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Eurozone unemployment rate dropped to 7.4%, lowest since 2008

    By
    ActionForex
    -

    Eurozone unemployment rate dropped to 7.4% in December, down from 7.5% and beat expectation. That’s also the lowest level since May 2008. EU28 unemployment was at 6.2%, down from 6.3%.

    Among the Member States, the lowest unemployment rates in December 2019 were recorded in Czechia (2.0%) as well as in Germany and the Netherlands (both 3.2%). The highest unemployment rates were observed in Greece (16.6% in October 2019) and Spain (13.7%).

    Full release here.

    Swiss KOF rose to 100.1, Swiss economy free somewhat from its shackles

      By
      ActionForex
      -

      Swiss KOF Economic Barometer rose to 100.1 in January, up from 96.4, beat expectation of 96.5. The reading is higher than any levels reported back in 2019. KOF said “the Swiss economy can free itself somewhat from its shackles”.

      “The indicator bundle for manufacturing is no longer as unfavourable as before and the prospects for other services have improved. In addition, the changes in the indicators for foreign demand, accommodation and food service activities, financial and insurance services and construction are slightly positive. The private consumption prospects are practically unchanged.”

      Full release here.

      BoE to stand pat on a close call, some previews

        By
        ActionForex
        -

        BoE rate decision is a major focus today and it will be Mark Carney’s last meeting as Governor. The central bank is more likely to keep Bank rate unchanged at 0.75%. Markets are just pricing in around 45% chance for a cut as of yesterday. Bets on a cut receded sharply last week after data showed strong improvement in business optimism. But the decision would be a close call.

        Here are some suggested previews:

        GBP/CHF fall from 1.3310 lost momentum after hitting 1.2528. Such decline is seen as a corrective move. In case of another fall, we’d expect strong support from 1.2447 cluster support (50% retracement of 1.1674 to 1.3310 at 1.2492) to contain downside and bring rebound. Break of 1.2854 resistance will bring retest of 1.3310 high. However, firm break of 1.2477 will likely bring deeper fall through 61.8% retracement at 1.2299.

        China’s coronavirus cases jump to 7711, Yuan to extend selloff

          By
          ActionForex
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          China’s National Health Commission reported that, as of January 29, number of confirmed coronavirus case in the country rose 1737 from 1459 to 7711. Serious cases rose from 1239 to 1370. Death toll rose from 132 to 170. Suspected cases rose from 9239 to 12167. Number of people being tracked rose from 65537 to 88693.

          WHO chief Tedros Adhanom Ghebreyesus said in Geneva, “in the last few days the progress of the virus especially in some countries, especially human-to-human transmission, worries us.” “Although the numbers outside China are still relatively small, they hold the potential for a much larger outbreak.”

          Offshore Chinese Yuan is back under selling pressure today. USD/CNH’s rebound suggests that rise from 6.8452 is resuming for channel resistance (now at 7.0061). Sustained break there should confirm that corrective fall from 7.1953 has completed. Further rally would be seen to 7.0867 resistance next. Nevertheless, break of 6.9420 support will indicate rejection by the channel resistance and turn focus back to 6.8452 low.

          Fed carefully monitoring coronavirus, 10-year yield breaks 1.6 handle

            By
            ActionForex
            -

            Fed left interest rate unchanged at 1.50-1.75% overnight as widely expected, by unanimous vote. Chair Jerome Powell said in the post meeting press conference that current monetary stance is “appropriate”. He added that global growth stabilizing and trade uncertainties receded.

            However, “uncertainties about the outlook remain, including those posed by the new coronavirus.” “China’s economy is very important in the global economy now, and when China’s economy slows down we do feel that – not as much though as countries that are near China, or that trade more actively with China, like some of the Western European countries”. He added that Fed is “very carefully monitoring the situation” regarding the coronavirus, but it’s “too early” to assess the impact.

            Here are some reviews:

            10-year yield extended recent fall and closed down -0.047 to 1.594. The decline was mainly due to coronavirus related safe haven flow rather than FOMC statement. TNX is expected to drop further to retest 1.429 low. At this point, we’re not expecting a firm break there. Instead, range trading should continue between 1.429 and 1.971.

            Fed left interest rate unchanged at 1.50-1.75%, full statement

              By
              ActionForex
              -

              Fed left interest rate unchanged at 1.50-1.75% as widely expected, on unanimous vote.

              Full statement below.

              Federal Reserve Issues FOMC Statement

              Information received since the Federal Open Market Committee met in December indicates that the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending has been rising at a moderate pace, business fixed investment and exports remain weak. On a 12­month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.

              Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee decided to maintain the target range for the federal funds rate at 1­1/2 to 1-3/4 percent. The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation returning to the Committee’s symmetric 2 percent objective. The Committee will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path of the target range for the federal funds rate.

              In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

              Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Loretta J. Mester; and Randal K. Quarles.

              US crude oil inventories rose 3.5m barrels, WTI softens mildly

                By
                ActionForex
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                US commercial crude oil inventories rose 3.5m barrels in the week ending January 24, versus expectation of 0.7m rise. At 431.7m barrels, crude oil inventories are about 2% below the five year average for this time of year.

                WTI crude oil dips notably after the release but stays above 52.09 temporary low made earlier this week. At this point, while further fall is mildly in favor, we’d continue to look for strong support from 50.64, which is close to 61.8% retracement of 42.05 to 66.49 at 51.38, to contain downside and bring rebound. Break of 55.89 will indicate short term bottoming. However, sustained break of 50.64 will invalidate our view and open up the case for a test on 42.05 low.

                China’s GDP growth could slow to 5% or below in Q1 due to coronavirus outbreak

                  By
                  ActionForex
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                  Zhang Ming, an economist at the Chinese Academy of Social Sciences, said China’s annualized growth could slow to 5.0% in Q1 this year, or even lower, due to coronavirus outbreak. That’s sharply lower than original estimate of 6.0% annualized growth. While there could be recovery afterwards, full-year expansion could flow from 2019’s 6.1% to just 5.7%.

                  He estimated that the impact of the current coronavirus would be significantly higher than that of SARS back in 2003. Now, China’s economy is much more reliant on services and consumption. The outbreak has also hit sectors including transportation, tourism, catering and entertainment. It could also weigh on the employment market as unemployment rate could exceed 5.3% in the coming months.

                  In response, Zhang expected the government to step up policy support while PBoC could lower the reserve requirement ratios for banks and interest rates.

                  US goods trade deficit widened to $68.3B

                    By
                    ActionForex
                    -

                    US goods trade deficit widened 8.5% mom to USD -68.3B in December, larger than expectation of USD -64.5B. Goods exports rose USD 0.4B to USD 137.0B. Goods imports rose USD 5.8B to USD 205.3B.

                    Wholesale inventories dropped -0.1% mom to USD 675.6B. Retail inventories was flat at USD 661.2B.

                    Full release here.

                    Germany Maas: Without meeting EU standard UK will not have full access to the single market

                      By
                      ActionForex
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                      German Foreign Minister Heiko Maas said in a Die Zeit article that “we all want zero tariffs and zero trade barriers” between EU and UK. However, “that also means zero dumping and zero unfair competition.”

                      He emphasized, “Without similar standards to protect our workers, our consumers and the environment, there can be no full access to the largest single market in the world.”

                      Mass also urged that EU and UK must conduct the negotiations regarding post-Brexit relationship in a way that “won’t harm the European Union”.

                      German Gfk consumer sentiment rose to 9.9, economic expectations improved

                        By
                        ActionForex
                        -

                        Germany Gfk Consumer Sentiment for February rose to 9.9, up from 9.7, beat expectation of 9.8. Economic Expectations also rose from -4.4 to -3.7.

                        Rolf Bürkl, GfK consumer expert: “Initial agreements in the trade dispute between the United States and China will also ease the situation in Germany. As an export nation, the country relies on the free and unrestricted exchange of goods.”

                        “The positive start for the consumer climate in 2020 confirms our assessment that private consumption will continue to be an important pillar of the German economy this year. For the year as a whole, GfK forecasts real growth in private consumer spending in Germany of one percent.”

                        Full release here.

                        Fed to keep rate unchanged at 1.50-1.75%, some previews

                          By
                          ActionForex
                          -

                          FOMC rate decision is a major focus today. Fed is widely expected to keep interest rate unchanged at 1.50-1.75%. The accompanying statement will, at most, contain only minor changes from December’s. There will be no update on economic projections and median dot plot at the meeting. Fed Chair Jerome Powell would reiterate that monetary policy is at the right place. Overall, the decision and press conference is more likely a non-event than not.

                          Currently, fed fund futures are indeed pricing in 87.3% chance of no change for today, and 12.7% chance of a hike to 1.75-2.00%. For June meeting, markets are pricing in 74.1% chance of federal funds rate being at 1.50-1.7% or above.

                          Here are some suggested previews:

                          BoJ: Only halfway out of Japanification, downside risks still significant

                            By
                            ActionForex
                            -

                            In the Summary of Opinions of BoJ’s January 20/21 meeting, it’s noted that there has been “no further increase in the possibility that the momentum toward achieving the price stability target will be lost.”. Therefore, it’s “appropriate” to keep monetary policy unchanged. Nevertheless, the possibility of inflation losing momentum continues to “warrant attention”. It’s “appropriate” to tilt toward monetary accommodation.

                            Also, Japan is just “only halfway toward moving out of the so-called Japanification” of secular stagnation where low growth, low inflation, and low interest rates last for a long period. Risk of deflation continues to “warrant attention”. Downside risks to economic activity and prices are “still significant”. It’s necessary to be prepared for possible economic downturn as one of the risk scenarios.

                            Full Summary of Opinions here.

                            Australia CPI rose 0.7% qoq, 1.8% yoy, drought pushed food prices higher

                              By
                              ActionForex
                              -

                              Australia CPI rose 0.7% qoq, 1.8% yoy in Q4, up from 0.5% qoq, 1.7% yoy, beat expectation of 0.6% qoq, 1.7% yoy. RBA trimmed mean CPI rose 0.4% qoq, 1.6% yoy, unchanged from prior quarter. RBA weighted median CPI rose 0.4% qoq, 1.3% yoy, also unchanged from Q3. The set of data affirmed the chance for RBA to stand pat in February, and delay the widely expected rate cut.

                              ABS Chief Economist, Bruce Hockman said: “Drought conditions are impacting prices for a range of food products. Food prices increased 1.3 per cent this quarter with price rises for beef and veal (+2.9 per cent), pork (+4.7 per cent), milk (+1.7 per cent) and cheese (+2.4 per cent). Both the impact from the drought and lower seasonal supply contributed to price rises for fruit (+6.8 per cent) this quarter.”

                              “Annual inflation remains subdued partly due to some price falls for housing related expenses. Through the year to the December 2019 quarter, price falls were recorded for utilities (-1.0 per cent) and new dwelling purchase by owner-occupiers (-0.1 per cent), while rent price rises remained modest (+0.2 per cent),” said Hockman.

                               

                              Full release here.

                              China coronavirus cases jump to 5974, surpassed SARS, HSI tumbles

                                By
                                ActionForex
                                -

                                China’s National Health Commission reported today that, as of end of Tuesday, the number of confirmed coronavirus cases in China surged to 5974, up from 4515 a day ago. The number also surpassed the 5327 cases in of SARS in the country 17 years ago. Death toll rose from 106 to 132. Globally, number of confirmed case now stands at 6058.

                                Hong Kong HSI is back from holiday, diving to as low as 27101.54 in initial trading. There is no clear momentum for recovery yet. With 55 day EMA firmly taken out, we’d now expect further fall to trend line support at around 26510. Also, whole corrective rise from 24899.93 should have completed too. Break the trend line will put 25995.15 support into focus.

                                US consumer confidence rose to 131.6, driven my job market optimism

                                  By
                                  ActionForex
                                  -

                                  Conference Board US Consumer Confidence rose to 131.6 in January, up from 126.5, beat expectation of 128.2. Present Situation Index rose from 170.5 to 175.3. Expectations Index rose from 100.0 to 102.5.

                                  “Consumer confidence increased in January, following a moderate advance in December, driven primarily by a more positive assessment of the current job market and increased optimism about future job prospects,” said Lynn Franco, Senior Director, Economic Indicators, at The Conference Board.

                                  “Optimism about the labor market should continue to support confidence in the short-term and, as a result, consumers will continue driving growth and prevent the economy from slowing in early 2020.”

                                  Full release here.

                                  US durable goods orders rose 2.4%, but ex-transport orders dropped -0.1%

                                    By
                                    ActionForex
                                    -

                                    US durable goods orders rose 2.4% to USD 245.5B in December, way above expectation of 1.2%. However, ex-transport orders dropped -0.1%, missed expectation of 0.4%. Ex-defense orders dropped -2.5%.

                                    Full release here.

                                    WHO and China discussed alternatives to evacuation due to coronavirus

                                      By
                                      ActionForex
                                      -

                                      WHO spokesman Christian Lindmeier said in Geneva that Director-General Tedros Adhanom Ghebreyesus met Chinese President Xi Jinping in Beijing. Both have discussed ways to protect people in areas affected by the coronavirus. Also, they talked about “possible alternatives” to evacuations by other countries.

                                      Lindmeier added that the Emergency Committee is being “kept in the loop” on the coronavirus outbreak. At this point, WHO hasn’t seen onward human-to-human spread of the virus outside China. He said it’s “good news but of course this could change”.

                                      China’s Xi was quoted by state media, saying: “The virus is a devil and we cannot let the devil hide,” state television quoted Xi as saying. China will strengthen international cooperation and welcomes the WHO participation in virus prevention … We believe that the WHO and international community will give a calm, objective and rational assessment of the virus and China is confident of winning the battle against the virus.”

                                      German BDI: Simply impossible to complete a EU-UK trade deal by year end

                                        By
                                        ActionForex
                                        -

                                        Joachim Lang, Managing Director of Germany’s BDI industry group said today, “the uncertainty surrounding the withdrawal may be over, but there is no reason to be relieved.” “The risk of a hard Brexit, meaning a disorderly British exit from the EU at the end of the year, is not off the table.”

                                        Lang warned that is is “simply impossible” to complete the task of trade negotiations between EU and UK by the end of the year. He complained that “it is a serious mistake for the British government to categorically rule out an extension of the transition period.”

                                        He also explained that only a basic free trade agreement could be achieved by year end. And, . “We would be miles away from a modern free trade agreement such as the one with Canada, for example.” He also urged a strong EU position and “the EU cannot leave any doubt: those who will diverge from EU rules will not get the best access to the world’s largest internal market. We expect the EU to act in a united and strong way.”

                                        Australia NAB business confidence dropped to -2, lowest since mid-2013

                                          By
                                          ActionForex
                                          -

                                          Australia NAB Business Confidence dropped to -2 in December, down from 0, hitting the lowest level since mid-2013. Business Conditions rose 1pt to 3. Trading condition dropped from 6 to 5. Profitability condition dropped from 3 to 1. Employment condition was unchanged at 4.

                                          Alan Oster, NAB Group Chief Economist: “At present there appears to be a relatively large divergence between confidence and conditions, and we will continue to watch the survey to see how this resolves. Though, if confidence and forward orders remain weak, it is likely that the early part of 2020 could see further deterioration in the growth momentum (especially in private sector demand). We think that more policy stimulus will be needed to boost the economy over 2020”.

                                          Full release here.

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