Is the ECB losing their fight against inflation? 😳

PLUS: RBA turns up the heat 🥵

Just when you thought Monday couldn’t get any worse you wake up still hungover from Canada Day.

Oh. Just me? 😬

Only have a minute? ⏱

Key Takeaways:

  • Germany: As we expected, German consumers don't seem to be in a hurry to open their wallets anytime soon. 💰

    • Even though retail sales were up 0.4% from April to May, they fell 3.6% compared to May of last year.

  • EU: EU inflation is still on the rise - with June's HICP showing an acceleration to 5.5% from May's 6.1%.

  • Australia: Apparently, another 25 basis point hike is on the books tomorrow during the RBA interest rate decision - bringing the interest rate up to 4.35%.

    • Expect AUDUSD ↑

  • China: Let’s put China's services sector in the spotlight - the Caixin Services PMI is the go-to indicator for measuring its performance.

    • Experts don’t have a consensus for tomorrow but last month we saw a high score of 57.1 and we haven’t seen any contraction since last year.

    • Expect AUDUSD ↓

German consumers afraid to spend 😧

As we expected, German consumers don't seem to be in a hurry to open their wallets anytime soon. 💰

Even though retail sales were up 0.4% from April to May, they fell 3.6% compared to May of last year.

And experts don’t think it stops here.

The numbers are expected to drop again next month. 👇🏼

Why so pessimistic? 🧐

It boils down to two main things: lower-than-expected incomes and an uncertain future.

Incomes have been slipping, leaving people unable to spend as much as they would like.

On top of this, economic forecasts don't look promising either - making it near impossible to plan for the future with any degree of certainty. 🤷‍♀️

Is the ECB losing their fight against inflation? 😳

EU inflation is still on the rise - with June's HICP showing an acceleration to 5.5% from May's 6.1%.

Just missing the consensus of 5.6%.

Europe is still far from achieving its inflation target of 2%. 😬

On day two of the ECB forum this week, President Lagarde emphasized that they are committed to reaching their goal, no matter what it takes.

Markets have priced in a 89% probability for a 25 basis points rate hike to 3.75% in July - indicating that the ECB may not be too keen on pausing their rate cycle just yet. 😒

Although inflation continues to rise across Europe - thanks largely to food & alcohol prices - there is still a fight to get it under control. 🤺

Trade Of The Day 📈

EURUSD

June 30, 2023 - 08:00 AM EST

Tuesday News

Happy 4th of July! 🇺🇸

Remember kids, don’t play with fireworks. Let the adults who have been drinking all day set them off. 🧨

Here’s what you’re in for:
(All times in EST)

  • 00:30 — RBA turns up the heat 🥵

    • Event: RBA Interest Rate Decision & Statement

    • Major pairs to watch: AUDUSD

  • 21:45 — China’s service sector: A peek behind the curtain 👀

    • Event: China: Aixin Services PMI(Jun) 

    • Major pairs to watch: AUDUSD

RBA turns up the heat 🥵

Will the RBA hike the rates again? 👆🏼

Experts think so. Apparently, another 25 basis point hike is on the books - bringing the interest rate up to 4.35%.

Expect AUDUSD ↑

Why another increase? 🤷‍♀️

I know it’s hard to believe after inflation dipped from 6.8% to 5.6% in May but those numbers are still way too far from the 2% target.

Plus, with such strong employment growth last month, too many people have extra cash to spend which is never good for inflation. 😳

Which means there is more monetary policy tightening to come…potentially starting as soon as tomorrow. 👀

China’s service sector: A peek behind the curtain 👀

Let’s put China's services sector in the spotlight 🔦 - the Caixin Services PMI is the go-to indicator for measuring its performance.

Experts don’t have a consensus for tomorrow but last month we saw a high score of 57.1 and we haven’t seen any contraction since last year.

Expect AUDUSD ↓

Like other PMI scores we’ve talked about, a score below 50 shows contraction in the industry and above 50 shows expansion. 🔎

What makes up the score?

A survey is given to over 400 companies in China’s service sector.

There are 5 major components:

  1. New business - how many new customers are they bringing in? 🛍

  2. Business activity - how are they making processes for efficient? 🛠

  3. Employment - how many people are you hiring or firing? 👷🏽‍♀️

  4. Outstanding business - are you communicating well with your current customers? 📞

  5. Input prices - how much do you spend on raw materials? 🧱

Why does all this matter?

China is currently home to the world's second largest economy; its services sector performance can have significant repercussions on global trade and your win-rate. 🤑

Grow with Tradezie

Do you have a cool trading software to promote? Or maybe you represent a growing business in the Forex industry?

Expose your brand to over 1200+ traders who are always looking for an edge.

Technical Tip

Want your Fundamental tips all in one place? 👀

I know you do!

Check out this Fundamentals Cheat Sheet to help you keep everything organized.