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China Caixin PMI manufacturing showed “marginal weakening” in March

    By
    ActionForex.com
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    China Caixin PMI manufacturing dropped to 51.0 in March, down from 51.6 and missed expectation of 51.7. That’s also the lowest level in four months.

    Quotes from the release by Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group:

    • “The Caixin China General Manufacturing PMI fell to 51.0 in March. The sub-indices of output and employment both fell from the previous month, while new orders increased at a slightly slower rate, highlighting that the deceleration in the manufacturing sector was mainly driven by the supply side and that demand has remained relatively stable.
    • “Output prices rose at a faster pace in March than in the previous month while the increase in input costs weakened markedly, which will help shore up manufacturers’ profits.
    • “The willingness of companies to restock waned as, apart from a slower expansion in output, the growth rates in stocks of finished goods and stocks of purchases also declined in March.
    • “Overall, the manufacturing PMI reading in March showed that demand was not as strong as expected, leading to lower willingness of manufacturers to produce and restock. However, the ability of manufacturers to make a profit was beefed up by the stable increase in new orders and the much slower jump in input costs.
    • “The growth momentum of the Chinese manufacturing economy may have weakened in March, but at a marginal pace.”

    Released over the weekend, however, the official China PMI manufacturing rose to 51.5, up from 50.3. Official PMI manufacturing rose to 54.6, up from 54.4.

    Japan Tankan shows slight deterioration in large manufacturer sentiment

      By
      ActionForex.com
      -

      Japan Q1: Tankan survey results:

      • Tankan Large Manufacturing Index Q1: 24 vs exp 25 vs prior 26
      • Tankan Large Manufacturers Outlook Q1: 20 vs exp 22 vs prior 21
      • Tankan Large Non-Manufacturing Index Q1: 23 vs exp 24 vs prior 25
      • Tankan Non-Manufacturing Outlook Q1: 20 vs exp 21 vs prior 20
      • Tankan Small Manufacturing Index Q1: 15 vs exp 14 vs prior 15
      • Tankan Small Manufacturing Outlook Q1: 12 vs exp 10 vs prior 11
      • Tankan Small Non-Manufacturing Index Q1: 10 vs exp 8 vs prior 9
      • Tankan Small Non-Manufacturing Outlook Q1: 5 vs exp 5 vs prior 5
      • Tankan Large All Industry Capex Q1: 2.3% vs exp 1.0% vs prior 6.4%

      There were slight deterioration in large manufacturing index from 26 to 24 and missed expectation of 25, and large manufactorers outlook from 21 to 20, missing expectation of 22. Over business confidence were firm though. The fall in confidence and outlook is likely more due to Yen’s recent appreciation. And so far, the fear of a global trade war had limit impact on sentiments.

      The indices were calculated, like many other similar series in the world, by subtracting the number of respondents saying conditions are poor from those responding conditions are good.

      Also released from Japan, PMI manufacturing was finalized at 53.1 in March, revised down from 53.2.

      US jobless claims dropped to lowest since 1973, Canada GDP missed, USDCAD yawns

        By
        ActionForex.com
        -

        Canadian data are generally disappointingly. GDP contracted -0.1% mom in January versus expectation of 0.1% mom. IPPI rose 0.1% mom in February versus expectation of 0.4% mom. RMPI dropped -0.3% mom versus expectation of 2.8% mom rise.

        US personal income rose 0.5% in February, spending rose 0.2% and both met expectations. Headline CPI accelerated to 1.8% yoy while core PCE also accelerated to 1.6% yoy.

        Initial jobless claims dropped -12k to 215k in the weekended March 254. That’s notably below expectation of 231k. That’s also the lowest level since January 1973.

        Four week moving average of initial claims dropped 0.5k to 224.5k.

        Continuing claims rose 35k to 1.87m in the weekended March 17.

        There’s a bit of spikes on both direction after the releases. But that’s it as USD/CAD quickly settle back into today’s tight range.

        ECB Knot: Market expectations and ECB policy actions converged into a “sweet spot”

          By
          ActionForex.com
          -

          ECB Governing Council member,  Dutch central bank Governor Klaas Knot talked about monetary policy as he  presented his bank’s annual report in Amsterdam today. He said:

          • “The top priority is to normalize monetary policy and strengthen the economic and monetary union,”
          • “This is now a widely-shared realization, certainly also in the financial markets.”
          • “If you look at the market expectations of our policy action, I would say they have more or less converged at what I call a sweet spot,”
          • “There is a fair degree of consensus around these expectations.”
          • “I would say the likelihood of us erring on the side of being too cautious is a bit larger than for us being too bold,”
          • “All in all, undoing these unorthodox, unconventional instruments could easily last for most of a decade.”

          Regarding trade relationship with the US, he said:

          • “The question is if Europe will come with countermeasures which could make us slip into a trade war,”
          • “But don’t be mistaken, if the U.S. were to implement trade restrictions on say steel, it will be the American consumer paying the price.”

          Philadelphia Fed Harker expects three hikes this year on “some firming of inflation”

            By
            ActionForex.com
            -

            Philadelphia Fed President Patrick Harker said in a WSJ interview that he now expects three Fed rate hike this year. Harker is seen as on the dovish side of the spectrum as he previously projected just two hikes in 2018.

            He pointed to “some firming of inflation” as he reason for the upgrade is his own forecast. He also clarified that he placed more emphasis on inflation than fiscal policy.

            And to us, this could be a hint on a major difference between Fed’s hawks and doves. The hawks anticipate the growth and inflation impact of the tax cut and other policies. Meanwhile, seeing is believing for the doves.

            Nonetheless, Harker also sounded cautious on trade tensions. He noted that risk of increasing trade tariffs as a source of uncertainty for both economic projections and monetary policy.

            UK Q4 GDP finalized at 0.4% qoq, little reaction from GBP

              By
              ActionForex.com
              -

              A batch of data is released from UK:

              • GDP Q/Q Q4 F: 0.4% vs exp 0.4% vs prior est 0.4%
              • Current account (GBP) Q4: -18.4b vs exp -23.7b vs prior -22.8b
              • Index of services 3M/3M Jan: 0.6% vs exp 0.6% vs prior 0.6%
              • M4 money supply M/M Feb: -0.4% vs exp 1.3% vs prior 1.5%
              • Mortgage approvals Feb: 64k vs exp 66k vs prior 66k

              There is little reaction to the set of data as expected.

              For us, the main question is on when GBP/JPY’s corrective rise from 144.97 would end. Should be about time as it once again lose momentum as it approaches key resistance level at 150.92.

              German unemployment rate hit record low, but no support to Euro

                By
                ActionForex.com
                -

                German unemployment dropped -19k to 2.373m in March, more than expectation of -15k.

                Unemployment rate dropped from 5.4% to 5.3%, met expectation. That’s also the lowest level on record.

                EUR, however, receives no support from the data. It’s trading down against all major current in the current 4H bar. And for the week, EUR is also reversing much of the earlier gains and is turning mixed.

                The only exception is against CHF, which is trading as the second weakest one for the week, next to JPY. EUR/CHF is still on track to test 1.1832 resistance.

                Swiss KOF: Dropped but still indicates above average growth

                  By
                  ActionForex.com
                  -

                  Swiss KOF economic barometer dropped to 106.0 in March, down from 108.4, below expectation of 107.2.

                  KOF noted in the release that “notwithstanding this decline, the present position is still on a level clearly above its long-term average.” This indicates that in the near future the Swiss economy should continue to “grow at rates above average”.

                  Also noted:

                  • The strongest negative contributions to this result come from manufacturing, followed by the indicators from the exporting industry.
                    • Within manufacturing, clear negative outlook came from metal, followed by wood, textile and food processing
                  • The indicators from the financial sector, from the hospitality industry and those relating to domestic private consumption have remained practically unchanged.

                  Tech stock recovery short-lived as NASDAQ dropped 0.85%, 10 year yield hit 7-week low

                    By
                    ActionForex.com
                    -

                    The recovery in tech stocks in the US proved to be weak and short-lived. NASDAQ hit 7036.09 initially but failed to sustain above 7000 handle. It closed down -59.58 pts or -0.85% at 6949.23. Near term direction is still on the way down considering it’s staying comfortably below falling 55 H EMA. Note that it’s now trying to sustain below 61.8% retracement of 6630.67 to 7637.27. Next target will be 6630.67 key structural support.

                    The deterioration in investor sentiments seem to be finally having an impact in the bond markets too. 10 year yield closed down -0.11 to 2.775 after hitting a 7-week low. Safe haven flow is noted as the correction in equity markets look far from being over. TNX is now sitting on 55 day EMA but we’d see it probably dip further to 38.2% retracement of 2.033 to 2.943 at 2.595 before bottoming.

                    US Q4 GDP finalized at 2.9%, Muted Reaction, DOW Can’t take out 24000 yet

                      By
                      ActionForex.com
                      -

                      US data wrap up:

                      • GDP annualized Q4 F : 2.9% vs exp 2.7% vs prior est 2.5%
                      • GDP price index Q4 F: 2.3% vs exp 2.3% vs prior est 2.3%
                      • Personal consumption Q4 F : 4.0% vs exp 3.8% vs prior est 3.8%
                      • Core PCE Q4 F Q/Q: 1.9% vs exp 1.9% vs prior est 1.9%
                      • Wholesale inventories mom Feb: 1.1% vs exp 0.5% vs prior 1.0%
                      • Trade balance (USD) Feb: -75.4b vs exp -74.4b vs prior -75.3b
                      • Pending home sales M/M Feb: 3.1% vs exp 2.0% vs prior -4.7%

                      Reactions to the data are rather muted. DOW posts slight gains in early US session but is struggling to break through 24000 handle so far. It remains to be seen whether today’s recovery could sustain. We maintain the near term bearish view that as long as 24453.14 resistance holds, DOW will more likely revisit 23360.29 than not.

                      With markets back to risk on mode, JPY and CHF suffer much selling pressure. So far for today, USD/CHF and USD/JPY are the biggest winner.

                      JPY and CHF lower as stocks rebound in premarket, EUR/CHF and GBP/CHF surge

                        By
                        ActionForex.com
                        -

                        US stocks futures reverse earlier loss and point to a higher open. The move was triggered by news that Facebook is going to streamline privacy settings. Facebook shares trade more than 1% higher in premarket. The development triggers intensified selling in JPY and CHF. Both are in deep red in 4H heatmap.

                        But for now, EUR/JPY is held well below 132.40 resistance, GBP/JPY below 150.92, and USD/JPY below 106.63. There is confirmation of bullish trend reversal in these pairs yet.

                        On the other hand, developments in CHF crosses look more promising. EUR/CHF is on track for a test on 1.1832 resistance.

                        GBP/CHF is even close to equivalent resistance at 1.3491.

                        Based on current momentum, 1.1832 in EUR/CHF and 1.3491 in GBP/CHF could be taken out without much problem.

                        Germany rumored to be willing to offer concessions to US on trade, European Commission rules that out

                          By
                          ActionForex.com
                          -

                          Bloomberg reported the European Commission urged the region’s governments today to stand united in trade talks with the US, and be ready to “think out of the box fast”. EU is seeking to follow South Korea to get indefinite exemption on the steel and aluminum tariffs by May 1.

                          But, the option of re-negotiation of EU-US free trade agreement is ruled out by EC. Unilateral European concessions to the US is also ruled out. It seems that EC is asking the officials to stay “inside” the box but think “out of” it. Well, there is no logical contradiction.

                          It was also reported by Bloomberg that Germany is adopting a flexible approach in dealing with the US and is willing to offer concession to the US. Germany Chancellor Angel Merkel is believed to be ready to lower the 10% EU tariff on autos to avoid a trade dispute.

                          But that is in total opposite position to France. President Emmanuel Macron is clear in his message that European steel and aluminum exports pose no security threat to the US. And the rules of international trade need to be “reinforced” to ensure such a level playing field.

                          So, the EC’s message seemed to be directed at Germany.

                          AUD/USD falls but will face 4H, D, W pivot S1 confluence

                            By
                            ActionForex.com
                            -

                            Markets are generally back in risk averse mode today. Nikkei lost -286 pts or -1.34% to close at 21031.31. Major European indices are in red in initial trading, with DAX due -1.5%, CAC down -1.3% and FTSE down -0.6%.

                            AUD is a currency that’s usually weighed down by risk aversion. EUR/AUD extended recent rally and reaches as high as 1.6189, and regains upside H action bias.

                            AUD/USD also drops through 0.7671 support to resume whole fall from 0.8135.

                            However, as AUD/USD dips lower, it will face confluence of 4H S1, D S1 and W S1 at 0.7648/9. AUD/USD might struggle to build downside momentum for a short while.

                            Euro stays strongest after jitters, EURAUD with solid upside bias

                              By
                              ActionForex.com
                              -

                              After some jitters yesterday, EUR remains the strongest major currency for the week as seen in W heatmap. Strength is apparent against USD, GBP and AUD. Meanwhile, JPY is trading as the weakest, followed closely by USD, CHF and AUD.

                              Looking at EURAUD action bias table, the biases are consistent across time frame.

                              And EURAUD is seen as in up trend in 6H, D and W charts. So, the current H neutral could present an opportunity to long EUR/AUD.

                              An intraday strategy could be buying at PP at 1.6120 with a stop below S1 at 1.6081.

                               

                              DOW closed down -1.43% after 737 pts swing, rejected by 24453 resistance

                                By
                                ActionForex.com
                                -

                                DOW initially gained 244 pts to 24446.22 but reversed to closed down -344.89 pts or -1.43% at 23857.71. Considering that it hit as low as 23708.73, that was indeed a massive 737 pts swing. The reversal was mainly because tech stocks were crushed. S&P 500 lost -45.93 pts or -1.73% to 2612.62. NASDAQ suffered most and closed down -211.73 pts or -2.93% at 7008.81. Selloff continues in Asia with Nikkei down -1.8%, HK HSI down -0.9% at the time of writing.

                                Technically, we’ve mentioned before (here) that there will be no change in near term direction before a break of 24453.14 resistance. That is, DOW is expected extend recent decline to 23360.29 and below. The development is no far in line with our near term bearish view.

                                US consumer confidence dropped moderately in March, dollar and stock lack direction

                                  By
                                  ActionForex.com
                                  -

                                  US Conference Board consumer confidence dropped moderately in March to 127.7, missing expectation of 131.0 But it stayed close to 18 year high at 130 in February.

                                  Reaction to the data is muted though. Dollar rebounded earlier today, but it’s struggling to extend gain in US session so far.

                                  Stocks also struggle to find a direction as DOW is trading nearly flat.

                                  USD in counter trend rebound as buying emerges in European session

                                    By
                                    ActionForex.com
                                    -

                                    Buying emerges for USD in European session as seen in the 4H heatmap. And that also majors USD as the strongest one for the day.  H action bias of dollar also turned all up. (EUR/USD, GBP/USD, AUD/USD, NZD/USD down means USD up, just in case).

                                    However, it should be noted that firstly, 6H action bias of USD is all neutral. Indeed, USD is in down action bias against EUR and GBP in daily chart. USD is also in down action bias against JPY, GBP and CAD in weekly chart. Hence, the momentum across time frame is not consistent. That means, the current rebound in dollar in counter trend.

                                    For example, for GBP/USD’s we’d prefer to see a break of 1.4075 before weighing the chance of a near term reversal. Otherwise, GBP/USD is seen as in a correction only.

                                    ECB Nowotny: Could reduce asset purchase “significantly” after September

                                      By
                                      ActionForex.com
                                      -

                                      Outspoken ECB Governing Council member Ewald Nowotny commented again today. He said that the central bank will decide on the future of monetary policy in the summer. This is rather apparent as the current EUR 30b per month asset purchase program is set to end in September. Nowotny also said that “if things continue as they are, ECB will be able to reduce asset purchases significantly” after that. While he cautioned not to make any abrupt change to policy, he also emphasized not to fall behind the curve.

                                      Overall, Nowotny’s comments were consistent with his usual stance, which is slightly on the hawkish side of the spectrum.

                                      European Commission: Economic sentiment weakend in all the five largest euro-area economies

                                        By
                                        ActionForex.com
                                        -

                                        Eurozone confidence indciators generally deteriorated in March.

                                        The European commission noted in the release:

                                        Euro area developments

                                        In March, the Economic Sentiment Indicator (ESI) decreased markedly in both the euro area (by 1.6 points to 112.6) and the EU (by 1.9 points to 112.5).1 While this is the third consecutive drop, the indicators remain at elevated levels.

                                        The deterioration of euro-area sentiment resulted from drops in industry, services and retail trade. Confidence among consumers remained unchanged, while it increased among construction managers. The ESI weakened in all the five largest euro-area economies; significantly so in Germany (-2.4), Italy (-1.8) and Spain (-1.2) and, less so, in the Netherlands (-0.5) and France (-0.4).

                                        EU developments

                                        The marginally stronger decrease of the headline indicator for the EU (-1.9) was mainly due to the marked deterioration of sentiment in the largest non-euro area EU economies, the UK (-4.2), and Poland (-2.0). In line with the euro area, confidence deteriorated strongly in industry, services, and retail trade, while it increased slightly in the construction sector and remained unchanged among consumers. The fall in EU confidence in the financial services sector was slightly less pronounced than in the euro area.

                                        By contrast to the euro area, EU managers’ employment expectations improved in retail trade, while they remained broadly stable in services. Price expectations differed from the euro area mainly in retail trade, where they decreased markedly.

                                        Full release here.

                                        EUR/GBP rally drags down GBP/JPY and GBP/USD

                                          By
                                          ActionForex.com
                                          -

                                          EUR/GBP spikes higher in early European session, after clearing 0.8750. A major reason is believed to be Bundesbank’s monthly purchase for UK’s contribution to EU membership. Today’s move could be exaggerated by thinner holiday liquidity. Also EUR/GBP bearish could be finally giving up after the cross failed to sustain below 0.8686 last week. But it’s worth a watch to see if the rebound is turning into something sustainable. For now, based on current momentum, it could be heading back to 61.8% retracement of 0.8967 to 0.8666 at 0.8852 with a short term based formed.

                                          The move in EUR/GBP is also affecting other pairs. GBP/JPY dip notably lower after hitting 150.48.

                                          GBP/USD also dips after hitting 1.4243.

                                          On other hand, EUR/USD is staying firm after edging higher to 1.2475.

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