoJ Kuroda: We’ll consider easing if currency moves derails path to inflation target

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            ActionForex.com
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            BoJ Governor Haruhiko Kuroda told the parliament today that “currency moves could have an impact on the economy and prices, so it’s crucial we take into account these factors when guiding monetary policy.”

            And, if the currency moves are “having an impact on the economy and prices, and if consider it necessary to achieve our price target, we’ll consider easing policy.”

            Yen dips mildly after the comments. But there is no follow through selling as what Kuroda said are pretty much known.

            UK Cox to set out proposed legal changes in Irish backstop, and return to Brussels mid-week

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              ActionForex.com
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              UK Brexit Minister Stephen Barclay said he had a “positive meeting” with EU chief Brexit negotiator Michel Barnier and UK Attorney General Geoffrey Cox. In the meeting, the proposed Malthouse Compromise regarding Irish backstop was discussed.

              And, Cox shared his thinking in terms of the legal way forward and the ways to address the central issue. That is, according to Barclay, “the legal underpinning that is temporary and his advice to parliament in terms of the indefinite nature of the backstop”.

              Fox is now expected to set out the changes on Irish backstop on Tuesday. He and Barclay will return to Brussels at mid-week to present the proposals to Barnier.

              EU Juncker believes Trump will keep his words and no US auto tariffs for now

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                ActionForex.com
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                European Commission President Jean-Claude Juncker believed that US will refrain from imposing auto tariffs on EU cars for now. He told Stuttgarter Zeitung newspaper that “Trump has given me his word that there will be no car tariffs for the time being. I believe him.” But Juncker warned that “should he renege on that commitment, we will no longer feel bound by our commitments to buy more US soya and liquid gas. However, I would very much regret that”.

                The US Commerce Department submitted the Section 232 national security report on auto imports to the White House on Sunday. Trump Trump has 90 days to make a decision on whether to act up the recommendations, which could include tariffs. The Commerce Department refused to disclose any details of the report to the public nor the industry.

                Germany’s BDI industry association urged the US to release information on the report. BDI President Dieter Kempf said “the U.S. Department of Commerce should now publish its report on automobile imports quickly, so as not to further increase business uncertainty for companies.” He also reiterated that “The import of automobiles is not a threat to U.S. national security, and U.S. President Donald Trump must abide by applicable trade law, and he should refrain from imposing any tariffs or quotas.”

                US-China trade talks to resume today, high level meeting starts Thursday

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                  ActionForex.com
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                  The White House confirmed in a statement that US-China trade negotiations will resume on Tuesday, today, in Washington. High-level talks will start on Thursday as led by US Trade Representative Robert Lighthizer. Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross, economic adviser Larry Kudlow and trade adviser Peter Navarro would also take part in the talks. Chinese Vice Premier Liu He is expected to join the meeting on Thursday and Friday too.

                  White House said the talks are “aimed at “achieving needed structural changes in China that affect trade between the United States and China”. And, “the two sides will also discuss China’s pledge to purchase a substantial amount of goods and services from the United States.”

                  A memorandum of understanding of some sort is expected at the conclusion of the meeting, acting as the framework for the trade agreements to be detailed. If the teams are able to deliver the MOU, it should then be known what kind of structural reforms China has agreed to take. For now, no detail is leaked on the core issues regarding IP theft, forced technology transfer, subsidies on State-Owned Enterprises, and enforcement of the agreement.

                  Gold resume upside, but should top below 1380 on bearish divergence

                    By
                    ActionForex.com
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                    Gold’s recent up trend from 1160.17 (2018 low) resumed today by breaking 1326.25 and reaches as high as 1327.60 so far. Near term outlook will now remain bullish as long as 1302.32 support holds. And current rally would target next resistance at 1366.05 (2018 high).

                     

                    The question now is, whether gold is strong enough to resume the rebound from 1046.37 long term bottom (2015 low). That would imply a solid break of key fibonacci level of 38.2% retracement of 192.070 to 1046.37 at 1380.36. It tried this resistance twice since 2016 but failed.

                    As daily MACD now displays bearish divergence condition, we’d expect another failure this time. And, even if gold is to break 1380 eventually, a near term fall back, possibly back to 55 week EMA (now at 1265.20) would likely be seen first.

                    That is, while current rise might extend further, we’d expect upside to be limited below 1380 handle to bring near term reversal.

                     

                    WTI oil extends medium term rebound, 60 to cap upside

                      By
                      ActionForex.com
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                      WTI crude oil’s break of 55.85 resistance last week confirmed resumption of whole rebound from 42.05. Further rise is now expected as long as 54.58 support holds. Nevertheless, for now, we’re viewing rebound from 42.05 as a corrective move. Hence, strong resistance will likely be seen around 61.8% projection of 42.05 to 55.85 from 51.49 at 60.01 to limit upside.

                      This level is actually close to 50% retracement of 77.06 to 42.05 at 59.55. 55 week EMA (now at 59.48) is also in proximity.

                      China Shanghai SSE composite completed double bottom reversal pattern

                        By
                        ActionForex.com
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                        Optimism over US-China trade negotiation gave Chinese stocks a strong boost today. The Shanghai SSE composite gained 2.68% or 71.97 pts to close at 2754.35. Technically, SSE is now considered takeout 2703.51 resistance decisively. That also completes a double bottom reversal pattern (2449.19, 2440.90).

                        There are various ways to view the rise from 2440.90. For now, we’d treat it as a corrective rebound, correcting the down trend from 3587.03. Thus, strong resistance could be seen at 38.2% retracement of 3587.03 to 2440.90 at 2883.84 to limit upside. That’s also quite close to 55 week EMA (now at 2817.49).

                        Into US session: Yen & Dollar weakest on trade optimism

                          By
                          ActionForex.com
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                          Entering into US session, Yen and Dollar remain the weakest major currencies today, on optimism that US and China could deliver a draft trade memorandum of understanding this week. But it should be noted that while Asian stocks closed sharply higher, European stocks are just mixed. Investors are not overwhelmingly convinced. With US on President’s Day holiday, the markets could turn quiet for the result of the day.

                          Staying in the currency markets, Euro and Sterling are the strongest one so far. With a lack of economic data, Euro’s strength is merely seen a technical rebound, paring recent losses. Bundesbank suggested that German economy will remain subdued in H1. With the assumption of normalization in the car industry, there is prospect of a rebound. But then, there is risk of US auto tariffs. Any, Euro will first look into ECB meetings and PMIs this week first. Sterling also look into employment data tomorrow.

                          In Europe, currently:

                          • FTSE is down -0.11%.
                          • DAX is down -0.22%.
                          • CAC is up 0.14%.
                          • German 10-year yield is up 0.0111 at 0.117.

                          Earlier in Asia:

                          • Nikkei rose 1.82%.
                          • Hong Kong HSI rose 1.60%.
                          • China Shanghai SSE rose 2.68%.
                          • Singapore Strait Times rose 0.81%.
                          • Japan 10-year JGB yield rose 0.002 to -0.019.

                          Bundesbank: German economy to remain subdued at least in H1

                            By
                            ActionForex.com
                            -

                            In its monthly report, Bundesbank warned that German economy will continue to struggle in the first half of 2019. The economy is unlikely to regain momentum with Weak orders in manufacturing, gloomy sentiment indicators and sluggish investments. It said that “all these suggest that the underlying pace of the economy should remain subdued at least in the first half of the year.”

                            Though, it also noted that “there are no signs that the slowdown is becoming an outright downturn.” In particular, the drag from auto exports is starting to normalize. Meanwhile, labor market remains healthy with private consumption picking up.

                            Full report here.

                            EU launched outreach campaign on no-deal Brexit customs preparedness

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                              ActionForex.com
                              -

                              European Commission launched an outreach campaign today on “no-deal” Brexit customs preparedness. The campaign aims to ” raise awareness amongst the EU’s business community, especially SME” to prepare for a “no-deal” scenario while continuing to trade with the UK after March 30. EU urged that businesses should “assess whether they have the necessary technical and human capacity to deal with customs procedures and rules”, “consider obtaining various customs authorisations and registrations in order to facilitate their trading activity” and, “Get in touch with their national customs authority to see what other steps can be taken to prepare.”

                              Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “With the risk of a no-deal Brexit increasing as we get closer to March 29, the European Commission and national customs authorities are working hard to be ready to introduce checks and controls on goods flowing between the EU and the UK. This is key to protecting our consumers and our internal market. A lot depends on the ability of businesses trading with the UK to get up to speed with the customs rules that will apply on day one in case of no deal. There is no time to lose and we are here to help with the information campaign.”

                              Full release here.

                              UK Lidington: Useful discussions with Brussels, but very difficult to reopen negotiations

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                                ActionForex.com
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                                UK Minister for the Cabinet Office David Lidington said today that the government is having useful discussion with Brussels. However, it’s still very difficult to reopen withdrawal agreement negotiation.

                                He told BBC radio that “My experience last week… was that they were a lot more than courtesy calls. It was a very useful discussion about the politics, both within the United Kingdom and within the EU27, and a scoping out of what was possible.” However, Lidington also noted that “Reopening the withdrawal agreement… will be very difficult.”

                                Brexit Minister Steve Barclay will meet EU’s chief Brexit negotiator today.

                                WH adviser Pillsbury: Trump is giving China one last chance

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                                  ActionForex.com
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                                  Michael Pillsbury, a leading adviser to Trump on China issues, told Fox that Trump is “essentially giving the Chinese one last chance next week, and then perhaps … a short extension”, referring to the next round of trade negotiation in Washington this week. He pointed out, “notice how the president always refers to the tariffs as bringing in revenue, billions of dollars of revenue to us,” and “so he is not somebody who’s anti-tariff.”

                                  Pillsbury also said “this coming week’s going to be awfully important, when the Chinese come here at the working level.” And, “We’re going to try to find out, I think, what will be in this memorandum of understanding,” he said, “whether it will “have enforcement and time limits and … be tough” or just “be a cosmetic agreement.”

                                  Trump on the weekend tweeted “Important meetings and calls on China Trade Deal, and more, today with my staff. Big progress being made on soooo many different fronts! Our Country has such fantastic potential for future growth and greatness on an even higher level!”

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                                  Chinese delegation with travel to the US this week to work towards a memorandum of understanding, which should form the framework of a trade agreement, to be finalized through a Trump-Xi summit.

                                  Auto tariff report submitted, 90 days for Trump to act

                                    By
                                    ActionForex.com
                                    -

                                    The US Commerce Department met the Sunday deadline and submitted its investigation report on imported cars and auto parts to the White House. The Section 232 is about national security threats from those auto imports. A Commerce Department spokesperson said it would not disclose any details of the report. Trump has 90 days to make a decision on whether to act up the recommendations, which could include some tariffs on fully assembled vehicles or on technologies and components related to electric, automated, connected and shared vehicles.

                                    German Chancellor Angela Merkel said in the Munich Security Conference that “we are proud of our cars and so we should be.” She added that “if that is viewed as a security threat to the United States, then we are shocked”. German car lobby VDA said the countries car industry has created more than 113k jobs in the US in recent years, with around 300 factories. German car companies were the largest car exporters from the US. And VDA said “all this strengthens the USA and is not a security problem.”

                                    ECB Rehn: Have to wait and see how long slowdown lasts

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                                      ActionForex.com
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                                      ECB Governing Council member Olli Rehn told German newspaper Handelsblatt that “the most recent data point to a weakening of the economy.” And, the reasons for the slowdown mainly lie abroad, including US-China trade conflicts. Though, there were also uncertainties over Brexit, yellow vest protest in France, fiscal issues in Italy and slower industrial production in Germany.

                                      But Rehn also noted that ECB’s monetary policy orientation is clear and unchanged. He added, “we have said that rates will be at their current level until we have sustainably reached our monetary policy goal.” For now, wage growth had not had much impact on core inflation yet even though “at the end of last year it looked as if there would be stronger momentum in inflation.”. And, “we have to wait and see how long the period of weaker growth will last.”

                                      ECB de Galhau: The key question is if slowdown is temporary or more durable

                                        By
                                        ActionForex.com
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                                        ECB Governing Council member Francois Villeroy de Galhau said in a El Pais newspaper interview over the weekend that the central bank will scrutinize incoming data to decide whether to hike after this summer.

                                        He said “the key question will be if the slowdown is temporary — with a bounce-back during this year — or more durable.” For now, there is resilient domestic demand in Germany, France and Spain. And that kept recession risk low even though outlook was clouded by protectionism and Brexit.

                                        And de Galhau also noted that there was strong convergence of views within ECB about the sequencing of the next policy steps, as well as the flexibility about timing.

                                        Canada Freeland: Time to remove Section 232 tariffs with USMCA concluded

                                          By
                                          ActionForex.com
                                          -

                                          Canadian Foreign Minister Chrystia Freeland attended the Munich Security Conference over the weekend. There she also met US House Speaker Navy Pelosi and urged to remove the steel and aluminum tariffs. Freeland noted that Canada is now in the process of domestic ratification of the so called USMAC, US-Mexico-Canada agreement on trade. And Canada’s position remains strongly opposed to the section 232 steel tariffs. She also told reporters that “the Canada position is now that we have concluded (USMCA) that is all the more reason why the tariffs must be lifted.”

                                          Separately at the conference, Freeland also urged to reinforce “rules-based international order”. And she proposed to bring together specific coalitions around specific issues.”

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