In today’s briefing:
- FX Watch: Everything that Matters for EUR/USD Is Natural Gas
- CPI Watch: A Decent Report but 2% Is FAR Away Still
- China and Hong Kong : Long Covid and the Dawn of “Malaise Economics”
- Comment On Exchange Rate EUR/USD
- EM BY EM #16 Counting coppers and rating cuts
- CX Daily: Chinese Banks Balk at Regulatory Support for Rate Cuts to Existing Mortgages
FX Watch: Everything that Matters for EUR/USD Is Natural Gas
- We have been trying to trade the EURUSD on the short side a few times over the past 1-2 months with mixed results.
- Our fundamental story has been proven right but we have struggled to make money trading the relative weakness in Europe compared to the US in FX space.
- The bet has paid off in various other proxies such as the US equity superiority but not in FX.
CPI Watch: A Decent Report but 2% Is FAR Away Still
- The CPI report has just been released, and it’s kind of a nothing burger on the headline indices with headline and core coming in at 3.2% vs 3.3% expected for headline and 4.7% vs 4.7% expected.
- As we have told you before, the increase in headline compared to last month was expected due to basis effects, while core continues the disinflationary trend.
- Both headline and core increase 0.2% MoM, which is close to the golden number, 0.17%, which compounded rounds to 2% annually.
China and Hong Kong : Long Covid and the Dawn of “Malaise Economics”
- When China lifted Covid controls in Dec. 2022 the world welcomed the move. However Covid infections continued right across the world.
- Covid, is here to stay, but the worse news is the after- effects of Covid, Long Covid (LC ), are only now being addressed as countries have stopped gathering infection statistcs.
- LC must impact economic performance as it affects millions of people of all ages, not by fatal infections, but by a series of debilitating symptoms with no cures for now.
Comment On Exchange Rate EUR/USD
- The EUR/USD exchange rate ended up moving upwards in June 2023 despite the various fluctuations occurring during the month.
- During the first ten trading days of the period under consideration, the pair was fluctuating along a narrow range, i.e. 1.07-1.08.
- From June 13th – 21st, the exchange rate increased significantly whereas in the following trading sessions, the pair faced some ups and downs, finally closing with a slight rise on monthly basis, i.e.compared to end of May.
EM BY EM #16 Counting coppers and rating cuts
- As we engage a pivotal juncture between DM rates approaching peak and China on the verge of descending into deflation, EM Macro is subject to converging pressures.
- It is essential to embrace the diversity in the EM space here.
- I have been advocating throughout the early spring that EM’s were ahead and would be the first rate-cutters in this cycle and the LatAm carry trade will likely take in water in the aftermath – while the rate cuts have largely aligned with my expectations (which preceded market pricing I might add), the punishment in foreign exchange has been harsher and quicker than I anticipated.
CX Daily: Chinese Banks Balk at Regulatory Support for Rate Cuts to Existing Mortgages
- Mortgages /In Depth: Chinese banks balk at regulatory support for rate cuts to existing mortgages
- Floods /: Beijing floods’ death toll rises to 33
- Wanda /Exclusive: Three Wanda executives under police investigation
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