CFD Markets News and Forecasts — 15-03-2019

U.S. job openings unexpectedly increase in January

The Job Openings and Labor Turnover Survey (JOLTS) published by the Labor Department on Friday showed a surprise increase in the U.S. job openings in January. 

According to the report, employers posted 7.581 million job openings in December, compared to the December figure of 7.479 million (revised from 7.335 million in original estimate) and economists’ expectations of 7.310 million. The job openings rate was 4.8 percent in January, up from 4.7 percent in the prior month. The report showed that the number of job openings was little changed for total private and increased for government (+59,000). Job openings increased in a number of industries, with the largest increases in wholesale trade (+91,000), real estate and rental and leasing (+60,000), and information (+42,000). The job openings level decreased in other services (-98,000), retail trade (-97,000), and arts, entertainment, and recreation (-40,000)

Meanwhile, the number of hires edged up to 5.801 million in January from 5.717 in December. The hiring rate was 3.9 percent, up from 3.8 percent in December. The hires level was little changed for total private and for government. The number of hires was little changed in all industries and all four regions. 

The separation rate in January was at 5.550 million or 3.7 percent, compared to 5.469 million or 3.6 percent in December. Within separations, the quits rate was 2.3 percent (flat m-o-m), and the layoffs rate was 1.1 percent (-0.1 pp m-o-m).

A report from the University of Michigan revealed the preliminary reading for the Reuters/Michigan index of consumer sentiment rose to 97.8 in early March. That was the highest reading since December 2018.

Economists had expected the index would increase to 95.3 this month from February’s final reading of 93.8.

The early March gains were attributable to rising income and lower inflation expectations as well as prospects for growth in the overall economy during the year ahead.

According to the report, the index of current U.S. economic conditions rose to 111.2 in March from 108.5 in the previous month. Meanwhile, the index of consumer expectations climbed to 97.8 this month from 93.8 in February.

U.S. industrial output increases less than expected in February

The Federal Reserve reported on Friday that the U.S. industrial production rose 0.1 percent m-o-m in February, following a revised 0.4 percent m-o-m decrease in January (originally a 0.6 percent m-o-m decline). 

Economists had forecast industrial production would rise 0.4 percent m-o-m in February. 

According to the report, manufacturing production reduced 0.4 percent m-o-m for its second consecutive monthly decline. Meanwhile, the index for utilities rose 3.7 percent m-o-m and the index for mining went up 0.3 percent m-o-m.

Capacity utilization for the industrial sector decreased 0.1 percentage point m-o-m in February to 78.2 percent. That was 0.2 percentage points below economists’ forecast and 1.6 percentage points below its long-run (1972–2018) average. 

In y-o-y terms, the industrial output rose 3.5 percent in February, following an unrevised 3.8 percent advance in the prior month. That marked the slowest rate of growth in industrial production recorded since June 2018.

U.S. stock-index flat on Thursday, as investors reacted positively to signs regarding trade talks between the U.S. and China, as well as the latest Brexit developments.

Global Stocks:

The report from the New York Federal Reserve showed on Friday that manufacturing activity in the New York region expanded in March at a slower pace than in February.

According to the survey, NY Fed Empire State manufacturing index stood at 3.70 this month compared to an unrevised 8.80 in February. That was the lowest reading since May 2017.

Economists had expected the index to come in at 10.

Anything below zero signals contraction.

The new orders index dropped five points to 3.0, indicating that orders grew at a slower pace than last month, while the shipments index decreased three points to 7.7, the lowest reading in more than two years. At the same time, the index for number of employees surged ten points to 13.8, pointing to an increase in employment levels, though the average workweek index turned negative for the first time since 2016. With regard to inflation, the prices paid index rose seven points to 34.1, indicating a pickup in input price increases, while the prices received index decreased five points to 18.1, suggesting that selling price increases slowed.

(company / ticker / price / change ($/%) / volume)

Amazon (AMZN) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; target $2100

AT&T (T) upgraded to Outperform from Mkt Perform at Raymond James; target $34

Statistics Canada released its Monthly Survey of Manufacturing, which showed that the Canadian manufacturing sales rose 1.0 percent m-o-m in January 2019 to CAD57.05 billion, following an unrevised 1.3 percent m-o-m drop in December 2018.

Economists had anticipated an increase of 0.4 percent m-o-m for January.

According to the survey, sales rose in 15 of 21 industries, representing 55.9 percent of total manufacturing sales. Higher sales in the food (+2.8 percent m-o-m) as well as the electrical equipment, appliance and component industries (+13.0 percent m-o-m) were the main contributors to the January advance. Partially offsetting these increases were a decline in production in the aerospace product and parts industry (-12.4 percent m-o-m) and lower sales in the paper manufacturing industry (-2.7 percent m-o-m).

Overall, sales of durable goods surged 1.1 percent m-o-m in January, while sales of non-durable goods rose 0.8 percent m-o-m.

• EU27 would agree to short technical extension if deal passes next week
• EU27 would widely oppose a short extension if no Brexit deal is passed
• If UK parliament rejects deal next without clear alternatives, a no-deal Brexit scenario would prevail
• No point in Brexit delay without clear plan

• PM will continue to work tirelessly to get a Brexit deal
• Businesses should also prepare for no deal
• Not aware of updated Brexit legal advice cited in media reports this morning

• Don't want to comment on it now

Bank of America Merrill Lynch said, investors ploughed $14.2 billion into global equity funds this week, the largest amount in a year as investors jumped on to 2019's stock market rally.

An index of global stocks is up more than 16% since the end of 2018 as falling market volatility and a renewed dovishness from global central banks, led by the U.S. Federal Reserve has boosted risk appetite across the board.

BAML said most of the inflows went into exchange traded funds while mutual funds saw net outflows. U.S. equity funds were the biggest beneficiaries with net inflows of $25.5 billion while emerging markets saw net outflows. European funds also saw $4.6 billion of outflows after the ECB slashed its growth forecasts.

According to the report from Istat, in February 2019 the Italian consumer price index for the whole nation (NIC) increased by 0.1% on monthly basis and by 1.0% with respect to February 2018, up from +0.9% in the previous month. The flash estimate was +1.1%.

The slight acceleration of the growth on annual basis of All items index was mainly due to prices of Unprocessed food (from +1.7% to +3.7%) and Tobacco (from +2.9% to +4.5%), and, to a lesser extent, of Processed food including alcohol (from zero variation to +0.5%) and of Non-regulated energy products (from +0.3% to +0.8%). The slowdown of prices of Services related to transport (from +2.2% to +0.9%) and the wider decrease of prices of Services related to communication (from -2.0% to -4.8%) mitigated the effect of these accelerations.

The core inflation excluding energy and unprocessed food was +0.4% (down from +0.5% in the previous month) and inflation excluding energy was +0.7% (in acceleration from +0.6%).

In February 2019, the Italian harmonized index of consumer prices (HICP) decreased by 0.3% compared with the previous month. The HICP increased by +1.1%, with respect to February 2018 (it was +0.9% in the previous month). The flash estimate was +1.2%.

Eurostat, the statistical office of the European Union, said, the euro area annual inflation rate was 1.5% in February 2019, up from 1.4% in January 2019. A year earlier, the rate was 1.1%. European Union annual inflation was 1.6% in February 2019, up from 1.5% in January 2019. A year earlier, the rate was 1.4%.

The lowest annual rates were registered in Ireland (0.7%), Greece, Croatia and Cyprus (all 0.8%). The highest annual rates were recorded in Romania (4.0%), Hungary (3.2%) and Latvia (2.8%).

Compared with January 2019, annual inflation fell in seven Member States, remained stable in one and rose in nineteen.

In February 2019, the highest contribution to the annual euro area inflation rate came from services (+0.61 percentage points, pp), followed by food, alcohol & tobacco (+0.44 pp), energy (+0.35 pp) and non-energy industrial goods (+0.09 pp).

According to the report from Istat, in January 2019 the seasonally adjusted turnover index increased by 3.1% compared to the previous month (+2.3% in domestic market and +4.5% in non-domestic market).

The seasonally adjusted industrial new orders index increased by 1.8% compared to December 2018 (-1.1% in domestic market and +6,0% in non-domestic market).

With respect to the same month of the previous year the calendar adjusted industrial turnover index increased by 0.6% (-0.1% in domestic market and +1.9% in non-domestic market). Calendar working days in January 2019 were 22 as in January 2018.

The unadjusted industrial new orders index decreased by 1.2% with respect to the same month of the previous year (-1.9% in domestic market and -0.2% in non-domestic market). The seasonally adjusted volume turnover index (only for the manufacturing sector) increased by 2.8% compared to the previous month.

• sees oil markets in modest surplus in Q1 2019 before flipping into deficit in Q2 by about 0.5 mln bpd

• non-OPEC oil output growth will slow from 2018’s record of 2.8 mln bpd to 1.8 mln bpd in 2019

• OPEC Feb production dropped by 240,000 bpd to 30.68 mln bpd on Venezuela, Saudi arabia and Iraq

• OPEC compliance with oil cuts was 94 pct in Feb; non-OPEC complying at 51 pct with Russia reducing output very gradually

• OECD commercial oil stocks rose 8.6 mln barrels in Jan to highest level since Nov 2017, Feb points to sharp drop

• degradation of Venezuelan power system, vital for oil output, is such that we cannot be sure whether fixes are durable

• in event of major loss of Venezuela oil supply, OPEC has about 2.8 mln bpd of effective spare capacity

ING discusses USD/JPY technical outlook and flags an indecisive picture in the near-term.

"The daily chart shows a consolidation above the EMA-200 line at 111.02, still not ruling out further gains within the longer-term uptrend, although limited. Next overhead resistance comes in between the March highs around 112.10 and the long-term falling trend line around 112.50. The momentum chart is deteriorating making the short-term outlook indecisive. A close below the EMA-200 line would suggest a short-term sell-off towards the underlying trend line and bottoming MA-50 line, both around 110.05. From here a new rally within the longer-term rising trend remains possible," ING notes.

China can use reserve requirements and interest rates to support economic growth, Premier Li Keqiang said.

Li's comments suggest Beijing is ready to roll out more forceful stimulus measures to ease strains on businesses and consumers. China has so far promised billions of dollars in tax cuts and infrastructure spending, as economic momentum is expected to cool further due to softer domestic demand and the trade war with the United States.

"Of course, we are faced with many uncertain factors this year. We have to prepare more and we have reserved policy room (to address uncertainties). Moreover, we can deploy quantity-based or price-based policy tools such as reserve requirements and interest rates. This is not monetary easing but to more effectively support the real economy." Li told.

Karen Jones, analyst at Commerzbank, suggests that the EUR/USD pair is likely to slip back to the low 1.1200 region as it appears to be baulking just ahead of the 55 and 100 day MA at 1.1366/68.

“We have our doubts that the market will at this juncture retest the 61.8% Fibonacci retracement of the 2017-18 advance at 1.1186 but Intraday Elliott wave counts remain negative There is now a considerable amount of resistance above the market extending up to the 200 day MA at 1.1486. Rallies will find initial resistance at 1.1366/68 the 55 and 100 day MA, which guard the 1.1420 end of February high and the 1.1425 downtrend. Below 1.1185/75 lies the 1.1110, the May 2017 low and the 1.0814/78.6% retracement.”

According to the report from Association of European Carmakers (ACEA), in February 2019, the EU passenger car market contracted by 1.0% compared to one year ago, despite some major EU markets showing a slight recovery. After a five-month decline, demand for new cars increased modestly in Germany (+2.7%), France (+2.1%) and the United Kingdom (+1.4%) last month. However, in Spain (-8.8%) and Italy (-2.4%) car registrations continued to decrease for the sixth consecutive month.

From January to February 2019, demand for new cars in the European Union fell by 2.9%. Some markets saw a strong drop compared to last year, most notably Spain (-8.4%) and Italy (-4.9%), but new passenger car registrations remained more or less stable in Germany (+0.6%), France (+0.5%) and the United Kingdom (-0.6%).

According to the National Bureau of Statistics, prices of new homes in mainland China grew at their slowest pace in 10 months in February.

Across 70 cities monitored by the government, prices edged up by 0.53 per cent last month, their slowest pace since April 2018 and down from 0.61 per cent in January. In annual terms, prices for new housing across 70 large cities rose 10.4 per cent. That marked the equal-quickest gain in 21 months.

The prices of new homes rose in 57 out of the 70 cities covered, down from 58 in January and 59 in December. In particular, 35 smaller cities categorised by the bureau as tier 3 towns reported a 0.4 per cent increase, slower than a 0.6 per cent increase a month earlier and the 0.7 per cent gain registered in tier 2 cities.

National Bureau of Statistics said, property sales by area declined by 3.6 per cent year on year across China, and by 2.8 per cent in value against a 12.2 per cent increase last year.

Federal Statistical Office (Destatis) said, the selling prices in wholesale trade increased by 1.6% in February 2019 from the corresponding month of the preceding year. In January 2019 and in December 2018 the annual rates of change had been +1.1% and +2.5%, respectively. From January 2019 to February 2019 the index rose by 0.3%.

In February 2019, the price increase in wholesalers of cereals, raw tobacco, seeds and animal feed products increased by 16.5% (-0.5% compared to January 2019).

The prices for fruit and vegetables and potatoes (+ 7.8%) also increased at an above-average rate compared with January 2018. In addition, the price increase of 2.8% for mineral oil products compared to the same month of the previous year contributed significantly to the overall development due to its high weight. In contrast, prices for waste and residual materials (-5.4%) and for computers, peripherals and software (-3.5%) at wholesale level were lower than in February 2018.

• Global slowdown affecting Japan's exports, production

• Overseas developments will affect Japan for some time

• Japan economy remains in moderate expansion

• Momentum towards achieving 2% inflation target is maintained

• There is a need to achieve 2% inflation target

• Not desirable for economy if only prices rise

• Also need to consider that easing policy could affect financial intermediation

• Need more time to see overall movement in wages

• Spring wage negotiations still ongoing, still too early to see the whole picture

EUR/USD

Resistance levels (open interest**, contracts)

$1.1453 (1780)

$1.1430 (1450)

$1.1403 (366)

Price at time of writing this review: $1.1317

Support levels (open interest**, contracts):

$1.1274 (3712)

$1.1234 (3168)

$1.1191 (2950)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date April, 5 is 72023 contracts (according to data from March, 14) with the maximum number of contracts with strike price $1,1500 (4626);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3403 (636)

$1.3373 (419)

$1.3342 (793)

Price at time of writing this review: $1.3239

Support levels (open interest**, contracts):

$1.3104 (1094)

$1.3074 (673)

$1.3048 (466)

Comments:

- Overall open interest on the CALL options with the expiration date April, 5 is 23687 contracts, with the maximum number of contracts with strike price $1,3400 (4369);

- Overall open interest on the PUT options with the expiration date April, 5 is 25510 contracts, with the maximum number of contracts with strike price $1,2500 (3618);

- The ratio of PUT/CALL was 1.08 versus 1.07 from the previous trading day according to data from March, 14

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.