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.