Economic and company news by ForexMart

June 15, 2017

Job Creation in Australia Reached 42,000, Unemployment Rate Slowdown by 5.5% in May

Australia created additional jobs with a total of 42,000 which exceeded the expectations of 10,000 as indicated in the roughly calculated poll led by Reuters, disclosed by the Australian Bureau of Statistics on Thursday. However, the number of unemployed for this month accounts to 5.5 percent which came in lesser than predicted 5.7 percent.

The Aussie dollar further gained strength after releasing the current employment data of the Australian economy at exactly 9:30 HK/SIN while the exchange rate against its American counterpart is greater by 0.5 percent.

The employment figures appeared to be volatile but the rate in the past few months showed some development within the labor sector, said by Steven Milch, the chief economist of Suncorp. Mr. Milch also mentioned that the number remained stable for the third consecutive month and much stronger than their anticipated figures.

In case that the trend will continue, it will also increase the wages which could reinforce the reflection of the RBA towards the economy as a “half empty glass”. This shows that the Reserve Bank of Australia is not probable to revise its policy anytime.

The central bank announced that earlier this June the labour market indicators will remain mixed, keeping its benchmark cash rate on hold at a record low of 1.5 percent. The financial institution also noted that the slackening of real income will curtail the growth in household spending.
 
June 15, 2017

NZ Below Expectation Economic Growth

The New Zealand economy climbed by 0.5 percent in the first quarter of the year but still lower than market expectations as the construction sector weakened. The forecast figure of the central bank is 0.9 percent while the analysts predicted it to attain 0.7 percent, which obviously fell short from both predictions.


Despite positive growth for the milk production and a moderate growth of GDP, these were out shadowed by weak data from the construction sector and the mixed results from the service sector. The construction data declined by 2.1 percent for Q1 that negated the 4.3 percent augmentation in agriculture particularly the milk production.


An economic analyst described this phenomenon to be transient and the economy will advance at estimated of 3.0 to 3.5 percent this year. Also, other sectors are performing well but there is no need for the Reserve Bank of New Zealand (RBNZ) to adjust its cash rate from a record low of 1.75 percent.
 
June 15, 2017

Fed Implements Rate Hike, Maintains Outlook for Next Hike

The US Federal Reserve has pushed through with its planned interest rate hike for this month while outlining its plans to continue with stricter monetary policies in spite of the country’s weak inflation rates. FOMC officials approved the central bank’s third rate hike within a six-month period and hinted at possibly another rate hike just before the end of 2017. Fed Chair Janet Yellen stated in a press conference following the announcement that the bank’s plans of unwinding its policies might be implemented sooner than later, especially if the country’s economic status meets the expectations of the Fed. Moreover, the central bank is also looking into a three-quarter point rate increase for 2018 just like its previous projection last March.
 
June 19, 2017
Aussie Economy can Grow Further, says Philip Lowe
RBA Governor Philip Lowe thinks that the Australian economy will still be able to grow further if the country’s officials will be able to overcome several political hurdles, although he also warned that disappointing wage gains data will most likely to continue plaguing developed countries. Lowe also stated that the central bank believes that the country’s economic growth will continue advancing during the next two years due to an overall surge in the status of the international economy. The political environment within Australia has become more and more polarized over the years, as parties attempted to gain an unfair electoral advantage from losing reform proposals. This has prevented the Australian economy to properly implement any kind of economic reform since 2000’s goods and services tax.
 
June 20, 2017

Positive Economic Feelings of Americans, No Help For Trump, CNBC says

The American economy remains optimistic as shown in the All-America Economic Survey by CNBC, along with some leading components reaching its highest level, however, this optimism does not help the president.

The poll shows that 800 U.S. citizens or 30 percent of the populace believe that the economy is in upbeat as of this moment until the future. It's the highest percentage recorded in the past two successive quarters amid survey's 10-year history.

There are 54 percent who think that house price will surge in 2018 and 44 percent who deems that their earnings will further rose for the following year. The stocks as well demonstrated a positive stance as there were 44 percent assumed that this period is a time for good investment

However, the positive tone of Trump’s economy does not contribute much help towards the approval rating of the state’s leader which showed a 37 percent decline based on the recent survey versus 39 percent result in April. President D. Trump’s approval on the economy is down to 41 percent and 44 percent in April. Moreover, negative factors may arise driven by various groups particularly laborers such as blue collar, independents, and retirees.

As the public has split belief, the poll found that quarter of the United States economy is becoming better due to policies adopted by the president. On one side, there are 22 percent who said that his plans worsen the country.
 
June 20, 2017

Positive Data Buoys Up Japanese Factory Sector's Confidence

Japanese manufacturers confidence rating rallied this month reaching the record level high in April and it is anticipated to further increase in succeeding months indicating according to the poll of Reuters. This is an indicator of economic recovery.



The mood of service industry also surged to a two-year high implication of improving confidence even though it is contradicting to the survey of Reuters Tankan which described credence to be declining in the next three months.



Most indicators and business activity indicated positive data on exports and factory production but the wage growth and household expenditure have slow growth amid tightening job market.



This prompted the central bank to keep its monetary policy unchanged on Friday while the private consumption increased for the first time within six months as the economy gains momentum particularly exports.
 
June 20, 2017

UK Loses First Round of Brexit Talks to EU Bloc

The EU bloc dominated the first round of Brexit negotiations as UK officials cowered and retreated as EU’s chief negotiator cautioned that the British government will be dealing with substantial consequences should they chose to completely remove themselves from the union. UK PM Theresa May has already consented to the EU’s terms and conditions during the first day of the talks, although they have yet to discuss the trade deals between the European common market and Britain. However, EU chief negotiator Michel Barnier warned the UK bloc that this process would be a slow and arduous one, a complete antitheses to May’s hopes of a quick conclusion to the free trade agreement between the two blocs.
 
June 21, 2017

US Senate to Release Draft of Healthcare Bill

The Republican bloc of the US Senate will be releasing their draft of the healthcare bill this Thursday as the country’s senators attempt to iron out several issues within the country’s economy, such as the Medicaid program and the daunting task of decreasing insurance costs. Republicans have been struggling for several weeks as they attempt to revise major chunks of Barack Obama’s Affordable Care Act. Meanwhile, members of the Democratic bloc have staged a protest last Monday as part of their collective dissent towards these closed-door meetings of the Republican bloc.
 
June 21, 2017

Ifo Raise Economic Forecast for Germany

The Ifo Institute for Economic Research in Germany had revised its projections regarding the increase in the country’s GDP for 2017 until 2018. The job sector must maintain its strong stance and trade surplus should expand based on predictions of think tank.

This year it is expected to gain 1.8 percent of growth in GDP compared with the previous outlook of 1.5 percent. While forecast for next year also increased by 2.0 percent which is higher than the prediction beforehand that accounts to 1.8 percent

The Munich-based institution presumed that the total laborers in the economic powerhouse of Europe will continue to surge with 43.6 million recorded in 2016, reaching 44.62 million for the current year while 2018 will obtain 44.6 million based on forecasts.

In addition to it, the unemployed workers will be lessened by 2.5 million for this period and 2.4 million for upcoming year while declined by 2.7 million during 2016. Therefore, unemployment percentage had an overall downturn which is from 6.1 percent to 5.7 percent and 5.5 percent by next year.

Furthermore, the Ifo institute anticipated that the budget surplus of the German government will fall from 26.4 billion euros down to 19.1 billion euros during the election. Nevertheless, forecast says it will continue to rise till next year around 22.9 billion euros.

The current account of the country further benefited the surplus which includes investments, trade flows and other transfer payments made between different countries, hence this transaction will keep on going.

According to estimates, the surplus will soar (under some conditions) by 261 billion euros up to 265 billion euros this year and 279 billion euros in 2018. However, economic production would mainly be stagnant at 8.3 percent approximately.
 
Sluggish Growth of Eurozone’s Business Sector in Q2

Business growth in the eurozone did not meet expectations as it approaches the end of the first half this year after the unexpected sluggish growth of the service enterprises, according to the survey on Friday. Nevertheless, the inflation and the overall remains considerably strong which will most likely be sustained by policymakers of the central bank of Europe to balance out and return to its dovish stance.

The PMI data showed a 0.7 percent GDP growth for the second quarter that has exceeded the 0.5 percent forecast of Reuters earlier this June. In the previous quarter, it grew a corrected figure of 0.6 percent growth.

However, companies focused on the service industry has weakened. The services PMI dropped to 54.7 from 56.3, significantly lower than the predictions of economists surveyed. On the other hand, the manufacturing sector PMI rose to 57.3 from 57.0 reaching more than six-year high.
 
Theresa May Offered “Fair and Serious” Rights on EU Citizens

Theresa May, British Prime Minister of Britain, said to the leaders of European Union that EU citizens who came legally prior Brexit happenings are authorized to stay in Britain giving them a new ‘settled status provided that they have spent five years living in the UK.

PM May had spoke concurrently as the dinners end during the EU leaders' summit held in Brussels, stating that the United Kingdom agreed to deal with the “cutoff point” between March 29 of the current year, the date when she formally invoke Article 50, until the preferred period of the European Commission until March 2019.

This is the opening offer of May for the future citizen rights. Both nations, UK and EU wants to iron out the issue during earlier negotiations

European citizens who are part of this special status can acquire the same rights when it comes to NHS care, pensions and work along with other public services that British people have.

May mentioned in an interview with The Guardian that "The UK's position represents a fair and serious offer, and one aimed at giving as much certainty as possible to citizens who have settled in the UK, building careers and lives and contributing so much to our society,"

According to the report, the offer is dependent on the reciprocal pledge regarding the privilege of 1.5 million UK citizens who are presently residing somewhere in Europe had failed to reach its target with the EU’s demand in maintaining the continuity of the entire EU rights. But, the British country did not accept the demand of EU to grant the European Court of Justice to take the role as the guarantor.
 
June 27, 2017

ECB Helped Taper Off Inequality, Says Draghi

ECB President Mario Draghi argued in a statement last Monday that the central bank’s efforts to maintain the union’s low interest rates has actually helped to taper off inequality rates within the eurozone and minimize unemployment rates. In a conference at a Lisbon university, Draghi stressed that the easy-money stance of the central bank has helped to curb the “highly-destabilizing” inequality levels in the EU, although several German officials in the past have repeatedly questioned this easy-money stance, as this apparently endangers pensioners and savers. This statement from Draghi comes at a very delicate time for the central bank as the ECB is now in the process of halting certain policies, including its negative interest rate program and its €2.3 trillion or $2.6 trillion bond-buying scheme.
 
June 27, 2017

Sluggish Growth Prediction for Developed Countries

A U.S. central banker forewarned that advanced economies and financial institutions in the United States will face a slower economic growth for long-term unless fiscal officials do something to counter this. Although, this comes surprisingly since the Federal Reserve just increased its interest rates earlier this month and intend to do more rate hikes gradually to prevent overheating of the economy. This also indicates positive growth of the economic outlook.

Federal Reserve president John Williams said that this optimism will only last for short-term and will change over time. With the sluggish growth, this gives a hard time for monetary policymakers to curb inflation and sustain full employment. This leaves the central bank with no choice but to rate hike since low growth trims the demand for investment and further push down the interest rates.
 
June 27, 2017

Indo-US Deepen Economic Relations

US President Donald Trump and India’s Prime Minister Narendra Modi had clinched the deal in intensifying the economic partnership between the two countries, India and United States. The agreement resulted in a win-win scenario for the two economies and resolving the diverging opinions in a peaceful approach.

Following the maiden meeting between Trump and Modi held at the White House, the Foreign Secretary of Indian Dr. S Jaishankar, told the reporters that the two parties had productive talks. Both countries are having changes in its economy that generates further demands and reaching the high-level comfort among the two nations, the other partner is suitable to satisfy such demands.

Jaishankar mentioned that the civil aviation market along with natural gas cooperations have said that Liquefied Natural Gas (LNG) coming from the US will begin to run to the Republic of India

It is anticipated that after many years, the LNG trade between Ind-US will exceed its amount of USD 40 billion, he added.

According to a joint statement of India and US, they are committed to strengthening their economic ties in order to build a stronger nation and successful citizens.
 
June 28, 2017

IMF Cuts Growth Forecast for US Economy

The International Monetary Fund watered down its economic outlook for the United States due to the high level of risk regarding the plans of current president Donald Trump in boosting growth in the economy. According to their forecast, U.S will gain an annual rate of 2.1 percent for this year which is a positive increase compared with 1.6 percent recorded in 2016, however, it is comparatively lower to 2.3 percent estimate on April.

The Washington-based organization also cut its forecast for 2018 saying that the country will have a hard time in reaching the 3 percent target determined in the first budget of the president. The latest growth numbers are part of the annual review made by the IMF to the American economy which is released on June 27. Report says the forecast was trimmed down because it was clearly stated that various parts regarding the expenditure project and administration tax are still ambivalent.

With these concerns, the institution said that the final decision is made in order to abate any assumptions concerning the programs of Trump will get the Congress approval and rather to work with predictions that ongoing policies will remain consistent.

Based on IMF’s projections, the yearly GDP growth is 2.1 percent for 2017 and 2018 and this will decrease by 1.9 percent by 2019 while in the year 2020 it will only reach 1.8 percent.
 
June 30, 2017

Probable Increase of Core inflation in Eurozone

There is a tendency for the European Central Bank to raise its inflation rate this month as shown in the data released on Friday because of the weak oil prices that influence the decline of the consumer prices in the succeeding months. The central bank is pressing to boost prices after it has failed to reach its target over the past four years despite its consequences to attain the two percent target at a long period of time.



Meanwhile, the 2 percent target has been lowered to 1.3 percent from the 1.4 percent target in the previous month but it is still above the market expectations of 1.2 percent. The central bank is already implementing the stimulus through massive asset buying and low-interest rates to counter sluggish price growth and encourage borrowing and spending that could lead to inflation. However, the ECB president Mario Draghi tightened its monetary policies implying that improved conditions essentially provides “more accommodation”.
 
July 5, 2017

Delay in Implementation of Bank Capital Rules in Singapore

The banking regulator in Singapore has announced the extension of the execution of global rules for a year to curb trading risks which in signifies a post-crisis overhaul of the global banking system to be interrupted.


Other countries such as Hong Kong and Australia followed postponement in the same manner as there is a rising concern regarding the complexity of rules. Also, this is yet to be settled on how this will match with other capital reforms.
 
July 6, 2017

Oil Recovered As Bonds Progressed

Oil improved after a sharp decline and both of the European stocks and bonds were in the red on Thursday as the market awaits for the ECB minutes. This would determine the next actions of the central bank. Although, the Fed Reserve showed mixed signals on Wednesday. Bond yields climbed higher again as the benchmark of U.S. Treasuries rose more than 2.34 percent which increased the global borrowing rates.


The market was caught in between the ambiguous results from FOMC minutes and the U.S. employment statistics on Friday. The beginning of G20 summit has been the center of attention after the long-range missile test this week launched by the North Korea.
 
China’s economy Slowed Down in the Second Quarter

The economy of China could possibly weaken once again in the second quarter of 2017, slowed down by the slight tightening of the monetary policy of the government polled by China economists, Nikkei and Nikkei Quick News.

Most of the respondents mentioned that the property market failed to advance unlike before and pointed out that the economic decline will become more evident from July to the end of December.

As indicated in the survey, the average estimate of the economists for the gross domestic product of China will rose by 6.8% in Q2 this year, with marginal easing from the expansion on first quarter at 6.9%. The official figures are scheduled to be release on July 17.
 
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