After 'Black Monday', which caused significant declines in financial markets, the situation is slowly stabilising, although uncertainty still prevails. The Nasdaq 100 and Nikkei 225 indices recovered some of their earlier losses of 5.4 per cent and 13.3 per cent respectively. The panic in the markets was caused by fears of a recession in the US, the Fed's delayed response and the Bank of Japan's change in policy, which affected the strengthening of the yen and falls in Japanese stocks. The Fed faces a difficult choice between fighting inflation and preventing a recession, leading the market to expect interest rate cuts. Economic data such as the rise in unemployment and the decline in the ISM business climate index are cause for concern, but economic growth and still low unemployment claims suggest that the recession has not yet begun. An additional destabilising factor for the markets was the termination of the Carry Trade strategy due to the rise in interest rates in Japan. This forced funds to close losing positions, exacerbating the sell-off in markets. Despite the strengthening of the yen, real interest rates in Japan remain negative, which continues to support the strengthening US dollar. Warren Buffett, through his Berkshire Hathaway fund, has sold almost half of his stake in Apple, surprising many investors. Despite his previous praise for Apple, Buffett made the decision to sell because he felt the company's shares were overvalued - the price-to-earnings (P/E) ratio had risen from 12 to 32 since Buffett first bought the shares in 2016. Berkshire Hathaway's fund has raised a record amount of cash and short-term government bonds worth more than $270bn, which is expected to bring safe returns to the company. Buffett has also made other sales, including shares in Bank of America.
Table of contents:
- US producer price index (PPI) on a monthly basis (July)
- UK consumer price index (CPI) annualised (July)
- US consumer price index (CPI) annualised (July)
- Japan's gross domestic product (GDP) quarterly (Q2)
Tuesday, 13.08, 14:30 CET, US producer price index (PPI) on a monthly basis (July)
US producer prices rose by 2.6 per cent year-on-year in June this year. This was the highest increase since March 2023. The reading beat the upwardly revised 2.4 per cent increase in May and also exceeded market expectations of 2.3 per cent.
Analysts' forecast is for PPI inflation to remain at 2.6 per cent.
Source: Tradingeconomics.com
A higher-than-expected reading could be bullish for the USD, while a lower-than-expected reading could act bearishly on the USD.
Impact: EUR/USD, USD/PLN
Wednesday, 14.08, 8:00 CET, UK consumer price index (CPI) annualised (July)
Annual inflation in the UK remained at 2 per cent in June, in line with May, although 1.9 per cent was forecast. The rise in inflation was mainly driven by higher prices in restaurants, hotels and transport, where second-hand cars and airfares in particular became more expensive. On the other hand, the decline in inflation was driven by lower prices for clothing, footwear and food and non-alcoholic beverages. Housing and utilities prices continued to fall, while inflation in services and leisure remained stable.
The current analyst forecast is for CPI inflation to rise to 2.3 per cent.
Source: Tradingeconomics.com
A higher-than-expected reading could be bullish for GBP, while a lower-than-expected reading could act bearishly on GBP.
Impact: EUR/GBP, GBP/USD, GBP/PLN
Wednesday, 14.08, 14:30 CET, US consumer price index (CPI) annualised (July)
Annual inflation in the US fell for the third consecutive month in June to 3 per cent, the lowest level in a year. A reading of 3.3 per cent was recorded in May, and forecasts for June were for inflation of 3.1 per cent. Energy costs rose at a slower rate than in the previous month, with gasoline and heating oil the main contributors. Inflation also fell for accommodation and transport, new and used vehicles. In contrast, food price dynamics accelerated slightly. The monthly CPI unexpectedly fell by 0.1 per cent, the first decline since 2020.
The current analyst forecast is for US CPI inflation to fall to 2.9 per cent.
Source: Tradingeconomics.com
A higher-than-expected reading could be bullish for the USD, while a lower-than-expected reading could act bearishly on the USD.
Impact: EUR/USD, USD/PLN
Thursday, 15.08, 1:50 CET, Japan's gross domestic product (GDP) quarterly (Q2)
In the first quarter of this year, Japan's GDP fell by 0.5 per cent quarter-on-quarter, which was also a year-on-year decline of 0.2 per cent. This was the first decline in GDP since 2021, confirming that Japan's economy is not yet out of its generational stagnation. Private consumption fell for the fourth consecutive quarter, mainly due to the high cost of living, low wages and the earthquake.
Analysts' current forecast is for Japan's GDP to grow by 0.5 per cent quarter-on-quarter
Source: Tradingeconomics.com
A higher-than-expected reading could be bullish for the JPY, while a lower-than-expected reading could act bearishly on the JPY.
Impact: EUR/JPY, USD/JPY, Nikkei 225
Grzegorz Dróżdż, CAI MPW, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
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