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NEW ZEALAND SOFTENS MONETARY POLICY TIGHTENING

New Zealand's central bank raised its benchmark rate by a half percentage point on Wednesday, following a 75 basis-point hike in November, as policymakers assessed that the upside risks to inflation has moderated since the last meeting.

The Monetary Policy Committee of the Reserve Bank of New Zealand lifted the Official Cash Rate to 4.75 percent from 4.25 percent.

Previously, the bank had hiked the OCR by 75 basis points in November, which was the ninth consecutive hike. The interest rate was lifted by 450 basis points since October 2021.

Although members discussed increases of 50 and 75 basis points at the February meeting, they observed that the balance of risks around inflation remain skewed to the upside but the extent of the risk had moderated somewhat since the November Statement.

"A a 50 basis point move balanced the need to ensure core inflation and inflation expectations fall, against the early signs that demand was beginning to moderate towards the economy's productive capacity," the bank said.

Members noted the long lags of monetary policy transmission to the economy. They agreed that the interest rate needs to reach a level where the MPC could be confident that it would reduce actual inflation to within the target range over the forecast horizon. Signaling further tightening, the bank said higher interest rates are required to sustainably bring down inflation and support maximum sustainable employment.

Regarding the Cyclone Gabrielle and other severe weather events, policymakers said it is too early to estimate the full economic impact. The committee decided to look through the short-term direct price pressures stemming from these extreme weather events, and focus on the medium-term impacts.

As the coming recession will be a little deeper than the central bank is anticipating, the RBNZ is likely to stop at 5.25 percent, Marcel Thieliant, an economist at Capital Economics, said.

The interest rate cuts could happen as soon as the end of this year rather than the second half of next year as signaled by the Bank today, the economist added.

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EUROPEAN ECONOMIC NEWS PREVIEW: EUROZONE FINAL INFLATION DATA DUE

Final inflation from the euro area is the only major statistical report due on Thursday, headlining a light day for the European economic news.

At 3.00 am ET, final consumer prices data from Austria is due. The flash estimate showed that consumer price inflation rose to 11.1 percent in January from 10.2 percent in December.

At 4.00 am ET, unemployment data is due from Poland. The jobless rate is forecast to rise to 5.5 percent in January from 5.2 percent in December.

At 5.00 am ET, Eurostat releases euro area final inflation data for January. The statistical office is set to confirm 8.5 percent inflation, which was up from 9.2 percent in December. Core inflation was seen at 5.2 percent, unchanged from December, and in line with preliminary estimate.

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JAPAN CONSUMER PRICE INFLATION AT 41-YEAR HIGH

Japan's consumer price inflation accelerated further in January to hit a fresh 41-year high, adding pressure on the central bank to withdraw its massive monetary stimulus.

Core inflation that excludes volatile fresh food climbed to 4.2 percent in January from 4.0 percent in the previous month, data from the Ministry of Internal Affairs and Communications showed Friday.

The rate was the fastest since September 1981 and matched economists' expectations. Headline inflation rose to 4.3 percent from 4.0 percent in December. The 4.3 percent was the strongest since December 1981. Inflation has remained above the 2 percent target for the tenth straight month.

Excluding fresh food and energy, inflation advanced to 3.2 percent from 3.0 percent in the previous month.

Fresh food prices advanced to 7.2 percent from 4.9 percent. Meanwhile, growth in energy prices slowed to 14.6 percent from 15.2 percent a month ago.

On a monthly basis, overall consumer prices gained 0.4 percent, following December's 0.3 percent increase.

With government energy subsidies taking effect from this month, inflation is expected to fall below the Bank of Japan's 2 percent target by mid-year, Capital Economics' economist Darren Tay, said. At the January monetary policy meeting, the BoJ left its yield curve control and negative interest rates unchanged.

At the parliamentary hearing on Friday, BoJ Governor nominee Kazuo Ueda said it would be appropriate to continue monetary easing measures. Markets widely expect a policy change under the governorship of Ueda.

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AUSTRALIA COMPANY OPERATING PROFITS JUMP 10.6% IN Q4

Australia's company gross operating profits surged a seasonally adjusted 10.6 percent on quarter in the fourth quarter of 2022, the Australian Bureau of Statistics said on Monday.

That blew away expectations for an increase of 1.5 percent following the upwardly revised 11.5 percent decline in the three months prior (originally -12.5 percent).

Business inventories eased 0.2 percent on quarter, in line with forecasts following the 1.7 percent increase in the previous three months.

Wages and salaries rose 2.6 percent on quarter.

On a yearly basis, operating profits jumped16.0 percent, inventories gained 5.9 percent and wages advanced 11.6 percent.

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JAPAN INDUSTRIAL PRODUCTION SINKS 4.6% IN JANUARY

Industrial production in Japan was down a seasonally adjusted 4.6 percent on month in January, the Ministry of Economy, Trade and Industry said on Tuesday.

That was shy of expectations for a decline of 2.6 percent following the 0.3 percent increase in December.

On a yearly basis, industrial output fell 2.3 percent after skipping 2.4 percent in the previous month.

Upon the release of the data, the METI downgraded its assessment of industrial production, saying that it has

Shipments were down 3.1 percent on month and 2.4 percent on year, while inventories fell 0.9 percent on month and gained 3.2 percent on year. The inventory ratio advanced 2.5 percent on month and 9.6 percent on year.
According to the METI's forecast of industrial production, output is expected to jump 8.0 percent in February and rise 0.7 percent in March.

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CHINA CAIXIN PMI MOVES BACK TO EXPANSION IN FEBRUARY

The manufacturing sector in China moved back into expansion territory in February, the latest survey from Caixin revealed on Wednesday with a PMI score of 51.6.

That's up from 49.2 in January, and it moves above the boom-or-bust line of 50 that separates expansion from contraction.

The higher headline index reading was supported by a renewed increase in production volumes in February. This marked the first upturn in output since last August, with the rate of expansion the steepest since June 2022.

Firms frequently mentioned that the recent easing of COVID-19 containment measures and recovery of operations and client demand had underpinned the increase in production. Similarly, total new business expanded for the first time in seven months, and at the quickest rate since May 2021.

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EUROPEAN ECONOMIC NEWS PREVIEW: EUROZONE FLASH INFLATION, UNEMPLOYMENT DATA DUE

Flash inflation and unemployment data from the euro area and the minutes of the governing council from the European Central Bank are due on Thursday.

At 3.00 am ET, Spain unemployment data is due. The number of unemployed is forecast to increase by 11,500 in February.

In the meantime, flash inflation figures are due from Austria.

At 4.00 am ET, Italy's statistical office Istat publishes unemployment data for January. The jobless rate is seen unchanged at 7.8 percent.

At 5.00 am ET, Eurostat releases euro area flash inflation and unemployment data. The annual inflation rate is forecast to ease to 8.2 percent in February from 8.6 percent in January. At the same time, the unemployment rate is forecast to remain at 6.6 percent in January.

At 7.30 am ET, the European Central Bank is scheduled to issue the account of the monetary policy meeting of the Governing Council held on February 1 and 2.

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SINGAPORE PMI SLUMPS IN FEBRUARY - S&P GLOBAL

The private sector in Singapore fell into contraction in February, the latest survey from S&P Global showed on Friday with a PMI score of 49.6.
That's down from 51.2 in January, and it slips beneath the boom-or-bust line of 50 that separates expansion from contraction.

Demand for Singaporean goods and services rose in February, but only fractionally compared to the start of the year. Promotional activities supported the latest growth in new orders. Growth was mainly driven by the real estate & business services and consumer services sectors. Foreign demand also saw its rate of growth slow in the latest survey.

As a result of the weak rise in new orders, private sector output was only able to eke out slight gains in February. Lingering issues of supply constraints also led to a further accumulation of backlogged work over the month.

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YEN RISES AGAINST MAJORS

The Japanese yen strengthened against the other major currencies in the Asian session on Monday.

The yen rose to a 5-day high of 144.15 against the euro and a 4-day high of 144.76 against the Swiss franc, from Friday's closing values of 144.36 and 145.03, respectively.

Against the pound, the yen advanced to 163.17 from an early 4-day low of 163.68. Against the Australian and the New Zealand dollars, the yen climbed to 5-day highs of 91.52 and 84.27 from last week's closing quotes of 91.87 and 84.48, respectively.

The yen rose to 99.67 against the Canadian dollar, from Friday's closing value of 99.85.

If the yen extends its uptrend, it is likely to find resistance around 141.00 against the euro, 140.00 against the franc, 159.00 against the pound, 88.00 against the aussie, 82.00 against the kiwi and 95.00 against the loonie.

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AUSTRALIAN DOLLAR FALLS AFTER RBA RATE DECISION

The Reserve Bank of Australia released its monetary policy meeting at 10:30 pm ET in the early Asian session on Tuesday. The RBA increased the cash rate target by 25 basis points to 3.60 percent, as expected.

After the RBA rate decision, the Australian dollar fell against its major rivals.

As of 10:31 pm ET, the aussie was trading at 1.5904 against the euro, 0.6721 against the U.S. dollar, 91.30 against the yen and 1.0827 against the NZ dollar.

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EUROPEAN ECONOMIC NEWS PREVIEW: GERMANY INDUSTRIAL OUTPUT & RETAIL SALES DATA DUE

Industrial production and retail sales from Germany and revised quarterly national accounts from the euro area are due on Wednesday, headlining a light day for the European economic news.

At 2.00 am ET, Destatis is scheduled to issue Germany's industrial production and retail sales for January. Industrial output is forecast to grow 1.4 percent on month, in contrast to the 3.1 percent decrease in December. Sales are expected to climb 2.0 percent on month, reversing a 5.3 percent decrease in the prior month.

Half an hour later, the Hungarian Central Statistical Office is scheduled to release consumer prices for February. Inflation is forecast to ease to 25.4 percent from 25.7 percent in January.

At 4.00 am ET, Italy's Istat is scheduled to publish retail sales for January. Economists forecast sales to fall 0.2 percent on month, the same pace of fall as seen in December.

At 5.00 am ET, Eurostat releases euro area revised quarterly national accounts for the fourth quarter. The initial estimate showed that the currency bloc expanded only 0.1 percent after rising 0.3 percent in the third quarter.

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EUROPEAN ECONOMIC NEWS PREVIEW: FRANCE PAYROLL EMPLOYMENT DATA DUE

Payroll employment from France is the only major economic report due on Thursday, headlining a light day for the European economic news.

At 1.30 am ET, France's statistical office INSEE releases payroll employment data for the fourth quarter.

At 2.00 am ET, Statistics Sweden is scheduled to issue GDP, industrial production and new orders data for January.

At 3.00 am ET, the Czech Statistical Office publishes foreign trade data for January. The trade balance is forecast to show a surplus of CZK 15.3 billion compared to a shortfall of CZK 1.2 billion in December.

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YEN FALLS AFTER BOJ RATE DECISION

The Japanese yen weakened against the other major currencies in the early Asian session on Friday, after the Bank of Japan left its policy balance rate unchanged at -0.1 percent, as expected.

The yen fell to a 2-day low of 144.99 against the euro, a 3-day low of 163.19 against the pound and nearly a 3-month low of 146.91 against the Swiss franc, from yesterday's closing quotes of 144.04, 162.25 and 145.87, respectively.

Against the U.S. and the Australian dollars, the yen edged down to 136.97 and 89.99 from a recent 3-day high of 135.81 and nearly a 2-month high of 89.26, respectively. Against the New Zealand and the Canadian dollars, the yen dropped to 83.52 and 98.94 from recent 1-month highs of 82.87 and 98.15, respectively.

If the yen extends its downtrend, it is likely to find support around 146.00 against the euro, 166.00 against the pound, 148.00 against the franc, 139.00 against the greenback, 92.00 against the aussie, 85.00 against the kiwi and 100.00 against the loonie.

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U.S. DOLLAR FALLS AGAINST MAJORS

The U.S. dollar weakened against other major currencies in the Asian session on Monday. The U.S. dollar fell to nearly a 4-week low of 1.0731 against the euro and nearly a 2-week low of 1.2139 against the pound, from last week's closing quotes of 1.0639 and 1.2029, respectively.

The U.S. dollar retreated to 133.69 against the yen and 0.9155 against the Swiss franc, from early highs of 135.05 and 0.9202, respectively.

The U.S. dollar dropped to near 4-month lows of 133.52 against the yen and 0.9146 against the Swiss franc in the early Asian session today.

Against the Australian, the New Zealand and the Canadian dollars, the greenback dropped to 6-day lows of 0.6672, 0.6202 and 1.3711 from Friday's closing quotes of 0.6580, 0.6132 and 1.3823, respectively.

If the greenback extends its downtrend, it is likely to find support around 1.09 against the euro, 1.23 against the pound, 131.00 against the yen, 0.90 against the franc, 0.69 against the aussie, 0.63 against the kiwi and 1.35 against the loonie.

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AUSTRALIA CONSUMER CONFIDENCE DATA DUE ON TUESDAY

Australia will on Tuesday see March results for the consumer confidence index from Westpac Bank, highlighting a light day for Asia-Pacific economic activity. In February, the index dipped 6.9 percent.

Australia also will see February results for the business confidence survey from NAB; in January, the survey score was +6.

Singapore will release January results for unemployment; in the previous month, the jobless rate was 2.0 percent.

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AUSTRALIAN DOLLAR RISES AGAINST MAJORS

The Australian dollar strengthened against other major currencies in the Asian session on Wednesday.

The Australian dollar rose to 2-day highs of 0.6711 against the U.S. dollar and 0.9169 against the Canadian dollar, from yesterday's closing quotes of 0.6682 and 0.9143, respectively.

Against the yen, the euro and the NZ dollar, the aussie edged higher to 90.00, 1.6028 and 1.0751 from yesterday's closing quotes of 89.68, 1.6054 and 1.0705, respectively.

If the aussie extends its uptrend, it is likely to find resistance around 0.69 against the greenback, 0.93 against the loonie, 91.00 against the yen, 1.56 against the euro and 1.09 against the kiwi.

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JAPAN HAS Y897.7 BILLION TRADE DEFICIT IN FEBRUARY

Japan posted a merchandise trade deficit of 897.7 billion yen in February, the Ministry of Finance said on Thursday.

That exceeded expectations for a shortfall of 1,069.4 billion yen following the 3,498.6 billion yen deficit in January.

Exports were up 6.5 percent on year to 7.654 trillion yen - missing forecasts for an increase of 7.1 percent but up from the 3.5 percent gain in the previous month.

Imports climbed an annual 8.3 percent to 8.552 trillion yen versus expectations for an increase of 12.2 percent and slowing from 17/5 percent a month earlier.

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SINGAPORE NON-OIL EXPORT DATA DUE ON FRIDAY

Singapore will on Friday release February figures for non-oil domestic exports, highlighting a light day for Asia-Pacific economic activity.

NODX are expected to slip 0.5 percent on month and 16.0 percent on year after adding 0.9 percent on month and tumbling 25.0 percent on year in January - when the trade surplus was SGD6.303 billion.

Malaysia will provide February numbers for imports, exports and trade balance. Imports are expected to rise 6.8 percent on year, up from 2.3 percent in January. Exports are called higher by an annual 4.5 percent, accelerating from 1.5 percent in the previous month. The trade surplus is pegged at MYR18.30 billion, up from MYR18.20 billion.

Japan will see February results for its tertiary industry activity index; in the previous month, the index slipped 0.4 percent on month.

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EURO LITTLE CHANGED AFTER GERMAN PPI DATA

At 3:00 am ET, Destatis issued Germany's producer prices data for February.

After the data, the euro changed little against its major rivals.

As of 3:05 am ET, the euro was trading at 0.8749 against the pound, 0.9874 against the Swiss franc, 1.0666 against the U.S. dollar and 139.64 against the yen.

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AUSTRALIAN DOLLAR SLIDES AGAINST MAJORS

The Australian dollar weakened against other major currencies in the Asian session on Tuesday.

The Australian dollar fell to a 6-day low of 1.6018 against the euro, from yesterday's closing value of 1.5949.

The aussie dropped to 87.81 against the yen, from yesterday's closing value of 88.18.

Against the U.S. and the Canadian dollars, the aussie edged down to 0.6690 and 0.9153 from yesterday's closing quotes of 0.6715 and 0.9175, respectively.

If the aussie extends its downtrend, it is likely to find support around 1.62 against the euro, 86.00 against the yen, 0.64 against the greenback and 0.89 against the loonie.

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