Economic News

Signs of Disinflation Continue

Signs of Disinflation Continue

There are some promising signs on the inflation data which is released today for UK and Canada. UK producers lower the prices to 1.8%, which is the disinflation in the third consecutive month. Core CPI also showed to 0.4$ m/m which is also its third straight month on disinflation.

Canada’s producer prices also reduced -1.1% in June, first reduction since Aug 2021 and when it was on fast pace in May 2020. The annual rate peaking in April 2022 at 18.1% could be attributed to basing effects, it is good to see the m/m PPI prints trending their way into contraction. Expectation is lower PPI going forward. As producer prices are an input for consumer prices, it is a good news for consumers.

The ECB meeting tomorrow has some excitement over potential 50-bp hike. A hawkish hike need to be seen in order for them to really surprise the market, if they announce 50-75-bp in foreseeable future.

EUR/CAD remains in a strong trend down and it has retraced against that trend. A bearish pubar was formed yesterday . The high is in and prices can now head back to the 1.3000 lows. Should prices instead recycle higher, the near-term bullish bias is towards the 1.3390 resistance zone, at which we can consider shorts if the technical and fundamental align.