Investing.com - Financial Markets Worldwide
🥇 First rule of investing? Know when to save! Up to 55% off InvestingPro before BLACK FRIDAYCLAIM SALE

German PPI’s Sharp Drop Lifts Peak-Rates Hopes

ByFxPro Financial Services Ltd
AuthorAlexander Kuptsikevich
Published 08/21/2023, 06:45 AM
Updated 03/21/2024, 07:45 AM
EUR/USD
-

The sharp fall in German producer prices is both a signal of easing inflationary pressures and a warning of a sharp slowdown in demand.

The German producer price index down 6% y/y


The German producer price index fell by 1.1% in July, dwarfing the expected correction of 0.1%. Prices are 6% lower than a year ago, marking the sharpest annual decline since 2009.

The data shows how quickly producers are cutting prices after the value of imports fell 11.4% y/y in June. This momentum raises hopes that inflation in Germany may not be as sticky as in other advanced economies, where rising service costs and a tight labour market are pushing up final prices.

Rapidly falling prices and weak business sentiment indicators have brought Germany's title ‘Sick man of Europe’ back into the spotlight, although such comparisons seem premature. Germany, which has often been resolute in its fight against inflation, may soften its stance.

In that case, the chances of further rate hikes by the ECB may diminish. Signs of a slowdown in the German economy, which is more exposed to China and Russia than other major eurozone economies, point in the same direction.

The German DAX40 is up 0.8% today, and the EuroStoxx50 is up over 1%, actively recovering from last week's losses. This is fuelled by positive traction in US index futures and hopes the ECB rate hike is nearing its peak.

DAX40 trying to recover on soft inflation data


Interestingly, the EURUSD is also rising, maintaining its positive correlation with equity market dynamics, temporarily having more weight on the market than the interest-rate differential perspective.

The FxPro Analyst Team

Latest comments

Loading next article…
Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.