It’s Friday!

Which means it’s time to add my espresso shots to a martini. 🍸

I’ll keep it short and sweet for you today.

Only have a minute? ⏱

400 Basis points later & inflation still on the rise in Germany 🤦🏻

Inflation rates in Germany were higher than expected in June. 👀

HICP was up 6.4% annually and 0.3% since last month. Both numbers higher than their consensus.

What are we chalking it up to this time? 🤷‍♀️

Last year in June, we saw reduced train fares in Germany. People were paying less to get where they needed to go.

Now that fares have returned to normal, commuters are paying more than they were last year which caused a blip in the inflation rate. 📈

Now what?

Until we see signs of stable decline in inflation in the EU, the ECB is going to continue their rate hikes. 400 basis points later and they’re still not finished. 😒

Like surprises? US economy just gave us one 👀

Well this certainly is not what we expected.

The revision for US GDP was supposed to stay the same at 1.3% but would you look at that? 👁👄👁

It increased to 2%.

What does this mean for the US economy? 🤷‍♀️

It just grew 0.1%.

Why?

The increase mainly came from exports and consumer spending. More businesses are expanding their markets overseas & Americans are spending more than they have in years. 💰

There's no question about it; the Fed isn't going to be relaxing on those rate hikes anytime soon. The everyday cost of living in the USA isn't about to get any cheaper.

Is Japan really better off than the rest of us? 🤔

Japan is singing a different song than Germany today with the inflation rate lower than expected. 🎤

The rate was expected to rise from 3.2% to 3.8% and instead dropped to 3.1% annually.

Prices for food and gas were down in June which made a big difference.

When you take those things out of the equation? 👀

Inflation rose 3.8% annually. Close to a 40-year peak.

Okay, maybe the song isn’t that much different.

This means that the drop was driven by those everyday essentials but underlying price pressures in Japan are still high. 👆🏼

Will reports like this be enough to drive the BoJ into changing things up?

Ueda says there was no plan to change direction anytime soon but how long will he be able to hold out? 🤷‍♀️

Trade Of The Day 📈

EURUSD

Monday News

HAPPY CANADA DAY! 🇨🇦

All banks in Canada are closed for the holiday but we’ve still got a couple things on the schedule.

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

• 02:30 — Swiss secrets to low inflation 🤫

  • Event: Switzerland: Consumer Price Index (YoY)(Jun) 

  • Major pairs to watch: USDCHF

• 10:00 — Is the USA on the brink of a recession? 🤯

  • Event: USA: ISM Manufacturing PMI(Jun) 

  • Major pairs to watch: EURUSD

Swiss secrets to low inflation 🤫

Switzerland is doing better than the rest of the world when it comes to inflation that’s for sure. 👀

The CPI release is tomorrow and inflation currently sits at 2.2%. We’ve seen a steady decline since February when inflation was 3.4%.

Although the consensus is unknown, the data for this year tells me that the rate probably won’t be increasing this month.

What exactly is keeping inflation at bay?

For one thing, healthcare costs take up 17% of the CPI - which puts Swiss citizens at an advantage as insurance companies are under immense pressure from the government to keep premiums low. 👇🏼

It doesn't stop there either.

With 60% of energy coming from hydropower plants, Switzerland escapes being impacted by rising prices for oil, gas and coal like other European countries are facing due to the Russian war on Ukraine. ⛽️

Add onto that the fact that many goods and services remain regulated in Switzerland, creating a market much more stable than elsewhere.

Steady regulation and smart investments mean that Swiss households can rest easy when it comes to keeping their costs down… at least for now! 🤷‍♀️

Is the USA on the brink of a recession? 🤯

After 7 months in a row of contraction in the US manufacturing sector, the PMI releasing Monday isn’t expected to show a change in that trend.

Another month of contraction on the books with a predicted score of 47.2. 😬

Expect EURUSD ↑

This is the longest manufacturing contraction stretch since the ‘Great Recession’ of 2008.

Wtf is going on? 🧐

New orders are down due to the Fed’s interest rate hikes.

With manufacturing accounting for 11.3% of the US economy, will this chain of contraction be enough to push the US economy into a recession later this year?

Some experts think so.

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