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British retail sales decline, pound extends lossesThe British pound is lower for a straight third trading day on Friday. In the North American session, GBP/USD is trading at 1.2543, down 0.36% on the day. UK retail sales disappointed in October, with a sharp decline of 0.7% m/m. This follows a downwardly revised 0.1% gain in September and missed than the market estimate of 0.3%. Annually, retail sales rose 2.4%, well below the market estimate of 3.2%. The September reading was revised downwards from 3.9% to 3.2%. The sharp drop in retail sales can be attributed to low consumer confidence and the recent Budget. The GfK consumer confidence index showed an improvement, rising from -21 to -18, but this points to a very pessimistic British consumer who is thinking twice before making discretionary purchases. The Reeves Budget on Oct. 31 dampened consumer spending, as the government had warned about “difficult decisions” and proceeded to deliver a Budget with some 40 billion pounds worth of tax increases. Understandably, consumers held back on spending in October and retail sales were down across most categories. The economy has slowed since the July election and services and manufacturing activity have decelerated for three straight months. The UK releases the Services and Manufacturing PMIs later today. The Services PMI is expected to remain unchanged at 52.0, while the Manufacturing PMI if projected to inch up to 50.0, up from 49.9. If the PMIs are weaker than expected, the pound could respond with losses. The US will also publish manufacturing and services PMIs on Friday, with little change expected. The Manufacturing PMI is expected to rise from 45.5 to 45.8, and the Services PMI, which has been showing solid growth, from 55 to 55.2. GBP/USD is testing support at 1.2557, followed by support at 1.2525 There is resistance at 1.2609 and 1.2641
by OANDA
British pound falls to 6-month low, retail sales nextThe British pound has lost ground on Thursday. In the North American session, GBP/USD is trading at 1.2506, down 0.44% on the day. Earlier, the pound dropped as low as 1.2593, its lowest level since mid-May. It’s a busy Friday in the UK, highlighted by the retail sales report. We’ll also get a look at consumer confidence and the services and manufacturing PMIs. The UK releases October retail sales on Friday and the markets are bracing for a downswing. The market estimate stands at 3.4% y/y, compared to 3.9% in September, the highest since Feb. 2022. Monthly, retail sales are expected to decline by 0.3%, following a 0.3% gain in September. The UK consumer remains in a sour mood, as the cost of living and high interest rates continue to squeeze households. The GfK consumer confidence index is expected to remain unchanged in November at -21. The UK manufacturing sector has been struggling. The October PMI was revised downwards to 49.9, which indicates stagnation. The PMI has decelerated for three straight months and the weak global demand will likely continue to weigh on manufacturing in the months ahead. The market estimate for November stands at 50.0. The services sector is in better shape and has shown 12 consecutive months of growth. The PMI has also eased for three straight months, raising concerns about the health of the economy. The market estimate for November is 52.0, unchanged from the October figure. The US will also publish manufacturing and services PMIs on Friday, with little change expected. The Manufacturing PMI is expected to rise from 45.5 to 45.8, and the Services PMI, which has been showing solid growth, from 55 to 55.2. There is resistance at 1.2666 and 1.2702 GBP/USD pushed below support at 1.2618 and tested support at 1.2582 earlier
by OANDA
Yen slips to 3-month low after Japanese electionThe Japanese yen is lower on Monday. In the European session, USD/JPY is trading at 152.63, up 0.22% at the time of writing. The yen weakened as far as 153.88 but has pared most of the losses. The new trading week has barely begun but the markets are busy digesting the drama out of Tokyo. The snap parliamentary election over the weekend was a disaster for new Prime Minister Shigeru Ishiba, as his Liberal Democratic Party (LPD) coalition won just 215 seats, short of the 233 majority. Ishiba has been in power for only a month and the snap election backfired as the LDP lost its parliamentary majority for the first time since 2009. It’s unclear if Ishiba will be able to cobble together a majority and the political uncertainly could push the yen, which is trading at 3-month lows, even lower. The election bombshell comes just ahead of the Bank of Japan’s on Oct. 31. The BoJ is expected to maintain policy settings and will release updated growth and inflation forecasts. The BoJ has intervened in the past when the yen showed a sharp and quick decline and there is speculation that the central bank might intervene if the yen falls to 155 or 160 per dollar. The US wrapped up the week with mixed results. Durable Goods Orders declined 0.8% in September, unchanged from a revised -0.8% reading in August and above the market estimate of -1%. The UoM Consumer Sentiment index improved slightly to 70.5 in October, above 70.1 in September, beating the market estimate of 69.0. USD/JPY continues to push through resistance lines. The next resistance line is 153.94 152.03 and 151.68 are providing support
by OANDA
Tokyo Core CPI complicates BoJ’s rate plansThe Japanese yen is showing limited movement on Friday. In the European session, USD/JPY is trading at 151.94, up 0.09%. Tokyo Core CPI, a leading indicator of inflation trends in Japan, fell to 1.8% y/y in October, down from 2% in September and just above the market estimate of 1.7%. This marked a second straight deceleration and was the lowest level since April. A key service inflation indicator also slowed in October, dropping from 2.7% to 2.6%, a four-month low. The decline in inflation is a disappointment for the Bank of Japan, which wants to see inflation remain sustainable around its 2% target before its raises interest rates on the path towards normalization. The BoJ meets next week and is expected to maintain rates. The central bank will release growth and inflation forecasts which could provide insights into future monetary policy. The cautious BoJ is unlikely to raise rates until early next unless inflation reverses its current downtrend and pushes higher. The US wraps up the week with core durable goods orders and UoM consumer sentiment. The manufacturing sector has contracted for four straight months and core durable goods orders are expected to fall 1% in September, after no change in August. The UoM consumer sentiment index is expected to fall to 68.9 in October, compared to 70.1 a month earlier. Consumers are unhappy about high inflation and there is uncertainty over the US election, with an extremely tight race between Donald Trump and Kamala Harris. USD/JPY is testing resistance at 1.5207. The next resistance line is 152.58 151.30 and 150.79 are providing support
by OANDA
USD/JPY jumps as BoJ Core CPI stallsThe Japanese yen is sharply lower on Wednesday. In the North American session, USD/JPY is trading at 144.49, up 0.89% at the time of writing. The Bank of Japan is expected to raise interest rates and continue on the path to normalization. The BoJ lifted rates out of negative territory in March but rates are barely above zero and the markets are expecting further hikes, although the timing remains unclear. This has made the BoJ an outlier among the major central banks, which have lowered rates in response to falling inflation. In Japan, inflation has been on the rise and hit 3.0% in August after running at 2.8% in the prior three months. The BoJ has signaled that it will raise rates but has been cautious, and Governor Ueda said on Tuesday that the central bank can afford to wait and is not in any rush to hike rates. The US Conference Board consumer confidence index is usually not a market-mover but a very soft reading on Tuesday sent the US dollar lower against most of the major currencies. The index slipped to 98.7 in September, down sharply from a revised 105.6 in August and below the market estimate of 103.8. The US labor market has deteriorated and consumers are worried about job security. The US releases GDP (third estimate) for the second quarter with a forecast of 3.0%. This would confirm the second estimate and point to stronger economic growth after a 1.4% gain in the first quarter. Still, the Fed may be planning another jumbo rate cut – the markets have priced in a 50-basis point cut at the next meeting in November, according to CME’s FedWatch. USD/JPY has pushed above resistance at 143.67 and 144.23. Above, there is resistance at 145.23 There is support at 142.67 and 142.11
by OANDA
240729 Weekly OutlookThe following week have major data release including, 240730 Tue CB Consumer Confidence **** 240731 Wed Fed Interest Rate Decision ***** 240801 Thu Initial Jobless Claims **** 240801 Fri Nonfarm Payrolls ***** Unemployment Rate ***** Consumer Confidence is the major leading indicator alongside Michigan Consumer index. Investors should follow the rise of two indexes to lead increase in economic data like inflation, GDP, labor market conditions, as well as economic conditions. Fed rate is expected to remain unchanged, while market discounting the first cut in the cycle to come in September. Labor market show resilience all the way that give space to maintain higher rates in this cycle for longer. Even the first rate cute is forecasted for September, I would still expect the higher rates to stay here for longer period due to resilient labor market, as shown by labor market indicators. There are no signs for S&P to weaken this time, rather shuttle up and down at high levels. Note that last adjustment in S&P followed the deviation of 12% from major trend line 200SMA. Attentive investors could observe it previously. When the market finally digest selling orders, S&P should resume the rising trend.
AMEX:VOO
by moncap2023
GBP/USD edges lower after soft retail sales reportThe British pound has slightly lower on Friday. GBP/USD is trading at 1.2922 in the North American session, down 0.17% on the day. The pound has sparkled in the month of July but has hit a snag, dropping 0.50% on Thursday and extending those losses today. UK retail sales suffered a turnaround in June, falling 1.2% m/m after a strong gain of 2.9% in May and below the market estimate of -0.4%. Annually, retail sales fell 0.2%; following a revised 1.7% gain in May and shy of the market estimate of a 0.2% rise. Fingers were pointing again at inclement weather, which kept shoppers away from the stores. A wet April was blamed for a weak retail sales report and the unseasonably cool weather in June, along with uncertainty prior to the July 4th election were blamed for a decrease in June retail sales. Consumers are showing a reluctance to spend, despite inflation falling to 2% and an increase in wages. Consumers have been squeezed by inflationary pressures and high interest rates and confidence in the economy has been weak. Still, the GfK consumer confidence index, released on Friday, ticked up to -13 for July, up a notch from -13 in June and its highest level since September 2021. In the US, the Fed is signaling that the central bank is moving closer to a historic rate cut. Earlier in the week, FOMC members Chris Waller and John Williams hinted at a rate cut in the coming months, although neither provided a specific date. Waller said that the higher-than-expected inflation in the first quarter of 2024 may have been an “aberration” and inflation was moving lower towards the 2% target. The markets have priced in a September cut at 90%, up from just 70% several weeks ago. GBP/USD is testing support at 1.2915, followed by support at 1.2887 1.2969 and 1.2997  are the next resistance lines
by OANDA
Australian dollar edges lower, CPI nextThe Australian dollar is slightly lower on Tuesday. AUD/USD is trading at 0.6638 in the North American session, down 0.27% on the day. Australia’s Westpac Consumer Sentiment index flexed some muscle earlier on Tuesday but that didn’t help the Australian dollar. The index jumped 1.7% in June, a strong turnaround after three straight declines. Despite the improvement, consumer confidence remains deep in negative territory, at 83.6. The index has been mired below 100 for over two years as pessimistic continue to outnumber optimists by a wide margin. Consumers have long been concerned that the Reserve Bank of Australia could raise interest rates, which at 4.35% are already at a 12-year high. The RBA remains concerned about sticky inflation and has warned that it could raise rates if inflationary pressures don’t ease. Inflation rose in April from 3.5% to 3.6% and May CPI, which will be released on Wednesday, is expected to rise to 3.8%. If inflation did accelerate in May, it could set up another hold in rates and possibly a rate hike when the RBA meets in July. The RBA left interest rates at 4.35% at the June meeting for a seventh straight time and discussed the possibility of a rate hike at that meeting. Inflation will be on center stage again on Thursday with the release of the Melbourne Institute Inflation Expectations, which is expected to rise to 4.3% in June, after a 4.1% gain in May. In the US, Conference Board Consumer Confidence dipped to 100.4 in June, down from the revised 101.3 in May and just above the market estimate of 100.0, which separates pessimism from optimism. AUD/USD is testing support at 0.6635. Below, there is support at 0.6591 0.6685 and 0.6729 are the next resistance lines
by OANDA
Australian dollar calm ahead of consumer confidenceAustralian dollar has started the week quietly. AUD/USD is trading at 0.6648 early in the North American session, up 0.11% on the day. Australia releases Westpac Consumer Sentiment early on Tuesday. Consumer confidence has been weak and fell 0.3% in May to 82.4, following a 2.4% decline in April. Consumers have been pessimistic about the weak economy and concerns that sticky inflation could prod the Reserve Bank of Australia to hike interest rates. The RBA has maintained its stance of “higher for longer”, holding rates at 4.35% for the past five meetings. The central bank hasn’t shied away from warning that it could raise rates if inflationary pressures don’t ease. The April CPI report surprised on the upside, rising from 3.5% to 3.6%, above the market estimate of 3.5%. The May CPI report will be released on Wednesday, with a market estimate of 3.8%. If inflation does rise again, we will no doubt hear the RBA express its concern and reiterate that rate hikes remain on the table. The economy is barely treading above water and posted a weak 0.1% gain in the first quarter, but the labor market, which is surprisingly tight, continues to confound the RBA and has dampened any hope of a rate cut in the near term. There are no US releases on Monday but we’ll hear from two FOMC members, Christopher Waller and Mary Daly. Investors will be hoping for some insights about the Fed’s rate path. The Federal Reserve has been hawkish as inflation has been stickier than anticipated. The markets have priced in a rate cut in September at around 60%, according to CME’s FedWatch. AUD/USD is testing resistance at 0.6655. Above, there is resistance at 0.6685 0.6591 and 0.6541 are the next support levels
by OANDA
Euro steadies after market jitters subsideThe euro is steady on Monday. EUR/USD is trading at 1.0714 in the North American session, up 0.10% on the day. France’s financial markets took a tumble late last week, as investors are nervous about the snap parliamentary election at the end of June. There are fears that the extreme right could make strong gains, as was the case in the recent European Union parliamentary elections. The market turmoil led to a sell-off in France’s financial markets and the euro losing 1% over Thursday and Friday. ECB Chief Economist Philip Lane sought to reassure nervous investors and said on Monday that the ECB would not intervene since the recent market turmoil was “not disorderly”. Lane also said the ECB was confident that inflation would fall to the 2% target in 2025. Lane may have sounded optimistic, but the ECB was not happy with the June CPI release, which showed inflation accelerating in the preliminary estimate. Headline CPI rose from 2.4% in May to 2.6% in June and the core rate climbed to 2.9%, up from 2.7% in May. The final estimate, which will released on Tuesday, is expected to confirm the initial release. The markets expect one or two rate cuts before the end of the year, but higher inflation will complicate the ECB’s plans to lower interest rates. In the US, the UoM consumer sentiment index fell for a third successive month to 65.6 in June. This was down from 69.1 in May and shy of the market estimate of 72. Inflation expectations remained unchanged at 3.3%, another signal that inflation remains sticky and the Fed will have a tough time bringing inflation down to the 2% target. EUR/USD is testing resistance at 1.0709. Above, there is resistance at 1.0743 1.0666 and 1.0628 are the next support levels
by OANDA
Australian dollar eyes RBA minutesThe Australian dollar is unchanged at the time of writing, trading at 0.6692 in the European session. There are no economic releases out of the US or Australia today, which should translate into a quiet day for AUD/USD. The Aussie is coming off an excellent week, gaining 1.36% and hitting its highest level since January. In the month of May, AUD/USD has surged 3.4%. Tuesday will be busier, with the Reserve Bank of Australia releasing the minutes of the policy meeting earlier this month. At that meeting, there were no surprises as the RBA held the cash rate at 4.35% for a fourth straight time. Notably, the central bank discussed the possibility of a rate hike at the meeting, which was not the case at the March meeting. This was likely a response to first-quarter CPI, which was slightly higher than expected. CPI fell from 4.1% to 3.6%, missing the forecast of 3.5%. Service inflation remains sticky, which means that CPI is expected to continue to ease, but slowly. RBA policy makers are concerned that the path to the 2% inflation target will be bumpy and are hesitant to start lowering rates until they see evidence of sustainable price stability. The fact that a rate hike is on the table, albeit an unlikely scenario, indicates that the RBA remains cautious and somewhat hawkish, and a rate cut will have to wait until inflation shows a substantial decline. Australia will also release Westpac Consumer Sentiment on Tuesday. The index has declined two straight times and remains in negative territory as consumers remain surly about high interest rates and the high cost of living. The May release is expected to show an improvement, with a market estimate of a 0.9% gain. AUD/USD has support at 0.6681 and 0.6662 0.6714 and 0.6733 are the next resistance lines
LSE:CPI
by OANDA
GBP/USD higher with eye on employment reportThe British pound is slightly higher on Monday. GBP/USD is up 0.20%, trading at 1.2549 in the European session at the time of writing. The UK labor market has held up well despite high interest rates but cracks have appeared and Tuesday’s job report is expected to be soft. Employment change is expected to slide by 215,000 in the three months to March, after declining by 156,000 in the previous release.UK wage growth including bonuses is forecast to fall to 5.3%, down from 5.6% and the unemployment rate is expected to creep up to 4.3%, up from 4.2%. The Bank of England will be keeping a close eye on Tuesday’s employment report. A decline in employment and wage growth will indicate that the labor market continues to cool down which could complicate the BoE’s plans to lower interest rates. The UK ended last week on a high note, as GDP grew 0.6% q/q in the first quarter, higher than the 0.4% market estimate. The stronger data still left a question mark about the central bank’s rate path, as the market pricing of a rate cut in June is around 48%. BoE Governor was non-committal about a June hike at his press conference at last week’s policy meeting. Still, Bailey didn’t rule out a June hike and said that he was “optimistic that things are moving in the right direction”. In the US, the University of Michigan consumer confidence index fell to 67.4 in May, compared to 77.2 in April and shy of the market estimate of 76.2. One-year inflation expectations rose from 3.2% to 3.5%, which indicates that consumers are less confident about inflation receding. GBP/USD tested support at 1.2522 earlier. Below, there is support at 1.2449 1.2597 and 1.2680 are the next resistance lines
by OANDA
Macro Monday 42 ~ Japan Business Sentiment (ReutersTankanIndex)Macro Monday 42 Japan Reuters Tankan Index – Business Sentiment (Released this Wednesday 17th April 2024) Firstly lets briefly cover the Japan Consumer Sentiment we covered last week, Japan Consumer Sentiment Last week we covered the Japan Consumer Confidence Index (CCI), which provided a great indication of how the Japanese consumer is feeling. The Japan CCI surveys have a reliable 90.6% response rate from c. 8,400 households. The Japan CCI came in at 39.5 for March last week which was the highest reading in 5 years and demonstrates a trending recovery from lows of 28.6 in Nov 2022. Any figure below 50 on the Japan CCI is pessimistic however historically the index has only ever rose above 50 briefly twice. We discussed how this is due to many factors such as the Japanese being conservative and risk averse. To remedy this and help find a threshold, I used the historical average level of 40.86 as an indicator of above average historical consumer sentiment (however still pessimistic). If we break above the 40.86 level in coming months this would be a good signal of improving sentiment, essentially that the Japanese consumer is less pessimistic than on average, however still pessimistic. Japan Business Sentiment This week we are looking at the Japan Reuters Tankan Index (RTI) which is essentially Japan’s Business Sentiment Indicator. Why is Business Sentiment in Japan an important macro-economic metric to observe? 1.Japan’s manufacturing output for 2021 was valued at $1.025 trillion USD, making it one of the world’s largest manufacturers. The country is known for its high-quality production in areas such as automobiles, electronics, and robotics 2.Japan contributes c.7.2% towards the world’s total manufacturing output, showcasing its critical role in the global supply chain and its influence on international trade. 3.Japan makes up 8% of total global GDP, despite having only 1.8% of the world’s population. 4.Japan is the third largest economy in the world after the US and China Now that we understand that Japan is one of the major manufacturing and economic hubs of the world, lets now try to understand how optimistic or pessimistic Japan businesses are feeling at present. The Japan RTI is collated from data from major leading Japanese companies. 200 manufacturers and 200 non-manufactures advise of improving (above 0) or worsening conditions (below 0). For reference the 200 non-manufacturing companies include the likes of services, retail, finance, and real estate. The Chart You will see, as outlined on the chart, that the Japan RTI is made up of 4 sub categories: 1. Business Conditions (current) 2. Business Outlook (future quarter) 3. Large manufacturing outlook 4. Non-manufacturing sector These subcategories can help in understanding the nuances of sentiment in Japan among different sectors and are crucial for a comprehensive analysis of Japan’s business environment. We might cover these individually when the data is released this Wednesday. I am particularly interested in the future quarter business outlook. Reading the chart Above 0 = Business Optimism Below 0 = Business Pessimism 0 = Neutral The Japan RTI Business sentiment is currently above 0, firmly in the optimistic zone at 10. You can see that we have been rejected from the 12 – 13 level three times since 2022 (Aug 2022, Aug 2023 & Dec 2023). If we break above this level it will be the first time in over 2 years that Japan Business sentiment reached this high. Expectations for the coming release this Wednesday are for a reduction to 9. So expectations are low for this weeks release. Japan Consumer Sentiment has risen from a major low that was established in Nov 2022 and has since been on a significant up trend moving from 28.6 to 39.5. Whilst still in the pessimistic zone the consumer index moves closer towards the historical sentiment average of 40.86. The Japan RTI Business Sentiment appears to have followed suit rising from a low in Jan 2023 a few months later and is now reaching for recent highs of 12 (current reading of 10 with 9 anticipated this week) Both the Japan Consumer Sentiment Index and the Japan RFI Business Sentiment Index are trending towards higher optimism (or less pessimism) but have a bit more work to do to offer some confirmatory action. We will look at the Japan Flash Composite PMI next week which is released Tuesday 23rd April 2024. This will help add perspective in the form of manufacturing/services data directly relating to New Orders, Output, Employment, Deliveries and Stock. In between now and then I will update the above Japan RTI Business sentiment index this Wednesday and update you on Japan CPI which is released this Friday also (something to watch out for). We will gradually get familiar the macro-economic data that matters across the globe here on Macro Mondays. Again, all these charts are available on my Tradingview Page and you can go to them at any stage over the next 5 - 10 years press play and you'll get the chart updated with the easy visual guide I provided. I hope its helpful Thanks for coming along. PUKA
ECONOMICS:JPRTI
by PukaCharts
Macro Monday 38 ~ The EU & German ZEW Economic Sentiment IndexMacro Monday 38 The Euro Area ZEW Economic Sentiment Index & The German ZEW Economic Sentiment Index (Released this Tuesday 19th Mar 2024) ZEW is the German acronym for the Zentrum für Europäische Wirtschaftsforschung, which translates to the Centre for European Economic Research. There are two releases from the Centre for European Economic research we will cover today both being released this coming Tuesday; 1. The Euro Area ZEW Economic Sentiment Index (Reading of 25 for Feb 2024) 2. The German ZEW Economic Sentiment Index (Reading of 19.9 for Feb 2024) EURO AREA ZEW INDEX This index is derived from 350 economists and analysts that operate from and represent the overall European Area. They include economists and analysts from different countries in the Eurozone that are using the Euro as their currency (20 countries out of the 27 members). In summary, while the EU ZEW index provides a broader perspective for the entire eurozone than the German ZEW Index discussed below, the exact methodology for distributing the surveys and their apportionment across individual countries within the eurozone is not explicitly disclosed. Historically, this index has proven very useful as a leading indicator of sentiment for the European Economy and it is closely monitoring for gauging economic sentiment in the EU by market participants. EURO AREA ZEW CHART - SUBJECT CHART ABOVE How to read the chart The index ranges from -100 (pessimism) to +100 (optimism). 0 is neutral however the historical average reading for the EU chart is 21.39 which is the point where the red area meets the green area on the chart. We show on the chart if we are above or below the average levels of optimism. The current reading of 25 indicates current optimism among analysts for the next 6 month The Trend Sentiment made a recovery from -60 in Sept 2022 to +25 in Feb 2024. We have moved from deep in negative sentiment territory to just above the historical average of the chart which is 21.39. GERMAN ZEW INDEX The German ZEW Index data is not derived from all the countries in Europe, it is derived from the views of collection of 350 economists and analysts that operate from and represent the German economy. As Germany is the largest economy within the Euro Area, its performance significantly impacts the overall region and this this metric could be considered the economic sentiment spearhead of Europe. Germany is also the 4th largest economy in the world by nominal GDP. As of 2023, its nominal GDP stands at approximately $4.43 trillion. This index could be monitored as a measure of not only European sentiment but as an important global sentiment gauge. GERMAN ZEW INDEX CHART How to read the chart The index ranges from -100 (pessimism) to +100 (optimism). 0 is neutral however the historical average reading for the German ZEW chart is 20.79 which is the point where the red area meets the green area on the chart. We show on the chart if we are above or below the average levels of optimism. The current reading of 19.9 indicates current optimism among analysts for the next 6 months, however we are below the historical average of 20.79 thus a definitive move above this level this coming Tuesday could be a confirmation step into potential sustained optimism. The Trend Sentiment made a recovery from -61 in Sept 2022 to +19.9 in Feb 2024. We have moved from deep in negative sentiment territory into positive numbers but we are not above the historic average of 20.79 yet. Lets see how both perform this coming Tuesday. The beauty of these charts is that you can review both on my Trading View at any stage, press play and it will update with the most recent release. This way you will have a full explainer of what this dataset is and can keep yourself up to date on its direction with the color coded map, the average line and the neutral line, all of which will at a glance give you a good indication of where we stand in terms of trend and sentiment. I'll keep you informed here too Thanks for coming along PUKA
ECONOMICS:EUESI
by PukaCharts
Macro Monday 41 ~ Japan Consumer Confidence Index Macro Monday 41 Japan Consumer Confidence Index (Released Tuesday 9th April 2024) Japan is the third largest economy in the world after the United States and China, contributing about 8% of global GDP, despite having only 1.8% of the world’s population. For such an impactful populace, lets see how the Japanese consumer confidence levels are looking at present. I promise you, it is very different to the western sentiment indicators. The Japan Consumer Confidence Index (CCI) survey is conducted monthly and covers 8,400 households in Japan, which includes 5,376 households of two or more persons and 3,024 one-person households. The survey has an unusually high response rate, with 90.6% of households responding in the latest survey. The index is made up of a sub set of Consumer Perception Indices: These sub-indices cover: 1. Overall livelihood: Views of current living standards 2. Income growth: Expectations for income increase 3. Employment: Outlook on job security & availability. 4. Willingness to buy durable goods: Likelihood of purchasing high-value items. The most incredible thing about the Japan CCI is that historically it has only risen above 50 indicating consumer optimism 3 times. Two of these occurrences were in the early 90’s and one was in the mid 00’s. All 3 were very brief with a reversion to pessimistic consumer sentiment in the months that followed. Since March 2006 the Japan CCI has remained below 50 indicating a prevailing pessimism amongst consumers in Japan. You might be wondering why are consumers in Japan are so pessimistic about their circumstances and economy. Historically, Japan has faced periods of economic stagnation, deflationary pressures, and slow wage growth, which are known to dampen consumer sentiment. Additionally, the aging population and concerns about the future of social security and pensions may also contribute to a underlying cautious outlook. Moreover, cultural factors might play a role; Japanese consumers are known for their saving habits and risk-averse nature, which can reflect in a more conservative CCI. It’s also important to note that the CCI is relative and can be influenced by the consumers’ expectations and experiences, which may differ from those in other countries. In essence, while the CCI below 50 might suggest a pessimistic view, it’s a complex interplay of economic conditions, age factors, cultural tendencies, and historical events that shape consumer confidence in Japan. The Chart As evident on the chart below and from the commentary above, the Japan CCI has only risen above 50 level into the optimistic sentiment zone three time in history, thus I have taken the historic average reading of 40.86 as a mid-level to create a line from which we can determine above and below average consumer confidence in Japan (based on the historical average). I understand that this approach isn’t a perfect as the average level will change over time as new data is released, however we can use the 40.86 level as a rough guide for above and below average historical sentiment (not as a measure of optimism vs pessimism). This level can help us identify when Japanese consumers are less or more pessimistic than their historical average level. Interestingly we are at the 39.1 critical level at present and the release tomorrow is an important release due to being at this important threshold level. We have been rejected from from the current level c.39.1 level twice in the recent past and if rise above 39.2, it will be the first time in 5 years that sentiment has risen above this level. 39.2 Level Significance ▫️ In Jan 2020 a fast rising and improving sentiment was rejected from the 39.1 level, and turned harshly lower to 21.6 in April 2020 (over 4 months). ▫️ Sentiment thereafter made a stark rise again only to be rejected a 2nd time from the 39.2 level in Nov 2021, with sentiment thereafter dropping to 28.6 in Nov 2022 (over 12 months). ▫️ Since Nov 2022 the Japan CCI has risen from 28.6 to 39.1 for Feb 2024. This will be the 3rd time since Jan 2020 that we have hit this level. We have been rejected twice from c.39.2 level over the past 4 years thus a break above this level would be a significant move in the right direction for sentiment in Japan. Whilst a reading above 39.2 is ultimately still pessimistic as it is below the 50 level, we would still be making new highs not seen since May 2019 when we fell lower than 39.2 for the first time (since rising above it in Jan 2015) If the Japan CCI can make a definitive move above this 39.2 level, I would see this as a positive indication of improving sentiment in Japan (in other words less pessimistic). If we thereafter made a move above the historical average of 40.86, I would view this as another significant positive confirmation of a less pessimistic consumer in Japan. Given the age, cultural and monetary differences between Japan and other countries, particularly those in the west, we can only look for thresholds of lessor pessimism using the Japan CCI as since March 2006 the Japan CCI has remained below 50 indicating a prevailing pessimism amongst consumers in Japan. The chart still informs of us of a lot and provides clear thresholds that we can pay attention to to gauge consumer sentiment in Japan. As always the beauty of the above chart and any others I share is that you can go onto my TradingView ideas page and press update, and the chart will update you with the most recent data release, informing you at a glance how the data looks on the chart with a nice visual guide with all the above thresholds easily visible. Hope it helps you stay visually informed at a glance with a click of a button. Thanks all PUKA
ECONOMICS:JPCCI
by PukaCharts
AUD/USD eyes confidence reportsThe Australian dollar has pushed higher on Monday. In the North American session, AUD/USD is trading at 0.6600, up 0.35%. Australia’s Westpac consumer confidence is expected to rebound in April after a 1.8% decline in March. The market estimate stands at 0.5%. We’ll also get a look at the mood of the business sector, with NAB business confidence expected to fall to -3 in March, down from 0 in February. Consumers and businesses are in a surly mood about the economy and last month’s pause from the Reserve Bank of Australia increased skepticism about a rate cut. The RBA has maintained the cash rate three straight times and hasn’t signaled when it will end its “higher for lower stance”. The March RBA minutes didn’t mention the possibility of a rate hike, the first time that’s happened in the current tightening cycle, but the hot US nonfarm payrolls release may have pushed back the timing of an RBA cut. A rate cut from the RBA would have more impact if the Federal Reserve lowered rates first but the nonfarm payrolls data has pushed the likely timing of a first rate cut in the US from July to September. US nonfarm payrolls jumped to 303,000 in March, up from a revised 270,000 in February and blowing past the market estimate of 200,000. The unemployment rate dipped lower to 3.8%, down from 3.9% and below the market estimate of 3.9%. Wage growth matched expectations at 4.1%, down from 4.3%. The strong release points to a robust labour market, and investors have doubts if the Fed will cut more than twice this year. This mark a huge turnaround in market expectations – in January, an exuberant market had priced in six rate cuts in 2024, but the US economy is performing much better than expected despite high interest rates. AUD/USD tested resistance at 0.6606 earlier. Above, there is resistance at 0.6632 0.6577 and 0.6551 are providing support
by OANDA
EURO Area Consumer Confidence - Confidence SLUMPSEURO Area Consumer Confidence - ECONOMICS:EUCCI The lower the minus figure on this chart the better the confidence is in the EU area (closer to zero the better). Rep: -16.10 🚨 Worse than Expected🚨 Exp: -14.30 Pre: -15.00 The Chart ▫️ We have a long term general downtrend in EU Consumer Confidence since 1985. ▫️ Prior to recessions we formed lower highs (red arrows on the chart) ▫️ We have not made a new all time high since Jan 2000 ▫️ Confidence has currently stalled and turned slightly lower coming in lower than expectations of -14.3 and instead coming in at -16.10. What's driving the data and how to read it? The Consumer Economic Sentiment Indicator (Consumer ESI) gauges the optimism levels among consumers in the EU. Conducted through phone surveys, the indicator encompasses 23,000 households, with variable sample sizes across the region. The survey includes questions on the current economic and financial conditions, savings intentions, and expectations related to consumer price indexes, the general economic situation, and major purchases of durable goods. The Consumer ESI is measured on a scale from -100 to 100, where -100 represents an extreme lack of confidence, 0 signifies neutrality, and 100 indicates an extreme level of confidence. Final Word The ESI indicator provides valuable insights into consumer sentiment, reflecting perceptions and expectations that can influence economic behavior and decision-making in the EU. Consumer sentiment is low in Europe with sentiment remaining below March 2022 levels with little sign of recovery as it stands coming in lower than expectations. Obviously with the ongoing conflict in Ukraine, EU migrant crisis and Germany having full year of GDP decline for 2023 (Europe's largest economy), one can understand why the sentiment is so low. WE can watch for a turning point and a new high lower than -15 for a change in the right direction. PUKA
ECONOMICS:EUCCI
by PukaCharts
NZD/USD eyes RBNZ rate meetingThe New Zealand dollar posted slight gains earlier on Tuesday but has recovered. In the European session, NZD/USD is trading at 0.6101, up 0.07%. The Reserve Bank of New Zealand meets on Wednesday and is likely to maintain the cash rate at 5.5% for a fourth straight time. The central bank's stance appears to be one of "higher for longer", which will provide policy makers the flexibility to raise or lower rates as needed. The RBNZ's stance does not dovetail with the market view that rate cuts could come as early as May 2024. Inflation is falling and the labor market is slowing down, and the markets are betting that this trend will continue and allow the RBNZ to trim rates. This makes Wednesday's meeting quite interesting, not so much as to the rate decision but to how strongly Governor Orr pushes back against market expectations of rate cuts. The RBNZ said in October that rates might need to stay higher for longer in order to bring inflation back down to the 1%-3% target, but a more forceful message may be needed to send the message that rate cuts are not around the corner. Orr's press conference and updated forecasts will be opportunities to counter market expectations and present a hawkish stance on rate policy. The US releases Conference Board Consumer Confidence later today. Consumer confidence has been falling and the downtrend is expected to continue, with a market consensus of 101.0, down from 102.6. We'll also hear from a host of Fed members during the day, which could provide some insights into the Fed's plans for the December meeting. NZD/USD is putting pressure on resistance at 0.6121. Above, there is resistance at 0.6167 There is support at 0.6053 and 0.5996
by OANDA
AUD/USD edges lower, confidence data nextThe Australian dollar lost ground earlier in the day but has pared these losses. In the North American session, AUD/USD is trading at 0.6381, down 0.05%. The markets are braced for a deceleration in consumer and business confidence indicators, which will be released on Tuesday. Westpac consumer confidence change is expected to decline by 0.7% in October, following a 1.5% decline in September. Consumers remain pessimistic about the economic outlook, and the index, which is currently at 79.7, has been below the neutral 100 level since March 2022. The NAB business confidence index is expected to fall to -2 in September, after improving to 2 in August, the highest level since January. The Reserve Bank of Australia left rates unchanged last week and will meet next on November 7th. This provides the central bank time to evaluate key data, including third-quarter inflation later this month. The RBA has paused for four straight times but can't start to think about trimming rates until inflation, which rose to 5.2% in August, is closer to the 2%-3% target range. US nonfarm payrolls soared in September, with a huge increase of 336,000. This crushed the market consensus of 170,000 and the upwardly revised August reading of 227,000. The unemployment rate remained at 3.8%, compared to the market consensus of 3.7%. Wage growth decelerated in September - from 0.3% to 0.2% m/m and from 4.3% to 4.2% y/y. This is another sign that inflation is easing. The blowout nonfarm payrolls led to the Fed futures market increasing the odds of a rate increase before the end of the year, which currently stands at 31%, according to the CME FedWatch tool. The Fed has been signalling that rates will remain "higher for longer" and traders are concerned that the Fed's scenario could play out, especially with the US posting strong releases such as Friday's nonfarm payrolls. AUD/USD is testing support at 0.6372. Below, there is support at 0.6299 There is resistance at 0.6430 and 0.6531
by fisherkj4
AUD/USD extends losses, CPI loomsThe Australian dollar is in negative territory on Tuesday. In the North American session, AUD/USD is trading at 0.6405, down 0.28%. Australia releases the CPI report on Wednesday. In July, CPI eased to 4.9%, beating expectations and dropping to the lowest inflation rate since February 2022. CPI is expected to rise to 5.2% in August. Inflation remains more than double the 2% target, and the core rate is also high, with the trimmed mean dropping from 6.0% to 5.6% in August. The RBA has raised rates to 4.1%, the highest level since 2012. Have interest rates peaked? That is the thousand-dollar question. The futures markets have priced in a final rate hike before the end of the year at 35%, as investors are betting the Reserve Bank of Australia is likely done with rate tightening. The Australian economy has cooled off as a result of the RBA's tightening, and the slowdown in China could tip the economy into a recession if rates were to move higher. The central bank is understandably more hawkish, as policy makers don't want to close the door on further tightening with inflation still well above the target. The new RBA Governor, Michelle Bullock, has warned that the door remains open to further rate hikes and said that upcoming decisions will be based on key data. The RBA minutes from the September meeting indicated that members considered a rate hike, but in the end, opted to pause rates. In the US, Consumer Board (CB) Consumer Confidence slipped to 103.0 in August, down sharply from a revised July read of 108.7 and shy of the market consensus of 105.5. This marked a 4-month low. Consumers noted concern over rising gasoline prices and high interest rates and the percentage of consumers who expect a recession rose in September, according to the CB. This does not bode well for consumer spending, a key driver of US growth. AUD/USD is putting pressure on support at 0.6380. The next support line is 0.6320 There is resistance at 0.6446 and 0.6506
by OANDA
1
GBP/USD extends losses on mixed UK dataThe British pound is in negative territory after two days of losses. In the European session, GBP/USD is trading at 1.2245, down 0.40%. The struggling pound is down 1.1% this week and is trading at its lowest levels since late March. It is a busy day on the data calendar for UK releases. Retail sales rose in August by 0.4% m/m, following a 1.1% decline in July and was just shy of the market consensus of 0.5%. The sharp decline in July was largely due to unusually wet weather. On an annual basis, retail sales fell by 1.4%, compared to -3.1% in July. Consumer spending has been in a nasty rut, as annualized retail sales have now declined for 17 straight months. The silver lining was that the -1.4% drop marked the slowest pace of contraction in the current streak. The September PMIs were a mixed bag. The Services PMI slowed to 47.2 in September, down from 49.5 in August and missing the consensus estimate of 49.2. This marked a second straight deceleration and the sharpest contraction since January 2021. The Manufacturing PMI increased to 44.2 in September, up from 43.0 in August and above the consensus estimate of 43.0. The decline in activity in both services and manufacturing points to a UK economy that continues to cool. The Bank of England, which held interest rates on Thursday, will be hoping that the slowdown translates into lower inflation and that it can continue to hold interest rates. UK consumer confidence remains low, but there was a bit of an improvement in September. The GfK consumer confidence index rose to -21, up from -25 in August and beating the consensus estimate of -27. This was the highest reading since January 2022, but the economy has a long way to go before consumers show optimism about the economic outlook. GBP/USD is testing support at 1.2267. The next support level is 1.2156 There is resistance at 1.2325 and 1.2436
by OANDA
1
Euro takes a tumble after ECB's hikeThe euro has steadied on Friday. In the European session, EUR/USD is trading at 1.0665, up 0.20%. The European Central Bank's rate decision went right down to the wire on Wednesday. It was unclear whether the central bank would hike or hold, with strong reasons to support each position. In the end, the ECB opted to hike, choosing the fight against inflation over the threat of recession. The ECB raised its key interest rate to a record high of 4.0%, but the euro responded with sharp losses. The reason? The ECB rate statement signalled that the rate-tightening cycle is likely over, which sent the euro and eurozone bond yields lower and European stocks higher. EUR/USD fell 0.80% on Wednesday and dropped as low as 1.0631, its lowest level since March. ECB policy makers have been grappling with a dilemma, which made the rate decision so difficult to call. Inflation is running at a 5.3% clip, more than double the target rate of 2%, but high borrowing costs and the slowdown in China have weighed heavily on eurozone growth. In the eurozone, the services sector has been weakening and manufacturing continues to contract. Germany, the traditional locomotive of the eurozone, is likely in recession and is struggling with an inflation rate of 6.1%. Against this background of high inflation and sluggish growth, the ECB opted for a 'dovish hike', with the rate statement noting that rates have likely reached the peak level. Lagarde didn't shed any light on the ECB's rate path, but the futures markets brought forward expectations of a rate cut to June 2024, compared to September 2024 before the rate decision. Lagarde stated at a follow-up press conference that it's too early to say that rates have not peaked, but the markets beg to differ and are already looking ahead to rate cuts, which indicates some dissonance between the stances of the central bank and the markets. In the US, the week wraps up with two tier-1 events. The Empire State Manufacturing Index, which plunged to -19 in August, is expected to improve to -10 points. UoM Consumer Sentiment is expected to dip to 69.1, down from 69.5 and inflation expectations are projected to remain unchanged at 3.5%. EUR/USD is testing resistance at 1.0654. Next, there is resistance at 1.0732 There is support at 1.0609 and 1.0531
by OANDA
1
EUR/USD eyes German, Eurozone CPI reportThe euro's mini-rally has run out of steam. EUR/USD climbed 0.80% over the past two days but is trading in negative territory on Wednesday. In the European session, the euro is trading at 1.0867, down 0.11%. The markets will be keeping a close eye on European inflation releases today and Thursday. Germany releases the July CPI report later today, with a consensus estimate of 6.0%, compared to 6.2% in July. The once-formidable German juggernaut is in trouble and inflation remains high. The eurozone releases July CPI on Thursday, which is expected to drop from 5.3% to 5.1%. The ECB meets next on September 14th and ECB President Lagarde may have signalled that another rate hike is coming. Lagarde attended the Jackson Hole summit last week and said that interest rates would remain high "as long as necessary" in order to bring inflation back to the ECB's 2% target. Lagarde's hawkish remarks were more hawkish than her comments at the July meeting, where she said that ECB policy makers had an "open mind" about the September decision. There's no arguing that eurozone inflation remains too high, but the argument against raising rates even higher is that the eurozone economy is not in great shape, and nine straight rate hikes from the ECB have cooled economic growth. Further hikes could tip the economy into a recession, which means that the ECB has its work cut out in deciding whether to raise rates again or take a pause in September. The Federal Reserve is widely expected to hold rates at next week's meeting, and disappointing data on Tuesday may have cemented a pause. The Conference Board Consumer Confidence Index fell sharply to 106.1 in July, compared to 116.0 in August, marking a two-year low. As well, JOLTS Jobs Openings slowed to 8.82 million in July, down from 9.16 million in June and well off the estimate of 9.46 million. This was the sixth decline in the past seven months, a sign that the resilient US labour market is showing cracks. EUR/USD is putting strong pressure on resistance at 1.0896. The next resistance line is 1.0996 1.0831 and 1.0731 are providing support
by OANDA
1