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Australia employment rose just 4k in Apr, unemployment at record 3.9%

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    Australia employment rose just 4k in April, missing expectation of 30k growth. Full time jobs rose 92.4k while part-time jobs dropped -88.4k.

    Unemployment rate was unchanged at 3.9%, matched expectations. Participation rate dropped -0.1% to 66.3%. Monthly hours worked rose 23m hours, or 1.3% mom.

    Bjorn Jarvis, head of labour statistics at the ABS, said, “3.9 per cent is the lowest the unemployment rate has been in the monthly survey. The last time the unemployment rate was lower than this was in August 1974, when the survey was quarterly.”

    Full release here.

    IMF raises 2024 global growth forecasts, risk of hard landing recedes

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      In the World Economic Outlook update, IMF upgraded global growth forecast for 2024 by 0.2% to 3.1%. 2025 growth forecast was left unchanged at 3.2%. This upward revision largely stems from stronger-than-expected economic resilience in the US and key emerging markets, along with fiscal support measures in China.

      Also, IMF anticipates slowdown in global inflation to 5.8% in 2024 and a further reduction to 4.4% in 2025. With this expected disinflation and steady economic growth, “likelihood of a hard landing has receded”, and risks to global growth are now viewed as “broadly balanced”.

      IMF outlines several potential upside and downside risks to its forecast. Upside risks include faster disinflation potentially leading to looser financial conditions and temporary growth boosts from more expansionary fiscal policies. However, these could pose longer-term challenges. Enhanced structural reforms could also positively impact productivity and have cross-border benefits.

      On the downside, IMF cautions against risks like new commodity price increases due to geopolitical tensions, including ongoing conflicts in the Red Sea. Persistent inflation could maintain the need for tight monetary policies. Further, troubles in China’s property market or unexpected fiscal tightening in other regions could lead to lower growth than anticipated.

      Looking at some details growth forecast:

      • US at 2.1% in 2024 (up 0.6% from October estimate), 1.7% in 2025 (down -0.1% from October estimate).
      • Eurozone at 0.9% in 2024 (down -0.3%), 1.7% in 2025 (down -0.1%).
      • Japan at 0.9% in 2024 (down -0.1%), 0.8% in 2025 (up 0.2%).
      • UK at 0.6% in 2024 (unchanged), 1.6% in 2025 (down -0.4%).
      • Canada at 1.4% in 2024 (down -0.2%), 2.3% in 2025 (down -0.1%).
      • China at 4.6% in 2024 (up 0.4%), 4.1% in 2025 (unchanged).

      Full IMF release here.

      German GDP contracted record -10.1% qoq in Q2

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        ActionForex.com
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        Germany GDP contracted -10.1% qoq in Q2, worse than expectation of -9.0% qoq. That’s also the largest decline since the beginning of quarterly GDP calculations for Germany in 1970. The contraction was also more than double of that during the financial market and economic crisis back in Q1 2009 (-4.7% qoq).

        Full release here.

        Also released, Germany unemployment dropped -18k in July, versus expectation of 45k rise. Unemployment was unchanged at 6.4% versus expectation of 6.5%. Italy unemployment jumped to 8.8% in June, up from revised 8.3%, above expectation of 8.5%.

        AUD/CAD in rebound, but no major bottoming yet

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          ActionForex.com
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          AUD/CAD is a pair worth watching today, after having sluggish response to RBA minutes. But Canada retail sales featured today could trigger some volatility. There is prospect of major bottoming at 0.8969 considering bullish convergence condition in daily MACD. Also, it’s so far staying above 55 day EMA, which is a positive sign.

          However, AUD/CAD will need to firmly take out 0.9335 resistance to indicate completion of the fall from 0.9991 high. Other wise, another fall would remain mildly in favor. On the downside, break of 0.9087 minor support will bring deeper fall to retest 0.8969 low. Break will resume the fall from 0.9991 to 61.8% retracement of 0.8058 to 0.9991 at 0.8796.

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

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            ActionForex.com
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            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.

            ECB’s Wunsch: We have to make a bet at some point

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              ActionForex.com
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              ECB Governing Council member Pierre Wunsch emphasized the need for proactive stance on interest rates, acting on the fact that “inflation has gone down, is moving in the right direction”.

              Speaking at a news conference for the Belgian national bank’s annual report, Wunsch candidly expressed that ECB is nearing a point where it must “make a bet” on cutting interest rates.

              However, he was quick to temper expectations, noting that any decision to cut rates would be made carefully, with a keen eye on the persisting challenges of “service inflation and wage developments”, which are “still running at levels that are ultimately not compatible with our objective”

              Despite these concerns, Wunsch indicated that ECB would not delay rate cuts until wage growth falls to 3%.

              Eurozone PMI Composite finalized at 51.5, scale of manufacturing downturn starting to overwhelm

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                ActionForex.com
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                Eurozone PMI Services was finalized at 53.2, down from 53.3, and June’s 53.6. PMI Composite was finalized at 51.5, down from 52.2. Looking at the member states, Germany PMI Composite dropped to 50.9, 73-month low. Italy hit 51.0, 4 -month high. Spain dropped to 51.7, 68-month low. France hit 51.9, 2-month low.

                Chris Williamson, Chief Business Economist at IHS Markit said:

                “The service sector continued to sustain the expansion of the overall eurozone economy at the start of the third quarter, but there are signs that the scale of the manufacturing downturn is starting to overwhelm.

                “Trade war worries, slower economic growth, falling demand for business equipment, slumping auto sales and geopolitical concerns such as Brexit led the list of business woes, dragging manufacturing production lower at its fastest rate for over six years. While the service sector has helped offset the manufacturing downturn, growth also edged lower among service providers in July, meaning the overall pace of expansion of GDP signalled by the PMI has slipped closer to 0.1%.

                “The main source of expansion currently appears to be the consumer, in turn buoyed by the relative strength of the labour market. However, with the July survey indicating the weakest jobs gains in over three years, there are signs that this growth engine is also losing impetus, and adding another headwind to the economy for the coming months.”

                Full release here.

                Japan industrial production down -4.6% mom in Jan, expected to rebound in Feb

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                  ActionForex.com
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                  Japan industrial production declined -4.6% mom in January, much worse than expectation of -2.6% mom.

                  Upon the release of the data, the METI downgraded its assessment of industrial production, saying that it has weakened. Never the less, the ministry forecast industrial production to bounce back by 8.0% in February, and then a further 0.7% in March.

                  Retail sales rose 6.3% yoy, above expectation of 4.0% yoy.

                  Italian cabinet approved budget, drama with EU begins

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                    ActionForex.com
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                    Italian cabinet approved the 2019 budget that would boost budget deficit from the current 1.8% of GDP to 2.4% next year. The key measures include basic income for the poor and tax cuts for the self-employed. Retirement age was also lowered and there is partial amnesty offered to settle tax disputes. Prime Minister Giuseppe Conte hailed after the cabinet meeting that “this budget keeps the government’s promises while keeping public accounts in order.” Economy Minister Giovanni Tria also talked down the potential clash with the EU and said “the idea that this budget can blow up Europe is totally unfounded.”

                    But no matter what Italy says, the drama with EU will now formally begin. After formally receiving the budget, European Commission will have a week, by October 22, to identify “particularly serious non-compliance with the budgetary policy obligations” of a state. By October 29, the Commission will have to decide whether to reject the draft budget as non-compliant, with written explanations. The showdown will come on November 5 in the Eurogroup of finance ministers meeting. And Italy is expected to submit a revised budget on November 19.

                    BoJ Kuroda: May take a long time to achieve price stability with wage hikes

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                      ActionForex.com
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                      BoJ Governor Haruhiko Kuroda told the parliament that it may “take a long time” to achieve the “price stability target, involving wage hikes”. He reiterated that the central bank needs to continue with its monetary easing to support a fragile recovery.

                      At the same session, Executive Director Shinichi Uchida said it was too early to discuss exit from monetary stimulus. “When exiting, the point will be adjusting long-term and short-term policy rates and the BoJ’s balance sheet,” Uchida said. “The order and mixture of those factors would differ depending on economy, prices and financial situations at the time.”

                      Swiss SECO: Growth below average this year, but no recession

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                        ActionForex.com
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                        Swiss economic growth projections for 2023 and 2024 have been revised by the State Secretariat for Economic Affairs (SECO), as recent forecasts indicate mixed outcomes for the nation.

                        The Swiss economy, adjusted for sporting events, is now anticipated to grow by 1.1% in 2023, a slight increase from December’s 1.0% forecast. However, the outlook for 2024 has been lowered, with an expected growth rate of 1.5% compared to the previous 1.6% projection. While 2023’s growth rate remains below average, it is not expected to plunge the economy into a recession.

                        Meanwhile, inflation is forecast to decelerate from 2.8% in 2022 to 2.4% in 2023, a revision from the initial 2.2% estimate, before settling at 1.5% in 2024, in line with prior expectations.

                        Early indicators for the first quarter of 2023 suggest a robust performance for the Swiss economy. Private consumption is projected to experience modest growth in the coming quarters, supported by a strong labor market and nominal wage increases. However, investment growth is likely to remain below average under current conditions.

                        SECO predicts that the European energy situation will stabilize further by the end of 2024, contributing to a gradual decline in global inflation rates. This should lead to a recovery in international demand. Nevertheless, the Swiss economy may outperform these projections if the energy landscape and inflation rates prove to be more favorable than anticipated, potentially resulting in stronger demand both domestically and globally.

                        Full release here.

                        AUD/NZD soars amidst diverging predictions for RBA and RBNZ moves

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                          ActionForex.com
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                          AUD/NZD surges sharply in Asian session, buoyed by the combined effects of more hawkish RBA minutes and the disappointing New Zealand inflation numbers. This series of events has led to heightened speculation of another interest rate hike by RBA come November, while RBNZ is more likely opt to hold their stance.

                          The strong break of 1.0720 resistance confirms short term bottoming in AUD/NZD . More importantly, fall from 1.1050 could have completed with three waves down to 1.0620 too. Immediate focus is on 55 D EMA (now at 1.0773). Sustained trading above there will strengthen this case and target 1.0914 resistance and above. In case of retreat, risk will now stay on the upside as long as 1.0620 support holds.

                          In the bigger picture, price actions from 1.0469 (2022 low) could still be interpreted as consolidation to the down trend from 1.1489 (2022 high). Thus, strong resistance could be seen in AUD/NZD as it enters into resistance zone of 1.0914/1.1050.

                          Australia PMI composite fell to 50.5, RBA has time on their side

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                            Australia PMI Manufacturing ticked up from 48.4 to 48.6 in June. PMI Services fell from 52.1 to 50.7. PMI Composite declined from 51.6 to 50.5.

                            Warren Hogan, Chief Economic Advisor at Judo Bank said:

                            “The loss of momentum in recent months will probably give the RBA some comfort that economic activity is slowing down across the economy in 2023, following their consecutive rate hikes in May and June…

                            “The survey suggests that the RBA has time on their side and does not necessarily need to hike rates again in July. The slowdown taking place across the economy provides further evidence that the point at which the RBA can undertake a genuine pause in their tightening cycle is getting closer.

                            “We cannot rule out a further hike in the next few months, but we are close to a level of interest rates whereby the RBA can sit back for 4-6 months and observe the effects of past interest rate increases.”

                            Full Australia PMI release here.

                            China backs down from tariff escalation, urges continuing negotiations

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                              ActionForex.com
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                              China’s Ministry of Commerce spokesman Gao Feng said today that “China has ample means for retaliation, but thinks the question that should be discussed now is about removing the new tariffs to prevent escalation of the trade war.” And, “China is lodging solemn representations with the U.S. on the matter.”

                              Additionally, Gao reiterated the usual rhetoric that “escalation of the trade war won’t benefit China, nor the US, nor the world,” and “the most important thing is to create the necessary conditions for continuing negotiations.” He also repeated Vice Premier Liu He’s comment that China is “willing to solve the problem through consultation and cooperation with a calm attitude, but firmly opposes escalation of trade war.”

                              The comments suggested that China is backing down from its hard-line stance after recent escalation by US President Donald Trump. Trump tweeted earlier this month that 25% tariffs on some USD 250B in imports from China would rise to 30% come Oct. 1. He also lifted planned levies on USD 300B in Chinese goods due on Sept. 1 and Dec. 15 by 5%.

                              Japan PMI manufacturing dropped to 53.3, recovery sustained with softening momentum

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                                ActionForex.com
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                                Japan PMI Manufacturing dropped from 54.0 to 53.3 in December. PMI Services dropped from 53.0 to 51.1. PMI Composite dropped from 53.3 to 51.8.

                                Annabel Fiddes, Economics Associate Director at IHS Markit, said: “The latest Flash PMI data showed that the Japanese private sector recovery was sustained in December, rounding off the best quarterly performance since Q4 2018. However, both manufacturers and services companies signalled softer rates of output and new order growth compared to November, to suggest a softening of momentum.”

                                Full release here.

                                CAD/JPY long opportunity for quick trading and position trading

                                  By
                                  ActionForex.com
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                                  USD/JPY is trading as the biggest mover (up) today, and momentum is maintained in the current 4H period.

                                  This is consistent with the D heatmap where USD is the strongest one, while JPY is the weakest one.

                                  However, looking at the 4H heatmap and W heatmap, we can see that USD’s strength is not that overwhelming. And indeed, CAD’s strength look more solid. And, CAD/JPY is indeed also top 10 movers across all time frame.

                                  Hence, CAD/JPY is probably a pair that’s worth more attention. Looking at CAD/JPY action bias table, solid upside momentum is seen in 6H time frame. However, D action bias has just turned from neutral to positive. And W action bias stays negative in the latest 9 bars. While there is a possibility that CAD/JPY is staging a trend reversal, current rebound could also be a correction.

                                  Looking back at the charts, CAD/JPY should have bottomed in short term at 80.52 after drawing support from 80.55. This give us more confidence on the long trade. For quick intraday traders, a strategy is to long CAD/JPY and target 38.2% retracement of 91.56 to 80.52 at 84.73 for a quick profit. For position traders, we better wait for the reactions from the 84.73 fibonacci level to make sure the pullback is corrective and buy at a dip. 

                                  South Korean Trade Ministry warns US-China trade dispute likely to be prolonged and proliferated

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                                    ActionForex.com
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                                    In a policy news release, the South Korean Ministry of Trade, Industry and Energy warned that the US-China trade dispute is likely to be “prolonged and proliferated”. And it urged private sector to seek analysis from the Korea Institute for Industrial Economics and Industry (KIEP) on the effects on imports and exports of each industry.

                                    The Ministry also warned that “China’s home appliances, computers and telecommunication equipment are included in the additional tariffs, which suggests that exports of intermediate goods to China will decrease .” Meanwhile, the government would prepare a scenario for developing trade disputes with the US and prepare counter measures accordingly.

                                    The issue regarding US 232 auto tariffs was discussed at a meeting with the motor industry representatives on July 10. Follow up actions including attending the US hearing by the government and the industry. In addition, delegation of representatives from the Ministry of Industry , Ministry of Foreign Affairs and the Ministry of Information and Communication , automobile industry association, Hyundai Motor , and trade association representatives, is scheduled to meet with US officials, legislators and automobile organizations.

                                    Full statement here.

                                    ECB Lagarde expects more steady 50bps hikes, EUR/CAD accelerates up

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                                      ActionForex.com
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                                      Euro is given a further boost after ECB President Christine Lagarde said in the the post-meeting press conference that “interest rates will still have to rise significantly and at a steady pace.” She added, “Obvious that we should expect 50 bps hikes for period of time.” The clarity of Lagarde’s message was a rather big surprise to the markets.

                                      EUR/CAD’s rally accelerates to as high as 1.4591 and it’s on track to 161.8% projection of 1.2867 to 1.3694 from 1.3270 at 1.4608. Firm break there will put focus to key long term fibonacci level of 1.6151 to 1.2867 at 1.4897.

                                      UK PMI composite finalized at 36.0, almost certain to experience a deep contraction in Q2

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                                        ActionForex.com
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                                        UK PMI Services was finalized at 34.5 in March, down from February’s 53.2. It’s the worst reading since survey began in 1996. PMI Composite was finalized at 36.0, lowest since series began in 1998.

                                        Tim Moore, Economics Director at IHS Markit: “”With the UK economy now almost certain to experience a deep contraction in the second quarter of the year, perhaps the most important aspect of the Services PMI to watch for hopeful signs will be any recovery in the business expectations sub-index from the record low seen in March.”

                                        Full release here.

                                        US ISM manufacturing dropped to 48.1, fourth straight month of contraction

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                                          ActionForex.com
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                                          US ISM Manufacturing Index dropped to 48.1 in November, down from 48.3, missed expectation of 49.4. It’s the fourth month of sub-50 contraction reading. ISM’s Timothy R. Fiore warned “global trade remains the most significant cross-industry issue”.

                                          Looking at some details, all components stayed are in contraction except supplier deliveries. New orders dropped -1.9 to 47.2. Employment dropped -1.1 to 46.6. New export orders dropped into contraction, by -2.5 to 47.9. On the the hand, production rose 2.9 to 49.1 while prices rose 1.2 to 46.7.

                                          Full release here.

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