Daily Market News by Xtreamforex.com

**xtreamforex.com** · 08-23-2022, 10:28 AM

The comment from Fed officials last week helped USD to surge and the expectations of 75bps rate hike on the next meeting which will be on 21st September. Last week there was a discussion of Fed officials about how it is premature to worry about the economy falling into recession and how they need to completely convince inflation coming down before stopping interest rate hikes.

China reported some unexpected data last week. Industrial production for the past month decreased to 3.8% YoY vs 4.6% which was expected. Retail sales for the last month decreased to 2.7% YoY and expectation was 5% YoY. As Covid issues continue, increasing drought conditions and worries of a collapsing housing market, the Public Bank Of China decreased its 1 year loan prime rate to 3.65% which was 5bps. The central bank then went on and said that it plans to spend $29 billion in special loans to troubled developers. However, the central bank will still have more to go if it plans on saving the dire housing market.

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**xtreamforex.com** · 08-24-2022, 10:29 AM

British pound jumped 0.82% yesterday, as the currency has rebounded from its worst week of the year. GBP/USD went down 2.53% last week, as the USD has found strength after weeks of beating a retreat. GBP/USD climbed yesterday after US New home sales dropped to 511 thousand in July, down from 585 thousand in August which is well below expectations.

The UK Manufacturing PMI crashed into contraction territory in August. The index fell to 46.0, down from 52.1 in July and shy of the estimate of 51.1. The dismal reading is part of a pan. European downward trend in manufacturing, which has been made worse by the prolonged war in Ukraine. Output has been an obstacle by higher costs, a drop in demand and supply chain problems.

There was better news from Services PMI, which was almost unchanged at 52.5, pointing to weak expansion. Still, it’s hard to see how the UK can avoid a recession with weak growth and increasing inflation. Business expectation is dropping, and that will likely lead to a cutback in spending, hiring and investment, which won’t help the economy one bit.

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**xtreamforex.com** · 08-25-2022, 11:02 AM

The volume of goods sold fell by 2.3%. That is lower than the forecast for muted 0.3% rise, and well below the average analyst forecast for a 1.7% gain.

Today’s fall follows a 0.9% drop in spending in first quarter, leaving spending volumes down 3% through the first half of the year. Spending in core categories in down 2%.

Looking under the surface, households have been winding back their spending on durable items like electronics and furnishings. There has also been a fall in vehicle sales. Those are the same categories where spending rose strongly when Covid-19 first arrived on our shores and measures to protect public health prompted a shift away from spending on services.

Now that health restrictions have been rolled back, and with the opening of the borders allowing tourists back in the country, there is increased spending on hospitality and accommodation services. However, the increases have not offset the reduced spending in other areas.

Many households have been shielded from the impact of interest rate increases to date due to the high level of mortgage fixing in the New Zealand market. Over the coming months, debt servicing costs will rise sharply for many households as they refix at higher interest rates. And coming on top of today’s soft result, that points to weak spending through the back part of the year.

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**xtreamforex.com** · 08-26-2022, 10:15 AM

After problem in the housing market and a recent bout of poor data from China, including weak retails Sales and Industrial Production, China has implemented several polices to help the beleaguered sectors. Earlier this week, China announced plans for $29 Billion in special loans to help troubled developers in the housing market. In addition, it cut loan prime rates, China announced 19 additional policies to help the economy, worth $146 billion. These policies will primarily support infrastructure projects. However, although these may be positive steps towards helping housing and infrastructure, will it be enough to help the broader economy ?

One currency that has seemed to get a bid on the back of the China news is the AUD. EUR/AUD has made a Year to Date high on 4th February near 1.6226 and quickly began a decent lower. Two months later, on 5th April the pair made a low of 1.4320 as the Euro sold off due to lack of commitment by the ECB to raise interest rates. EUR/AUD then bounced just above the 50% retracement level from the 4th Feb highs to 5th April lows, near 1.5273, in an ascending wedge formation. The pair spiked through horizontal resistance at 1.5354 and resumed the prior trend lower, breaking below the ascending wedge on 7th July near 1.4975. The target for the breakdown of an ascending wedge is a 100% retracement.

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**xtreamforex.com** · 08-29-2022, 10:43 AM

The ABS initial estimates of official retail showed a much stronger than expected 1.3% gain in July. That compares to a low rise of 0.2% in June and marks the strongest monthly gain since March. The consensus forecast was of a 0.3% rise The detail shows a broad-based lift with nothing to suggest the monthly gain is a rogue. Rising retail prices undoubtedly account for a sizeable part of the rise, with volumes likely to have been somewhat flatter.

Recall that the ABS retail release now comes in two stages, an early preliminary release with limited detail and a final estimate that may see some revisions and provides the full range of additional detail.

The limited detail available for July shows a strong rebound for department stores and a strong gain for clothing and footwear, with robust rises for cafes and restaurants and basic food. The only soft spot was around household goods which saw a second consecutive monthly decline, down 1.1%mth. That weakness may be a sign that housing-related and big ticket durables spend in contracting but the rest of the detail suggests this is being more than offset by strong gains in both small ticket discretionary categories and essentials.

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**xtreamforex.com** · 08-30-2022, 11:32 AM

Second quarter GDP figures are expected to be strong. Economy is expected to regain the positive momentum and expectations of analysists are of 4.5% compared to 3.1% registered in the first quarter of the year. The monthly reading for June is also expected to show a negligible improvement, inching to 0.1% from no growth previously.

Consumption was contributive too on the demand side. With the unemployment rate pinned at record lows, retail sales marked six months in the expansion area from March onwards.

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**xtreamforex.com** · 08-31-2022, 12:11 PM

The ECB is expected to raise the interest rate on their next meeting on 7th Sep. The discussion is that if the rates will be increased by 50bps or 75bps ? ECB members have been preparing the markets for what could be a potential 75bps hike, despite the possibility of the Eurozone falling into a recession:

ECB’s Schnabel said that both the likelihood and cost of current high inflation becoming entrenched in expectations are uncomfortably high.

ECB’s Villeroy said that the ECB needs to get rates to neutral by the end of this year, which is somewhere between 1% and 2%.

ECB’s Rehn said a significant hike in interest rates is needed in September.
ECB’s Knot said frontloading should not be excluded and that he is leaning towards a 75bps hike.

These comments came right before the Eurozone CPI Flash, which will be released on Wednesday. Expectations are for a slight uptick to 9% YoY in August vs a July reading on 8.9% YoY. Germany released it preliminary inflation data for July. The headline was Inflation rate of 8.8% YoY and expectation of 8.8% YoY and a July reading on 8.5% YoY.

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**xtreamforex.com** · 09-01-2022, 11:55 AM

Reserve Bank meeting is on 6th September. It is expected that the cash rate will be raised by 50 basis points to 2.35%.

The best approach will be to strengthen the statement we saw last month, not on a pre set path and following Chair Powell, at some point it will be appropriate to slow the pace of tightening while emphasizing that the cycle may have considerably further to run. Raising the cash rate by 50 bps will move the cash rate into the neutral zone.

The 2.5% estimate from the RBA assumes a zero real rate and a nominal component equal to long term inflationary expectations which are judged to be 2.5%. The challenge contain inflationary expectations in this cycle will be formidable given the current evidence that both businesses and households are becoming accustomed to rising prices and short-term inflationary expectations are rising quickly.

Holding the cash rate at 3.35% through 2023, the neutral setting of 2.0% is a necessary condition for the Bank to bring inflation down close to the 3% target-the top of 2-3% range. But there will be a price to pay for such success-the economy to grow by only 1% in 2023-well below the trend rate of growth of around 2.5%.

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**xtreamforex.com** · 09-02-2022, 10:34 AM

RBA board meeting will take place next week and an increase in Cash rate is expected, How much ? It’s a question. RBA discussion in June brought a hawkish element to the RBA’s monetary policy, noting that the current level of the cash rate is well below the estimated neutral rate, thought to be at least 2.5%. The neutral real interest rate is the real interest rate that is neither stimulatory nor contractionary.

Based on the RBA’s forecasts for inflation to rise to around 7 percent and for the unemployment rate to decline further in the months ahead, the RBA needs to continue tightening interest rates past the neutral rate to fulfil its pledge that the Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time.

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**ongxuyensxyphung21o** · 09-03-2022, 07:05 AM

Thread: Daily Market News by Xtreamforex.com

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USD CNH | US Dollar Chinese Yuan Offshore

GBP/USD – British Pound Jumped US Dollar

NZD First Impressions: Retail Trade

Additional China stimulus helps stimulate the Aussie

Australia Retail Sales Growth at 4-Month High

Second quarter GDP figures are expected to be strong recession signal

Eurozone Consumer Price Index (CPI) YoY

RBA to Raise the Cash Rate by 50 bps, AUD

What’s next for AUD/USD

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