Price Expectations in Germany Fall Again

Economic

Summary:

Ifo price expectations fell to 16.3 points in August from 17.6 points in July, mainly due to manufacturing and business-related service providers.

Fewer companies in Germany are looking to raise their prices. The ifo price expectations dropped to 16.3 points in August, down from 17.6 points* in July, mainly due to manufacturing and business-related service providers. By contrast, slightly more companies in consumer-related industries and construction than in the previous month are planning to raise their prices. “Overall, the inflation rate in the coming months is likely to remain below the two percent mark targeted by the European Central Bank (ECB),” says Timo Wollmershäuser, Head of Forecasts at ifo. “Energy in particular is significantly cheaper for consumers than it was a year ago.”

Wollmershäuser continues: “However, the price increase for all other goods and services, which is measured by the core inflation rate, is likely to remain largely unchanged for the time being at around 2.5%, and hence above the ECB’s inflation target.”

Price expectations for consumer-related service providers rose to 25.2 points, up from 20.0 in July. More price increases are to be expected, especially in the hospitality sector (37.6 points, up from 26.7* in July). By contrast, the share of tour operators planning price increases fell slightly (34.2 points, down from 35.4* in July). Price expectations also rose slightly in retail, to 25.3 points, up from 24.9 points* in July. Toy retailers (45.0 points, up from 32.7* in July) and DIY stores (36.3 points, up from 1.9* in July) in particular want to raise their prices more frequently. Among food retailers, price expectations declined somewhat to 49.9 points, down from 53.8* in July. Substantial price reductions are to be expected for bicycle dealers, with price expectations dropping to minus 50.3 points, down from minus 33.5 points* in July.

In construction, price expectations rose slightly to 3.3 points, up from 0.9 points* in July. Among business-related service providers (including wholesalers) and in manufacturing, however, fewer companies intend to raise their prices, with price expectations dropping to 18.9 and 5.0 points respectively, down from 20.4* and 7.1* in July.

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Forex

EUR/USD rally takes a breather

EUR/USD took a minor hit on Wednesday but as long as it stays above last Thursday's low at $1.1098, it remains on track to reach its July 2023 peak at $1.1275.

Below $1.1098, the $1.1047-40 area may offer potential support.

EUR/USD, GBP/USD Resume Their Ascents as EUR/GBP is Trying to Stabilize_1

EUR/GBP tries to find support

EUR/GBP's slip through the 55-day simple moving average (SMA) at £0.8469, now resistance, means that the cross is engaged in a downtrend with the June-to-July lows at £0.8398-to-£0.8378 being back in focus.

Short-term it may try to stabilize above Wednesday's £0.8411 low.

EUR/USD, GBP/USD Resume Their Ascents as EUR/GBP is Trying to Stabilize_2

GBP/USD remains bid

GBP/USD is still focused on the $1.3273-99 February 2022 low and March 2022 high with the July 2023 peak at $1.3143 acting as potential support.

Further minor support lies at the $1.3045 July high. EUR/USD, GBP/USD Resume Their Ascents as EUR/GBP is Trying to Stabilize_3

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Thomas

Stocks

Forex

Korean shares retreated more than 1 percent Thursday, led by chipmakers after an underwhelming earnings result by global artificial intelligence chip giant Nvidia. The local currency rose against the U.S. dollar.

The benchmark Korea Composite Stock Price Index slipped 27.55 points, or 1.02 percent, to close at 2,662.28.

Trade volume was moderate at 284.7 million shares worth 11.3 trillion won ($8.47 billion), with losers outnumbering winners 590 to 280.

Institutions and foreign investors sold a net 68.6 billion won worth of shares, while individuals bought a net 62.7 billion won.

Overnight in the United States, the Dow Jones Industrial Average fell 0.39 percent, with the S&P 500 losing 0.6 percent. The tech-heavy Nasdaq composite slipped 1.12 percent as well.

Wall Street lost ground as Nvidia's closely followed second-quarter earnings result failed to impress investors, despite having beaten market expectations.

Despite the market losses, observers advised investors to maintain a level-headed approach in reading market developments.

"What we need to focus on at this point is that although market expectations have risen significantly, the failure to meet these expectations does not indicate any damage to the earnings trend or the AI cycle," Han Ji-young, an analyst at Kiwoom Securities, said.

Kim added, "There is also the possibility that the market sentiment could improve depending on changing interpretations of the current situation among market players."

In Seoul, chip stocks took heavy beatings. Market heavyweight Samsung Electronics fell 3.14 percent to 74,000 won, and chip rival SK hynix plunged 5.35 percent to 169,700 won.

Bio shares also fell after gains in the past few sessions. Samsung Biologics shed 3.53 percent to close at 956,000 won, and Celltrion slipped 1.24 percent to 199,000 won.

In contrast, battery and energy shares advanced. Top battery maker LG Energy Solution surged 6.11 percent to 391,000 won, and leading refiner SK Innovation rose 1.03 percent to 107,900 won.

Source: Korea times

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Warren Takunda

Cryptocurrency

Market analysts are eying a potential Ether rally to $3,000, but it may only occur during the fourth quarter of 2024. How soon can Ether overcome the key $2,700 resistance?

Ether is setting up for a Q4 breakout above $3k

Ether price appears to be setting up for a price breakout above the $3,000 psychological mark, according to crypto analyst Poseidon, who wrote in an Aug. 28 X post:

“Followed the plan, and my longs filled sub $2500. The price tested daily demand, cleaned equal lows and reclaimed back above it. Still early to talk but everything is looking good to send it above $3k.”

ETH/USDT, 1-hour chart. Source: Poseidon

Other analysts are also expecting a breakout. However, Ether’s price rally may be delayed until the fourth quarter of 2024, according to market analyst Elja Boom.

The analyst wrote in an Aug. 28 X post: “ETH is still trading above EMA 50 support level. Price capitulation has happened. Now, the boring phase is going on where price keeps trading within a certain range. I'm still convinced of no breakout before Q4.”

ETH/USD, 1-month chart. Source: Eljaboom

The 50-day exponential moving average (EMA) is a technical indicator tracking the average price of a financial asset over the past 50 days, often used to determine local support.

In another bullish signal, Ether whales accumulated 200,000 Ether worth over $540 million in the four days leading up to Aug. 26, noted popular analyst Satoshi Sniper in an X post. $3K Ethereum Price Breakout Likely Delayed Until October_3

$3K Ethereum Price Breakout Likely Delayed Until October_3

Ethereum: Balance by holder value. Source: Satoshi Sniper

Can ETH price overcome key $2.7K resistance?

Ether holds significant resistance around $2,700, which will continue to be a challenge to overcome, according to Aurelie Barthere, principal research analyst at Nansen onchain analytics platform.

The analyst told Cointelegraph:“2.7k is the next resistance level for ETH, and there is not enough evidence that it is broken yet. Because price did not hold above this resistance for long enough and with enough volume.”

ETH/USD, 1-day chart. Source: Nansen

A hypothetical Ether rally above $2,700 would liquidate over $481 million worth of cumulative leveraged short positions across all exchanges, according to Coinglass data. $3K Ethereum Price Breakout Likely Delayed Until October_5

$3K Ethereum Price Breakout Likely Delayed Until October_5

ETH Exchange Liquidation Map. Source: Coinglass

On the other hands, Ether bears argue that a potential correction to $1,750 is possible, according to pseudonymous trader Mizuhara, who wrote in an Aug. 28 X post:“Either dead cat bounce here or $1,750 next. Short and Easy.”

ETH/USD, 1-day chart. Source: Mizuhara

A dead cat bounce is trader slang for a temporary price recovery of an asset after a significant correction, followed by more downside.

Source: Cointelegraph

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Pepperstone

Economic

Where We Stand –

The most important earnings release in the entire history of the world – at least if you believe the hype beforehand – saw NVDA deliver both top- and bottom-line beats, coupled with better-than-expected third quarter guidance, as well as promising news on the delivery of the new ‘Blackwell’ chip. While those at Nvidia earnings watch parties (bubble sign, perhaps!?) would’ve been pleased with the earnings slate, market participants appeared rather disappointed, with NVDA ending the after-hours session 7% softer, having failed to meet what, in hindsight, was an impossibly high bar that investors had set.

Naturally, given the manner in which NVDA remains central to the AI theme, and the stock’s chunky index weight in both the S&P and Nasdaq, both major benchmarks, as well as major equity indices across APAC, have seen some selling pressure since the earnings release. This pressure could well continue in the short-term, with conditions likely to be somewhat choppy as risks around the AI theme become increasingly two-sided. That said, any dips should continue to be viewed as buying opportunities, with economic growth resilient, earnings growth set for its best annual growth rate since the last quarter of 2021, and the ‘Fed put’ firmly back in place after Chair Powell’s Jackson Hole remarks last week.

Away from the equity space, it is the NZD that steals some attention, with the Kiwi having jumped around 0.75% overnight, testing the 63 figure to the upside. A 10-year high business confidence figure appears the catalyst for the flightless bird having finally found its wings, though should perhaps not be surprising given the fillip that a rate cut will naturally provide to both businesses, and consumers. It will be interesting to see if a similar reaction is seen, skewing US sentiment surveys, after the Fed cut in September. In any case, the NZD seems unlikely to sustain strength for any significant length of time, given the RBNZ’s status as one of the more dovish G10 central banks.

Elsewhere in the FX space, ‘more of the same’ is the general theme, as the greenback continues to unwind last week’s declines, though the bulls would prefer the DXY to reclaim the 101 figure to give this rebound some more legs. Both the GBP and the EUR continue to, slowly but surely, come back into touch with reality, dipping below the 1.32 figure, and testing the 1.11 handle, respectively.

Treasuries are quiet, across the curve, after yesterday’s 5-year supply was digested in a distinctly average manner, with a modest 0.3bp tail. Gold, by extension, has enjoyed a modest relief rally overnight, with solid buying interest found at the $2,500/oz mark.

Crude is also a touch firmer overnight, with front Brent and WTI coming into the day on the back of a 2-day losing streak. Yet again we see a classic ‘buy the rumour, sell the fact’ geopolitical trade in the crude complex, this time as a result of Libyan output being suspended, as participants reflect on how supply from the nation has always been incredibly choppy and unreliable. At risk of sounding like a broken record, a sustained pick-up in demand will be needed to unlock a prolonged rally in crude, though this seems elusive at present.

Look Ahead –

With NVDA earnings now out of the way, market observers have until next Friday to wait until the next major macro event risk, in the form of the August US employment report. With that in mind, and considering the looming Labor Day weekend stateside, conditions could perhaps become rather tepid, with liquidity thin and volumes a touch light.

In terms of the docket, the second estimate of US Q2 GDP is the highlight, though I use that word in its loosest sense, given expectations for the print to be unrevised, showing 2.8% growth on an annualised QoQ basis. The weekly US jobless claims figures might well attract more attention, particularly with the continuing claims print, seen a touch higher at 1.87mln, coinciding with the survey week for the aforementioned jobs report.

Elsewhere, 7-year supply is due from the US, while German CPI this afternoon may provide a useful leading indicator ahead of the eurozone-wide figure due tomorrow, albeit neither should deter the ECB from another 25bp cut at their September meeting in a couple of weeks. On that note, Governing Council members Lane and Nagel both speak today, though neither is likely to make any significant waves.

To stay updated on all economic events of today, please check out our Economic calendar

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FHFA

Data Interpretation

Economic

U.S. house prices rose 5.7 percent between the second quarter of 2023 and the second quarter of 2024, according to the Federal Housing Finance Agency (FHFA) House Price Index (FHFA HPI®). House prices were up 0.9 percent compared to the first quarter of 2024. FHFA’s seasonally adjusted monthly index for June was down 0.1 percent from May.

“U.S. house prices saw the third consecutive slowdown in quarterly growth,” said Dr. Anju Vajja, Deputy Director for FHFA’s Division of Research and Statistics. “The slower pace of appreciation as of June end was likely due to higher inventory of homes for sale and elevated mortgage rates.”

Significant Findings

Nationally, the U.S. housing market has experienced positive annual appreciation each quarter since the start of 2012.

House prices rose in 50 states and the District of Columbia between the second quarter of 2023 and the second quarter of 2024. The five states with the highest annual appreciation were 1) Vermont, 13.4 percent; 2) West Virginia, 12.3 percent; 3) Rhode Island, 10.1 percent; 4) Delaware, 10.0 percent; and 5) New Jersey, 9.9 percent.

House prices rose in 96 of the top 100 largest metropolitan areas over the last four quarters. The annual price increase was the greatest in Syracuse, NY at 14.2 percent. The metropolitan area that experienced the most significant price decline was Austin-Round Rock-Georgetown, TX at -3.2 percent.

All nine census divisions had positive house price changes year-over-year. The Middle Atlantic division recorded the strongest appreciation, posting a 8.5 percent increase from the second quarter of 2023 to the second quarter of 2024. The West South Central division recorded the smallest four-quarter appreciation, at 2.8 percent.

To stay updated on all economic events of today, please check out our Economic calendar

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Westpac

Central Bank

Economic

Key results (August 2024)

•Business confidence: 50.6 (Prev: 27.1)

•Expectations for own trading activity: 37.1 (Prev: 16.3)

•Activity vs same month one year ago: -23.1 (Prev: -24.3)

•Inflation expectations: 2.92% (Prev: 3.20%)

•Pricing intentions: 41.0 (Prev: 37.6)

Business confidence has lifted sharply in the wake of the Reserve Bank’s turnaround on monetary policy. The ANZ survey of business opinion saw general confidence rise from 27.1 to 50.6 in August, the highest reading in a decade. Firms’ expectations for their own activity, which tends to correspond more closely with GDP growth, rose from 16.3 to 37.1, the highest since 2017.

Firms’ confidence was up across a range of measures, including hiring and investment intentions and expected profits. And to remove any doubt about the source of this newfound optimism, expectations about the availability of credit rose to their second-highest since this question was added to the survey in 2009.

Many of the survey responses will have been received before the RBNZ cut the OCR at its 14 August Monetary Policy Statement. However, the change of tone in its July policy review laid the groundwork for this move.

We wouldn’t suggest that a single OCR cut could make this degree of difference to the economic outlook. Rather, we think this shows how downbeat firms had become earlier in the year. We had noticed a distinct souring in the mood amongst businesses at the prospect that interest rate cuts might be another year or so away, as the RBNZ had been signalling in its February and May forecasts. With the economy having already been effectively flat for the last year and a half, the prospect of having to “survive until ‘25” would have been daunting for many.

While the outlook may be looking brighter, businesses are still doing it tough right now. A net 23% said that their output was down on a year ago, only slightly better than the net 24% in July. A net 15% said that their staff levels were down on a year ago, compared to a net 20% last month.

The improvement in confidence also came with a note of caution on the inflation front. Firm’s expectations of general inflation fell further from 3.2% to 2.9%, the lowest reading since July 2021. However, their own pricing intentions ticked up slightly for a second month, and their expectations for wages and other costs held steady.

The RBNZ emphasised the recent weakness of high-frequency activity indicators in its decision to cut the OCR in August. And indeed there was a marked deterioration across a range of measures for the June month. However, the updates for July and beyond have generally improved since then. We don’t think this will derail further OCR cuts in the months ahead, but the lift in business confidence along with other measures should see the market scale back the odds of larger 50bp moves. NZ First Impressions: ANZ Business Confidence, August 2024_1

NZ First Impressions: ANZ Business Confidence, August 2024_1

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Price Expectations in Germany Fall Again

EUR/USD, GBP/USD Resume Their Ascents as EUR/GBP is Trying to Stabilize

EUR/USD rally takes a breather

EUR/GBP tries to find support

GBP/USD remains bid