US Inflation, damage to the global economy & PM Boris
According to The Economist, the trade war between the United States and China has already caused the global economy irreparable damage, disrupting the supply chain that had been creating for several decades. The point is that, there are a lot of Chinese companies have found the way of delivery of goods to the United States. For instance, across Vietnam. The scheme is very simple: the label “Made in Vietnam” is glued to Chinese goods and the goods are sold in the United States without the additional costs associated with duties. The downside of this was the destruction of the old logistics chains, and the creation of new ones, apart from the general riskiness, requires additional costs.
As proof of the damage, the information has been given as an example that the current business cycle is ending. Since the crisis in 2008, the world economy has gone through a very long period of recovery, and the business cycle usually enters a recession phase every decade. This assumption is confirmed by the data on exports from the developed countries, as well as exports from developed countries to other developed countries, which has fallen to its lowest level since 2009.
In general, it is worth preparing for the worst. In this regard, we recall that our recommendations are buying safe-haven assets.
It is worth noting yesterday's inflation data from the United States. Consumer inflation appeared below forecasts and reached the Fed target. This is quite an alarming signal for the dollar. Note, that the markets still believe that the Fed will leave the rate unchanged next week, but in a month in July, the US Central Bank will lower the rate by 0.25% (the current probability of this event is more than 80%).
Meanwhile, Boris Johnson has launched his campaign to get a post of Prime Minister. His main slogan is "Brexit at any price". This is an alarming signal for the pound, because "at any price" includes a no-deal Brexit. In this case, the consequences for the UK economy as a whole and the pound, in particular, could be unpredictable.
Our trading preferences for today are as follows: we will continue to look for points for the US dollar sales against the Japanese yen, as well as the euro, sales of oil and the Russian ruble, as well as buying of gold and sales of GBPUSD.
As proof of the damage, the information has been given as an example that the current business cycle is ending. Since the crisis in 2008, the world economy has gone through a very long period of recovery, and the business cycle usually enters a recession phase every decade. This assumption is confirmed by the data on exports from the developed countries, as well as exports from developed countries to other developed countries, which has fallen to its lowest level since 2009.
In general, it is worth preparing for the worst. In this regard, we recall that our recommendations are buying safe-haven assets.
It is worth noting yesterday's inflation data from the United States. Consumer inflation appeared below forecasts and reached the Fed target. This is quite an alarming signal for the dollar. Note, that the markets still believe that the Fed will leave the rate unchanged next week, but in a month in July, the US Central Bank will lower the rate by 0.25% (the current probability of this event is more than 80%).
Meanwhile, Boris Johnson has launched his campaign to get a post of Prime Minister. His main slogan is "Brexit at any price". This is an alarming signal for the pound, because "at any price" includes a no-deal Brexit. In this case, the consequences for the UK economy as a whole and the pound, in particular, could be unpredictable.
Our trading preferences for today are as follows: we will continue to look for points for the US dollar sales against the Japanese yen, as well as the euro, sales of oil and the Russian ruble, as well as buying of gold and sales of GBPUSD.
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