GERMAN DATA: Weekly Index Suggests Continued Economic Expansion In Mid-Q2
The Bundesbank weekly activity index for the week of May 27 - June 2 came in at -0.1 (vs 0.0 prior, unrevised) and implies a quarterly GDP growth rate for Germany of +0.2% in the 13 weeks up to June 2 (on a rolling, 13 week/13 week basis).
- After initially printing at low levels recently, the index has been consistently upwardly revised in subsequent releases, and now suggests activity expanded in mid-Q2 - a markedly brighter picture than the sharp contraction indicated about a month ago.
- The WAI fluctuates around its long-term mean of 0. Positive values indicate above-average growth in real economic activity, while negative values signal a below average increase or a decline in economic output.
- The index takes into account data on electricity consumption, truck mileage, flight activity, foot traffic, air pollution, credit card payments, as well as German google searches for "unemployment", "short-time work", and "state support".
- The index is volatile and individual weekly readings should not be taken too seriously in isolation - though given the recent strength in incoming German economic activity data (see our German Macro Signal publication out last week), we are watching closely for confirmation of stronger growth going forward.
MNI, Bundesbank
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AUSSIE 10-YEAR TECHS: (M4) Trend Needle Continues To Point South
- RES 3: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.110 - High Dec 28 and the bull trigger
- RES 1: 95.800 - High Apr 19
- PRICE: 95.595 @ 16:01 BST May 03
- SUP 1: 95.235 - 76.4% retracement of the Nov - Dec ‘23 rally
- SUP 2: 94.965 - Low Oct 31 ‘23
- SUP 3: 94.866 - 2.618 proj of the Dec 28 - Jan 19 - Feb 2 price swing
A bearish cycle in Aussie 10yr futures remains in play and the latest extension reinforces current conditions. A continuation would signal scope for a move towards 95.235, a Fibonacci retracement point on the continuation chart. Key short-term resistance has been defined at 95.800, the Apr 19 high. A break would highlight a possible reversal and signal scope for a climb towards 96.110, the Dec 28 high.
US OUTLOOK/OPINION: GS Continue To Expect Two Fed Cuts This Year
- Writing on today's payrolls report, Goldman Sachs note that “Job growth remained rapid in the healthcare industry but slowed sharply across leisure and government, raising the possibility that rehiring in those two sectors has mostly run its course.”
- “The household survey was soft, with the unemployment rate increasing 0.1pp to 3.9%, driven by a 25k increase in household employment.”
- “Our estimate of the underlying pace of job growth based on the payroll and household surveys now stands at 189k, though we estimate that counting immigration fully would boost this by 20k.”
- “Our Q1 wage tracker stands at +4.5% on a quarterly annualized basis and +4.3% on a year-over-year basis.”
- “We continue to expect two rate cuts this year, in July and November.”
USDCAD TECHS: Support At The 50-Day EMA Remains Intact
- RES 4: 1.3977 High Oct 13 ‘23 and a key M/T resistance
- RES 3: 1.3899 High Nov 1 and a key resistance
- RES 2: 1.3846/55 High Apr 16 and the bull trigger / High Nov 10 2023
- RES 1: 1.3785 High Apr 30
- PRICE: 1.3687 @ 16:21 BST May 3
- SUP 1: 1.3622 50-day EMA
- SUP 2: 1.3610 Low May 3
- SUP 3: 1.3547 Low Apr 9
- SUP 4: 1.3478 Low Apr 4
Despite the latest pullback in USDCAD, a bullish trend condition remains intact for now and the move lower appears to be a correction. The pair has recently cleared 1.3614, the Mar 19, 22, 25 and 29 highs, strengthening a bullish theme. Note too, that moving average studies are in a bull-mode position. Key support to watch is 1.3622, 50-day EMA. This average has today been pierced, but remains intact as a support.
