Australian PPI 0.1% vs predicted 0.3%

Producer prices rose by 0.1% in December. This was attributed to building construction, other transport equipment manufacturing and computer and electronic manufacturing.

The report can be obtained from the Australian Bureau of Statistics.

Solid drop in unemployment claims

Unemployment claims this week fell to 265 thousand, a stunning drop from 308 thousand last week. This means that nearly 14% less people filled for unemployment benefits this week.

German CPI contracted to -1.0%

Consumer price index (CPI), the leading indicator of inflation recorded a negative growth of 1.0% in Germany.

New Zealand exports rise

Statistics New Zealand said that the adjusted value of goods exported rose 0.9% to $ 12 billion in December. This was lead by meat.

Trade balance deficit fell to $ 159 million compared to $ 285 million recorded in December. While an improvement was recorded, it fell short of estimates at $ 48 million.

The full report can be found here.

NZ OCR remains at 3.5%

The Reserve Bank of New Zealand (RBNZ) left the official cash rate (OCR) unchanged at 3.5%. The growth outlook for trading partners this year is expected to be the same as 2014.

The lower cost of petrol has increased the purchasing power of households and reduced the cost of doing business.

Annual growth in New Zealand is above 3%. The line that indicates that the intrinsic value of the New Zealand Dollar is too strong and that further depreciation is expected is used again in the report.

This report can be found here.

Federal funds rate constant

The federal funds rate remained at 0.25%.

FOMC statement: Subtle changes

Another genetic FOMC statement came out earlier today. I have not had the time to fully analyze the statement as I`ve been pretty occupied with my dating startup but there is nothing new in the FOMC statement.

Here are some changes to the statement by Zerohedge:
- Strong jobs gain used instead of solid job gain.
- Considerable time is not used.
- Solid pace instead of moderate pace regarding the economy.
- Inflation is expected to decline further is added into the statement.

Mark Carney: Euro area recovery will take 4 times as long as Canada

In his speech today, the Bank of England governor Mark Carney said that the euro area needs 8 years to achieve the same level of recovery Canada recorded in 2 years.

The speech titled fortune favours the bold can be found here.

Australia CPI at 0.2%

The forth quarter consumer price index (CPI) in Australia rose by 0.2%, missing the estimated 0.3% growth.

The key figures of the CPI report can be found here.

New home sales rise by nearly 12%

New home sales in the US accelerated to 481 thousand, better than what economists were predicting. This is nearly a 12% increase from the previous period.

Bloomberg has a report on this. 

Consumer confidence increases to 102.9

Consumer confidence accelerated to 102.9, beating estimates and last month`s 93.1. The full report can be found here.

US core durable good orders shrink in December

Core durable good orders in the US fell by 0.8% in December. Bloomberg mentioned that this report gives a hint on what the US GDP figures will be on Friday.

UK preliminary GDP down to 0.5%

The UK preliminary GDP failed to meet estimates when it recorded a growth of just 0.5%. This is worse than the 0.7% growth recorded in the previous period.

The full report can be found here.

Business confidence in Australia falls again

The NAB business confidence recorded a 2, showing that business conditions fell yet again in Australia. However, it is a tad better than November, which recorded a score of just 1.

Business insider has a write up on the NAB business confidence.

Business climate in Germany is positive

The German IFO business climate met expectations at 106.7, an improvement from last month`s 105.5. This is the leading indicator of economic health in Germany.

Key indicators this week (Week 5)

Monday 
- German IFO business climate

Tuesday 
- NAB business confidence
- UK preliminary GDP
- US core durable goods order
- CB consumer confidence
- US new home sales

Wednesday 
- Australian CPI

Thursday 
- FOMC statement
- Federal funds rate
- New Zealand official rate
- RBNZ rate statement
- New Zealand trade balance
- German prelim CPI
- US unemployment claims

Friday 
- Australian PPI
- Euro CPI flash estimate
- US advanced GDP

Saudi Arabia King passes away: Bloomberg deleted its misleading post

Earlier today, the King of Saudi Arabia passed away. As a leader of one of the leading oil producing countries, his passing could increase the volatility in oil prices.

Bloomberg had a misleading post that oil spiked, it did rise but by a small margin. The article has now been removed from its Facebook page.

Low oil prices are here to stay as the new ruler, King Salman will keep his oil minister indicating that current policies will remain.

UK retail sales up by 0.4%

Retail sales posted a surprising gain by growing 0.4% in December. This exceeds the pessimistic forecast -0.6% set my economists.

Full report here and London South East has a news update on this.

France contracts slightly, Germanys growth drops

The French flash manufacturing PMI was 49.5. This is a good improvement from the prior period`s 47.5 and the forecasted 48.1. Like my post on the HSBC flash manufacturing PMI, a green figure does not necessary mean it is good. As PMI is an index, a figure below 50 indicates a contraction in the economy. However, the contraction is falling. The full report can be found here.

In Germany, the growth dropped to 51.0. This is slightly lower than forecast and previous period`s figure. The full report can be found here.

HSBC flash manufacturing PMI: Contracted in January

The HSBC flash manufacturing PMI in China managed to beat estimates and prior period. Sounds like good news isn`t it?

The answer is no. The January PMI was 49.8. Any figure below 50 indicates a contraction in the industry.

Week 4 unemployment claims

Unemployment claims did not manage to match estimates this week. The number of people filling for unemployment insurance stood at 307 thousand, 6 thousand more than the forecast. This is a small improvement from last week`s 317 thousand.

This miss does not affect the EUR/USD pair thanks to the ECB press conference earlier and movement in one direction is obvious.

ECB: Drop in Euro expected

In my post on Monday, I stated that a EUR/USD short was a good move pending the European Central Bank (ECB) press conference. As expected, the EUR/USD pair suffered another huge drop again as Mario Draghi unveils quantitative easing for the euro area.

What central banks have been up to

Weekly update on what central banks have been up to the past week. Bad news essentially.

1) Switzerland cut rates but appreciated their currency which was unexpected.

2) Turkey cut rates.

3) Denmark cut rates.
4) Canada cut rates.

5) England cannot increase rates. Note: The BoE wanted to increase rates in 2015 based on their statements last year.

6) Japan`s inflation forecast cut.

7) Malaysia is not doing anything. 

Brazil is the only central bank to increase rates but this is an extreme take as inflation is getting out of control. 

BoE monetary policy statement: Rate hike not happening

The Monetary Policy Committee (MPC) of the Bank of England (BoE) discussed financial market developments, the international economy, money, credit, demand and output and supply, costs and prices in addition to making its immediate policy decision.

There had been a pick up in volatility in financial markets triggered by political uncertainly in Greece, more evidence of a low global inflation and the consequences of falls in oil prices for oil-exporting countries.

Short term interest rates in the UK and the US have diverged. One year sterling rate one year ahead declined by close to 20 basis points whereas the equivalent dollar date had risen by nearly 5 basis points.This divergent is reflected in foreign exchange markets where the US dollar effective exchange rate (ERI) had appreciated by a further 3% on the month to a level 10% higher than a year earlier.

Twelve-month CPI inflation had fallen to 1.0% in November, the lowest rate since September 2002. The fall in CPI on the month was largely due to lower fuel prices and utility price increases. The CPI inflation is expected to reach a trough of zero in March due to lower oil prices with even a chance to dip below zero in the first half of 2015. 

The unemployment rate is down to 6%, with short term employment matching pre-crisis levels.

Generally, growth remained solid in the UK and the US. Medium term outlook on growth and inflation would depend on these factors: effects of reduced energy, food and other imported prices on CPI, inflation expectations, pace of aggregate demand growth and evolution of the labour market.

The committee voted 9-0 in favour of maintaining bank rates which was a change from the previous period`s 7-2.

US building permits: Conflicting data between sources

I have not obtained the original source for this report and there has been a conflicting data between the main sites.

Bloomberg reported it in a positive manner while Forex Factory indicated housing starts dropped.

UK labour market update

The average earnings index stood at 1.7% while claimant count change dropped to -29.7 thousand.

The full report can be found here.

BoJ Monetary Policy Statement: Inflation forecast cut

The Bank of Japan (BoJ) cut its core inflation projection to 1% for the year. BoJ governor Kuroda said that the fall in oil prices would delay inflation reaching the 2% target but mentioned that consumers stand to benefit from the lower energy prices.

The full statement can be found here.

New Zealand CPI fell

Consumer price index (CPI) fell to -0.2% in New Zealand. This came after three consecutive growths of 0.3% previously.

Price manager Chris Pike said that the lower prices for petrol and vegetables have been offset by more expensive travelling costs and housing related costs.

The CPI report can be obtained here.

GDT grows by 1%

The indicator for dairy prices, the GDT index rose to 1%. This is a tiny growth in comparison to the previous one at 3.6%.

ZEW: Higher confidence expected despite volatility in capital markets

The ZEW indicator of economic confidence is expected to continue its upwards trend. The indicator gained 13.5 points in January to 48.4 points. Appreciation in the Swiss Franc last week has caused significant volatility in the euro area capital markets.

 The ZEW report can be found here.

China`s GDP better than forecast

China`s actual GDP was 7.3%, beating the estimated 7.2% by a narrow margin. This helped lift Asian markets today.

The GDP report can be found here.

Business interest in New Zealand solid

The New Zealand Institute of Economic Research (NZIER) released its business confidence report today.

The graph above shows the changes in the business confidence level over a period of time.

The full report can be found here.

Key indicators this week (Week 4)

Monday

Note: US bank holiday

Tuesday

- NZIER business confidence

- China`s GDP

- German ZEW economic sentiment

- GDT price index

Wednesday

- New Zealand CPI

- Japan`s monetary policy statement

- Bank of Japan press conference 

- UK average earnings index

- UK claimant count change

- MPC official bank rate votes

- US building permits

Thursday

- Euro minimum bid rate

- ECB press conference

- Unemployment claims 

Note: Euro pairs tend to fall during the ECB press conference. Shorting say EUR/USD now would be a good strategy.

Friday

- HSBC flash manufacturing PMI

- French flash manufacturing PMI

- German flash manufacturing PMI

- UK retail sales

KLCI update: Week 3 at 1743.57

The index closed at 1743.57 points on Friday, a tiny gain for the week. The central bank, Bank Negara did not inspire much confidence in investors when it made the statement that it`ll not intervene in foreign exchange rates. The Ringgit has plummeted badly in recent months, making it the second worst performing currency in Asia after Japan. 

Overall, the outlook is still gloomy for KLCI with nothing fundamentally concrete to push the index up and gain its much needed foreign investors. 

UoM: Consumer confidence at an 11 year high

The University of Michigan survey for preliminary consumer confidence recorded a staggering figure of 98.2. In comparison, November recorded a figure of 93.6. This is an eleven year high as stated by Bloomberg.

The drop in fuel prices surprisingly is fuelling consumer confidence.

US inflation a 6 year low

The CPI (Consumer Price Index) and core CPI readings took a beating with the huge drop in energy prices in the last few months. CPI stood at -0.4% while core CPI recorded no growth at 0.0%.

Bloomberg mentioned that this is the biggest decline since December 2008. As expected, the slump in fuel prices is the primary culprit.

The full inflation report can be found here.

German Buba President: Limits on what the ECB can do

A heavy critic of the quantitative easing (QE) in the ECB, Buba (Deutsche Budesbank) President Jens Weidmann mentioned that there are limits on the actions that the ECB can take. Will his opposition carry weight in the ECB`s decision? Only time can tell.

Producer price index fell to -0.3%

The drop in December was the most in 3 years as claimed by Bloomberg Businessweek. Economists have mentioned that the sharp drop in energy prices have taken the spotlight as an inflation (deflation) driver.

The PPI fell to -0.3%, a small contraction from November`s -0.2%. The full report can be found here.

US unemployment claims above 300 thousand

For the first time in four months, the US weekly unemployment claims climbed to 316 thousand. This means a total of 19 000 new people signed up for unemployment benefits.

Swiss minimum exchange rate abolished, sharp gain in CHF

The Swiss National Bank (SNB) is discontinuing its minimum exchange rate of CHF 1.2 per Euro. The Libor rate is in negative territory at -0.75%. Conventional wisdom via interest rate parity would dictate based on interest rates alone, the Swiss Franc would depreciate against major currencies. There is however a catch.

"The euro has depreciated considerably against the US dollar and this, in turn, has caused the Swiss franc to weaken against the US dollar. In these circumstances, the SNB concluded that enforcing and
maintaining the minimum exchange rate for the Swiss franc against the euro is no longer
justified. " Previously CHF was pegged to the Euro.

Check out the movements of the CHF compared to other currencies.

As seen above, common pairs such as USD/CHF and EUR/CHF experienced sharp drops. To demonstrate how big this drop is, say a trader who went in short on one lot of USD/CHF at 1.0223 and closed out at 0.8759 would have made a gain of slightly over $14 000.

Huge drop in the USD/CHF chart.

 EUR/CHF chart to picture the CHF increase in strength.


The press release can be found here.

Unemployment in Australia falls again

The unemployment rate fell to 6.1%, down from 6.2% in November. The number of new jobs created in December was 37.4 thousand, the biggest jobs gain in 8 years according to Bloomberg Businessweek.

The labour force report can be found here.

Mark Carney grilled by MPs, reports The Telegraph

The BoE (Bank of England) governor, Mark Carney testified on the financial stability report before the Treasury Select Committee in London earlier. The Telegraph reports that he was grilled by MPs on various issues.

The main points by Carney include:
- Falling oil prices are positive for the UK economy but a negative shock for Scotland.
- The ECB has tools to raise inflation and should use them.
- The UK`s falling prices is not the same as the low inflation of the eurozone.

In addition, the low oil prices are increasing the prospect of default in some emerging markets but he refuses to name them. "I don`t want to put the knife in.", he adds.

Retail sales sagged, US may cut growth forecast

US core retail sales and retail sales slumped to -1.0% and -0.9% respectively, calling for a cut in growth forecasts by some economists. Bloomberg mentioned that this is the biggest drop in a year.

European Court of Justice : Bond buying may be legal

The European Court of Justice in its press release earlier said that the purchasing of OMT bonds may be legal. This is inline with the jurisdiction of the European Union if certain criteria are met.

Check out the press release for the full verdict.

UK CPI at 0.5%, lowest in 15 years

The CPI (consumer price inflation) in the UK recorded a growth of just 0.5%. Bloomberg stated that this is the lowest level in nearly 15 years. The fall in oil and energy prices in December is blamed for this figure. In addition, supermarket price wars are contributing to the stagnation in prices.

A number of traders have mentioned that quantitative easing may be expected as the Bank of England governor, Mark Carney is in need of a healthy inflation figure for the economy to expand.

The December CPI report can be found here.

China`s trade balance exceeds estimates

China`s trade data posted a surplus of $ 49.6 billion, an improvement over what economists predicted. However, it does fall short of the previous period`s surplus of $ 54.5 billion.

Key indicators this week (Week 3)

Tuesday 
- China`s trade balance
- UK CPI

Wednesday 
- European Court of Justice ruling
- US retail sales
- US core retail sales

Thursday 
- Australian employment change
- Australian unemployment rate
- US PPI
- US unemployment claims
- US Philly Fed manufacturing index

Friday 
- US CPI
- US core CPI
- Preliminary UoM consumer sentiment

China`s CPI at 1.4%

Business Insider has a good write up on China`s CPI.

Australian retail sales fell to 0.1%

Retail sales in Australia recorded an uninspiring growth of 0.1% after October`s 0.4%.

The full report can be found here.

Unemployment claims fell by 4000

The weekly unemployment claims dropped to 294 thousand this week after recording a figure of 298 thousand last week. Although it missed estimates, it is still an improvement when compared to the prior period.

MPC unchanged

The MPC (Monetary Policy Committee) maintains its bank rate at 0.5% and asset purchase size. A number of news portals have said that this looks like a repetition of 2014 as the BoE (Bank od England ) governor Mike Carney is reluctant to raise rates.

Australia building approvals at 7.5%

The trend estimate for total dwellings approved rose 0.2% in November and has risen for 6 months. Seasonally adjusted dwellings stood at 7.5%.

The full report can be found here.

FOMC minutes: Rate hike delalayed

The FOMC (Federal Open Market Committee) stated in its minutes that a rate hike before April is unlikely. Deflation still remains a key threat.

Deflation risk in Euro area

The Euro area annual inflation fell to -0.2% in December after a meagre growth of 0.3% in November. This increases the pressure on the ECB (European Central Bank) to take more drastic actions.

The fall in oil prices have contributed to the deflationary figure.

The CPI report can be found here.

US trade deficit reduced thanks to low oil prices

US trade balance recorded a deficit of $ 39.0 billion, a reduction from $42.2 billion in the previous period. Reuters stated that the shrinkage in deficit has been assisted by the falling oil prices.

The trade report can be found here.

KLCI midweek update

As of the pre-opening today, the KLCI index is just slightly over 1700 points. It shed 20.04 points yesterday, representing a 1.15% drop which is quite significant.

The aftermath of cheap oil prices have taken its toll on Malaysia`s stock market. Add the fact that the Prime Minister is down with E.coli, buying interest isn`t present.

Clarence Lim, a trading associate mentioned that foreign buyers are the ones who can potentially lift up the market.

Dairy prices increase: GDT up by 3.6%

New Zealand`s GDT (Global Dairy Trade) price index rose 3.6% to $ 2 307.

UK services growth 19 month low

Services PMI, a leading indicator of growth in the services sector in the UK deflated to 55.8. In the report by CIPS, this is the slowest growth for 19 months in December.

The key points:
- New business and activity both rise at weaker rates, but growth remains above trend.
- Employment continues to increase at marked trend.
- Positive projections for 2015 underpin staff recruitment.

Australian trade balance deficit decrease by 11%

In an influx of red economic data and missed estimates, the Australian trade balance surprised many with a deficit reduction of 11%. The balance on goods and services in November was a deficit of $ 980 million whereas in seasonally adjusted terms, the deficit was $ 925 million. 

Key figures available here. 

German inflation and brent crude lowest level since 2009, UK construction down

The German prelim consumer price inflation (CPI), the leading indicator of inflation recorded no growth. This is the lowest level of inflation since 2009. The inflation report can be found here. Something else that is at 2009 level is brent crude oil.

In the UK, construction PMI dropped to 57.6. This is the slowest growth since July 2013 according to the Chartered Institute for Procurement and Supply (CIPS)`s PMI report.

Key indicators this week (Week 2)

Monday
- German preliminary CPI
- UK construction PMI

Tuesday
- Australia`s trade balance
- UK services PMI
- US ISM non-manufacturing PMI
- New Zealand GDT price index

Wednesday 
- Euro area CPI flash estimate
- US ADP non-farm employment change
- US trade balance

Thursday
- FOMC meeting minutes
- Australian building approvals
- UK official bank rate
- US weekly unemployment claims

Friday
- Australia`s retail sales
- China`s CPI
- UK manufacturing production
- US non-farm employment change
- US unemployment rate