The liquidity in the financial markets was for a reason
national holidays lower, however, trading this week cannot be described as calm and uninteresting. Lower on Monday commercial activity on a global scale was caused by the Independence Day celebrations in USAto which on crown the market subsequently followed Public Holidays v CR. American dollar continued to strengthen against eurohaving strengthened by a significant roughly 3% to 1.015 this week USD/EUR. Common
European currency is thus the weakest in the last 20 let. Two reasons can be mentioned. The first is a much more proactive approach American Fed to the tightening of monetary policy, ECB on the other hand, it remains undecided. While Fed already fully prefers boj s inflation, ECB it still mentions possible negative impacts on the performance of economies and the financial situation of individuals of states. The second reason may be, at least according to the available leading indicators, higher resistance American
economyespecially then industrial sector. The current one has a stronger impact on the European one crisis associated with high energy prices and lack of parts. Concerns about whether after the end of the shutdown also resonated strongly this week of the Nord Stream 1 gas pipeline supplies will resume gas from Russia do
of Europe. Tendencies in market development interest rates however, they are similar on both
sides the Atlantic. While the short end of the yield curve is pushing upside concerns about the high inflationthe long one, on the other hand, is brought down by the ever-present threat recession. At the same time, it is also behind a strong sell-off on the stock markets. American index S&P
500 is down around 20% since the end of last year. However, in the last two weeks or so, the situation stabilized when there was a slight correction.
Czech crown remains near 24.75 CZK/EURwhere her CNB
keeps with its interventions. The first session of the new banking boardwhich, however, was not monetary-political, only brought information about the distribution of competences within the supervision of individual professional departments central banks. The new central bankers haven’t said much yet, exchange rates intervention according to current developments crowns however, they are likely to continue. Statistics released today show that Central Bank
have to make more and more efforts to koruna did not significantly weaken. The narrowing interest rate differential and negative global sentiment in the form of higher risk aversion do not play into her favor. In May CNB from their own foreign exchange reserves spent on defense crowns before the weakening of almost 3.5 billion EUR. In June, according to our estimate, it was even more, roughly 5 billion. EUR. For both mentioned months, this would be more than 5% of the volume foreign exchange reserveswhich the bank before the start
intervention she held We covered this topic more here https://bit.ly/3IlgJsu.
From a macroeconomic point of view Which the most important one this week was the one about the development of the European industry a American employment.
Month-on-month growth German industrial production it slowed significantly from 1.3% to 0.2% in May, slightly more than expected (consensus was 0.4%). The balance sheet ended up significantly below estimates foreign tradewhich for the first time in the last thirty let she reported deficit. On the contrary, factory orders were a positive surprise. Overall, there is development industrial production very volatile in recent months when it depends on the supply of production inputs. This is also confirmed by the domestic one industrial productionwhich thanks to a significant increase car manufacturing
it grew by 2.4% month-on-month in May (we wrote more about it here https://bit.ly/3yL4kec). In addition, the value of new orders increased by 5.4%. Weakening global demand, supply uncertainty energy and high prices will most likely have a negative effect on the manufacturing sector in the coming months. Relatively high however, the backlog and well-functioning supply chains could moderate this negative trend. Data z American labor market point to a still relatively fast growth rate employment. Number jobs in the non-agricultural sector there, it increased by 372 thousand in June, which was roughly the same as in May, but by about 100 thousand. more than expected. Tense labor market
so will support Fed in another brisk increasing interest rates.
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Author: Martin Gurtler
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