News & Economic Updates:

Despite the central bank’s efforts to increase lending and loosen limits on property loans, China’s credit grew at a little slower pace than predicted in November at 2T yuan ($287 billion) vs. a forecast of 2.1T yuan.

U.S. inflation data came in below expectations at 7.1% y/y vs. 7.3% forecast

The Federal Reserve Open Market Committee raised the target interest rate range by 50 bps to 4.25% – 4.50% range as expected on Wednesday.

China’s COVID and property sector weakness caused disappointing business and consumer activities data (industrial output, fixed asset investment, retail sales) in November

China sees full-blown outbreaks of COVID cases in major cities like Beijing, just a few weeks after easing up on zero-COVID policies. According to public health officials, China is facing a COVID surge that could lead to around 800M people being infected in the next few months

On Thursday, four central banks from Europe raised interest rates:

• The European Central bank raised their key interest rate 50 bps to 2.00%
• The Bank of England bank raised their interest rate 50 bps to 3.50%
• The Swiss National Bank raised their interest rate 50 bps to 1.00%
• Norway’s central bank raised their benchmark rate 25 bps to 2.75%

Global flash business survey data for December was released on Friday, with most surveys showing contractionary conditions.

• U.S. Budget Deficit in November: -$249B vs. -$248B forecast
• U.S. CPI for November: +7.1% y/y vs. +7.3% y/y forecast; Core CPI +6.0% y/y vs. +6.1% y/y forecast
• U.S. Import Prices in November: -0.6% m/m vs. -0.4% m/m previous (-0.2% m/m forecast)
• he FOMC raised rates by 50 bps to 4.25% – 4.50% range as expected; Fed dot plot now sees “terminal rate” at 5.1% in 2023, no rate cut until 2024; Powell said that they have “some ways to go” on rates and it will take “substantially more evidence” to convince the Fed that inflation is on a sustained downward path
• U.S. Retail Sales for November: -0.6% m/m vs. 1.3% m/m in October
• U.S. weekly initial jobless claims fell by 20K to 211K vs. the previous week
• NY Manufacturing Index dropped to -11.2 in November vs. 4.5 previous
• U.S. Flash Manufacturing PMI in December: 46.2 vs. 47.7 previous
• The U.K. economy expanded by +0.5% m/m vs. a +0.4% m/m forecast in October
• U.K. Oct manufacturing production advanced 0.7% m/m after previous flat reading; industrial production was flat in Oct. vs. a projected 0.1% m/m dip
• U.K. jobless rate edges up from 3.6% to 3.7% in the three months to October
• U.K.’s real wages down by 2.7% (3m/3m) in October despite 6.1% wage increase
• On Tuesday, the Bank of England issued a warning regarding “considerable pressure” on consumers and companies as a result of rising inflation and borrowing prices.
• Germany Final CPI read for November: +10.0% y/y and -0.5% m/m
• Germany ZEW Economic Sentiment Index rose to -23.3 in December vs. -36.7 in November
• Euro area Industrial Production in October: -2.0% m/m; down by -1.9% m/m in the EU
• Flash Eurozone Manufacturing PMI for December: 47.8 vs. 47.1 in November
• Euro zone final CPI for November was revised higher to 10.1% y/y vs. 10.0% y/y prelim.
• Euro zone Trade Balance for October was a deficit of -€26.5B vs. -€36.4B previous
• The Swiss government expects an economic slowdown in 2023 to a below-average rate of 1.0%, but no recession.
• Swiss producer prices index dropped by 0.5% m/m in Nov. to 109.2
• Swiss central bank hikes interest rates by 50 basis points to 1.00% to counter a “further spread of inflation”
• Bank of Canada Governor Macklem said on Monday that he’d rather raise rates too much than too little
• Canada Manufacturing Sales in October: +2.8% m/m to $72.6B
• Canada Housing Starts in November dipped to 264,159 from 264,581 units in October (255K forecast) – CMHC
• New Zealand Visitor Arrivals for October: +6.8% m/m vs. +16.6% m/m previous
• According to data released on Wednesday by Statistics New Zealand, New Zealand’s current account deficit for the third quarter of 2022 was NZ$5.9B
• REINZ: New Zealand house prices fall -12.3% m/m  in November as interest rates bite
• New Zealand GDP was up by +2.0% q/q in Q3 (vs. +0.9% q/q expected, +1.9% uptick in Q2) as borders fully reopened
• Australia’s consumer inflation expectations moved lower from 6.0% to 5.2% in December – Melbourne Institute
• Australia’s unemployment rate remained at 3.4% in November as 64,000 new jobs added
• Australian flash manufacturing PMI down from 51.3 to 50.4 in Dec.
• Australian flash services PMI fell from 47.6 to 46.9 in Dec.
• Japanese Nov preliminary machine tool orders fell 7.8% y/y, following previous 5.5% drop
• Japan Producer Price Index for November: +9.3% y/y vs. 8.9% y/y forecast
• Japan Large Businesses Manufacturing Survey Index for Oct. – Dec. 2022: -3.6 vs. 1.7 previous
• Japanese Tankan manufacturing index down from 8 to 7 in Nov vs. consensus at 6; non-manufacturing index up from 14 to 19 in Nov

Source: forexfactory.com