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Japan: Economy’s pace weakened in severe pandemic situation

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    ActionForex.com
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    Japanese Government’s Cabinet office maintained that the economy “remains in picking up”, but added that “pace has weakened in a severe situation due to the Novel Coronavirus”. In particular, “some weakness s seen recently” in industrial production, even though it’s still “picking up”.

    Other assessments are largely unchanged, with private consumption showing weakness further. Business is picking up while exports continue to increase moderately. Corporate profits are also picking up with some weakness in non-manufacturers. Employment situation shows steady movements in some components.

    Full release here.

    Swiss KOF dropped to 110.6 in Sep, slowdown likely to continue in coming months

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      Swiss KOF Economic Barometer dropped from 113.5 to 110.6 in September, slightly above expectation of 110.3. That’s the fourth decline in a row. The index remains above its long-term average, but the slowing in recovery is “likely to continue in the coming months”.

      KOF also said: “The recurring decline is primarily attributable to bundles of indicators concerning foreign demand. Indicators of the manufacturing sector send an additional negative signal, followed by indicators of the economic sector other services. By contrast, indicators from the finance and insurance sector are providing slightly positive impulses.”

      Full release here.

      ECB de Guindos: All stakeholders must avoid cliff effects from premature scaling back of policies

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        ECB Vice President Luis de Guindos said in a speech that “at the moment, risks from the early withdrawal of policies are higher than the risks associated with keeping support measures in place.”

        He also surged that “all stakeholders”, partly fiscal ones, “must keep complementing our accommodative monetary stance”. For a timely recovery in Europe, “we have to avoid any cliff effects from the premature scaling back of these policies”.

        Looking ahead, “completing the banking union and deepening the capital markets union are the best policy tools we have at our disposal to ensure that the EU financial sector is conducive to fostering long-term growth and that it embraces all the opportunities offered by the digital transformation and the transition to green technologies.”

        Full speech here.

        US consumer confidence rose to 108.3, reversing consecutive declines

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          ActionForex.com
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          US Conference Board Consumer Confidence rose from 101.4 to 108.3 in December. Present Situation Index rose from 138.3 to 147.2. Expectations Index rose from 76.7 to 82.4.

          “Consumer confidence bounced back in December, reversing consecutive declines in October and November to reach its highest level since April 2022,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.

          “The Present Situation and Expectations Indexes improved due to consumers’ more favorable view regarding the economy and jobs. Inflation expectations retreated in December to their lowest level since September 2021, with recent declines in gas prices a major impetus. Vacation intentions improved but plans to purchase homes and big-ticket appliances cooled further. This shift in consumers’ preference from big-ticket items to services will continue in 2023, as will headwinds from inflation and interest rate hikes.”

          Full release here.

          US ISM manufacturing ticked up to 47.7, corresponds to -0.3% annualized GDP contraction

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            ActionForex.com
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            US ISM Manufacturing PMI rose from 47.4 to 47.7 in February, below expectation of 47.9. Looking at some details, new orders rose from 42.5 to 47.0. Production dropped from 48.0 to 47.3. Employment dropped from 50.6 to 49.1. Prices jumped from 44.5 to 51.3.

            ISM said: “This is the fourth month of slow contraction and continuation of a downward trend that began in June 2022…

            “The past relationship between the Manufacturing PMI and the overall economy indicates that the February reading (47.7 percent) corresponds to a change of minus-0.3 percent in real gross domestic product (GDP) on an annualized basis.”

            Full release here.

            Knot: ECB frontloads asset purchases as counterweight to yield rise

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              ECB Governing Council member Klass Knot said that a “major part” of recent rise in Eurozone treasury yields was due to improvement growth in inflation outlook of the bloc. But still, the rest was an unwarranted response to the surge in US yields.

              Hence, “we thought it would be wise to frontload part of our purchases, as a counterweight in the coming months”. Knot referred to ECB’s decision to significantly increase the pace of the pandemic emergency purchase program in Q2.

              “But as soon as the improvements that we expect materialise, that reason of course will disappear,” he added.

              Eurozone GDP grew 0.2% qoq in Q4, matched expectations

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                ActionForex.com
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                Eurozone GDP grew 0.2% qoq in Q4, unchanged from Q3 and matched expectations. Annually, GDP grew 1.2% yoy. Over the whole year 2018, GDP grew 1.8%. Employment grew 0.3% qoq, above expectation of 0.2% qoq.

                EU 28 GDP grew 0.3% qoq, 1.4% yoy. Over 2018, EU 28 GDP grew 1.9%.

                Full release here.

                Fed Beige Book: Economy in slight growth, inflation to moderate

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                  ActionForex.com
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                  According to the Fed’s recent Beige Book report, US economy experienced slight growth at the beginning of the year. However, consumers’ purchasing power and discretionary income have been affected by high inflation and higher interest rates. The labor market conditions were solid, with moderate wage increases expected in the coming year. Inflationary pressures persisted throughout various districts, but the rate of price increases has moderated, with many contacts anticipating this trend to continue.

                  Overall economic activity “increased slightly” in early 2023 with six of twelve districts reported that activity ” expanded at modest pace”. Several districts said “high inflation and higher interest rates continued to reduce consumers’ discretionary income and purchasing power”. Manufacturing activity “stabilized following a period of contraction”.

                  Labor market conditions “remained solid” while ages “generally increased at a moderate pace”. Wages increases are expected to “moderate further in the coming year”.

                  Inflationary pressures “remained wide spread” but price increased “moderated” in many districts. Looking ahead, “contacts expected price increases to continue to moderate over the year.”

                  Full Beige Book here.

                  BoJ Kuroda: Consumption to strengthen, external demand remains solid

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                    ActionForex.com
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                    In the post meeting press conference, BoJ Governor Haruhiko Kuroda said the recent slump in consumption was “in a way unexpected”. But he’s still optimistic on consumption outlook. He added that the decline was not because households lacked income, but more due to the pandemic keeping them from boosting spending. He added, “as the pandemic subsided, consumption is expected to strengthen.”

                    Kuroda also said he expected “external demand to remain solid” and there is no need to project a “clear slowdown” in US and China growth. He added that actual economic indicators, consumption and output were growing very steadily in the US. The woes of Evergrande is see as “purely” and individual company’s issue, and that of the real estate sector.

                    Japan exports rose 28.9% yoy in Sep, imports surged 45.2% yoy

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                      ActionForex.com
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                      Japan’s exports rose 28.9% yoy to JPY 8189B in September. Exports to China grew 17.1% yoy while shipments to the US increased 45.2% yoy. Imports rose 45.9% yoy to JPY 10913B. However, the surge in import was unlikely a reflection of domestic demand, but sharp depreciation in Yen’s exchanged rate. Trade deficit came in at JPY -2094B, down from August’s record high of JPY -2817B

                      In seasonally adjusted term, exports rose 3.2% mom to JPY 8672B. Imports dropped -0.6% mom to JPY 10682B. Trade deficit narrowed to JPY -2010B, slightly smaller than expectation of JPY -2.06T.

                      Full release here.

                      Eurozone unemployment rate dropped to 7.6% in July, EU down to 6.9%

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                        ActionForex.com
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                        Eurozone unemployment rate dropped to 7.6% in July, down from 7.8%, matched expectations. EU unemployment rate dropped to 6.9%, down from 7.1%.

                        Compared with June 2021, the number of persons unemployed decreased by 430 000 in the EU and by 350 000 in the euro area.

                        Full release here.

                        Fed chair Powell press conference live stream

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                          ActionForex.com
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                          RBA stands pat, no rate hike expected until 2024 earliest

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                            ActionForex.com
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                            RBA left monetary policy unchanged as widely expected. Cash rate target and 3-year AGB yield target are both kept at 0.10%. Parameters of asset purchases are kept unchanged too. It maintained the pledge to keep “highly supportive monetary conditions” to support return to full employment and inflation consistent with target. Also, the conditions for rate hike are unlikely to be matched “until 2024 at the earliest.

                            The central bank said economic recovery is “stronger than earlier expected and is forecast to continue”. The central scenario is for GDP to grow 4.75% this year and 3.50% next. Progress in reducing unemployment “has been faster than expected”. Further decline is unemployment rate to 5% by year end is expected. Inflation and wage pressures are “subdued”.

                            At the July meeting, RBA will consider whether to move the target bond for the 3-year yield target to November 2024 bond. It will also decide then whether to extend the government bond purchase program after September.

                            Full statement here.

                            Australia Westpac leading index remains negative, indicating further slowdown

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                              ActionForex.com
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                              Australia’s Westpac Leading Index rose slightly from -1.04% to -0.94% in February, but it still marks the seventh consecutive month of negative growth rate, pointing to below-trend growth over the next 3-9 months. This is in line with Westpac’s forecast that growth in the Australian economy will be only 1% in 2023.

                              The slowdown reflects the lagged effects of rising interest rates, a deep shock to real wages, a bottoming out of the savings rate, and falling house prices. Westpac also expects the weakness to extend into 2024, with more negative readings likely.

                              RBA indicated in its March minutes that the board intends to consider a pause at its April meeting. However, Westpac does not expect that a decision to pause in April will mark the end of the cycle. It expects new information for the May meeting to indicate the need for a further response from the board, with a final 0.25% increase in the cash rate in May marking the end of the tightening cycle.

                              Full Australia leading index release here.

                              NASDAQ closed lower after comments from Fed hawks

                                By
                                ActionForex.com
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                                US stocks closed lower overnight as traders turned cautious, watching the development in Afghanistan and upcoming speech of Fed chair Jerome Powell at the Jackson Hole Symposium. A few Fed officials expressed their support for tapering asset purchases, somewhat talking down the impact of the spread of Delta. Yet, we’d note that those are known hawks already. Doves might come out today telling another story while Powell would likely sound non-committal. The overall Jackson Hole event would likely leave the market with nothing new on the net.

                                NASDAQ apparently faced some resistance from 61.8% projection of 10822.57 to 14175.11 from 13002.53 at 15074.39, and 15k psychological level. While it’s now in a retreat, there is no sign of reversal, at least before covering the gap made at weekly open. Nevertheless, it might still take some time to build the base to power through 15k at a later stage.

                                US Philly Fed manufacturing dropped to 23.8, price indicators remained elevated

                                  By
                                  ActionForex.com
                                  -

                                  In the October Philadelphia Fed Manufacturing Business Outlook Survey, the diffusion index for current general activity dropped to 23.8, down from 30.7, below expectation of 26.0.

                                  Looking at some details, current shipments index was essentially unchanged at 30.0. New orders rose 15 pts to 30.8. Employment index rose from 26.3 to 30.7. The index for prices paid rose 3 pts to 70.3. Current prices received index dropped -2 to 51.1. Price indicators remained elevated.

                                  Full release here.

                                  RBA minutes: Slower tightening comes with higher rates

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                                    ActionForex.com
                                    -

                                    Minutes of RBA’s September 6 meeting revealed that there were discussions on whether to hike by 25bps or 50bps. But, “given the importance of returning inflation to target, the potential damage to the economy from persistent high inflation and the still relatively low level of the cash rate, the Board decided to increase the cash rate by a further 50 basis points.”

                                    RBA reiterated that there will be further interest rate hikes “over the months ahead”, but it’s it “not on a pre-set path”. The full effects of higher interest rates were “yet to be felt” on mortgages, activity and inflation.

                                    The board was “mindful” that the path to bring inflation back to target “needed to account for the risks to growth and employment. RBA is seeking to return inflation to target “while keeping the economy on an even keel”.

                                    Size of timing of future rate hikes will be “guided by the incoming data” and outlook for inflation and job market, and risks. “All else equal, members saw the case for a slower pace of increase in interest rates as becoming stronger as the level of the cash rate rises”.

                                    Full minutes here.

                                    SNB kept rate at -0.75%, upgrades GDP and inflation forecasts

                                      By
                                      ActionForex.com
                                      -

                                      SNB kept policy rate and interest on sight deposits at -0.75% as widely expected. It remains “willing to intervene in the foreign exchange market as necessary”. It reiterated that the Swiss franc is “highly valued”. The “expansionary monetary policy provides favourable financing conditions, contributes to an appropriate supply of credit and liquidity to the economy, and counters upward pressure on the Swiss franc.”

                                      The new condition inflation forecasts are revised slightly higher to 0.4% in 2021 (from 0.2%), 0.6% in 2022 (from 0.4%) and 0.6% in 2023 (from 0.5%). 2021 GDP forecast was also revised up to 3.5%, “primarily attributable to the lower-than-expected decline in GDP and the first quarter”. GDP is “likely to return to its pre-crisis level by the middle of the year”.

                                      Full statement here.

                                      EU Juncker reiterates no re-negotiation, UK May to request short Brexit delay

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                                        ActionForex.com
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                                        European Commission President Jean-Claude Juncker reiterated the EU’s stance on Brexit with Germany’s Deutschlandfunk radio. He said “there will be no re-negotiations, no new negotiations, no additional guarantees in addition to those already given”. He added “we have intensively moved towards Britain, there can be no more.”

                                        Juncker also hinted at another EU summit next week and said “my view this morning at quarter past 8 is that we will not get this through this week and we will have to meet again next week”.

                                        Separately, both BBC and Sky reported that UK Prime Minister Theresa May will request only a short delay to Brexit in her letter to European Council President Donald Tusk today. But the actual length will only be confirmed when the letter is published.

                                        Education Secretary Damian Hinds also said “I don’t see how a long delay gives certainty. Actually we’ve had long time already… People are a bit tired of waiting for parliament to get our act together and get the deal passed… Unless and until a deal is finalized, there remains the prospect of the risk of no deal.”

                                        Australia retail sales rose 1.9% mom in Jan, flat on average over the past few months

                                          By
                                          ActionForex.com
                                          -

                                          Australia retail sales turnover rose 1.9% mom to AUD 35.09B in January, above expectation of 1.6% mom. Compared with January 2022, sales turnover was up 7.5% yoy.

                                          Ben Dorber, ABS head of retail statistics, said: “The rebound in retail turnover in January followed a substantial fall of 4.0 per cent in December and a large rise of 1.7 per cent in November.

                                          “Looking through this volatility shows that turnover is at a similar level to September 2022, and on average, growth has been flat over the past few months.”

                                          Full release here.

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