Germany Flash September manufacturing PMI 48.3 vs. 48.3 expected

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  • Before 49.1
  • Services PMI 45.4 vs. 47.2 expected
  • Before 47.7
  • Composite PMI 45.9 vs. 46.0 expected
  • Before 46.9

The German economy slips deeper into contraction territory at the end of the third quarter, with services and composite readings at 28-month lows, while the manufacturing reading is at a 27-month low. A recession is looming ahead of the winter months and the outlook remains rather bleak, which will not help Euro sentiment. S&P Global notes that:

“The German economy looks set to contract in the third quarter, and with the PMI showing that the slowdown accelerated in September and the survey’s forward-looking indicators also deteriorated, the outlook for the fourth quarter does not are not good either.

“The growing decline in business activity in September was led by the services sector, which saw demand weaken rapidly as customers cut back on spending due to tighter budgets and heightened uncertainty over services. prospects.

“While the constraints on manufacturing output from material shortages appeared to have eased somewhat, leading to a less pronounced decline in production levels in September, both goods producers and their service sector counterparts nonetheless became increasingly more concerned about activity in the coming months, with the energy crisis fueling the recession.

“Just when it felt like underlying inflation

Inflation

Inflation is defined as a quantitative measure of the rate at which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general price level where a given currency is effectively buying less than it has in previous periods. In terms of valuation of strength or currencies, and by extension foreign currencies, inflation or its measures are extremely influential. Inflation stems from the global creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply relative to the wealth produced (measured with GDP). This thus generates demand pressure on a supply that is not increasing at the same rate. The consumer price index then increases, generating inflation. How Does Inflation Affect Forex? The level of inflation has a direct impact on the exchange rate between two currencies on several levels. This includes purchasing power parity, which attempts to compare the different purchasing power of each country based on the general level of prices. By doing so, it helps to determine the country with the most expensive cost of living. The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates in the forex market. Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on the exchange. Conversely, too low inflation (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the foreign exchange market.

Inflation is defined as a quantitative measure of the rate at which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general price level where a given currency is effectively buying less than it has in previous periods. In terms of valuation of strength or currencies, and by extension foreign currencies, inflation or its measures are extremely influential. Inflation stems from the global creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply relative to the wealth produced (measured with GDP). This thus generates demand pressure on a supply that is not increasing at the same rate. The consumer price index then increases, generating inflation. How Does Inflation Affect Forex? The level of inflation has a direct impact on the exchange rate between two currencies on several levels. This includes purchasing power parity, which attempts to compare the different purchasing power of each country based on the general level of prices. By doing so, it helps to determine the country with the most expensive cost of living. The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates in the forex market. Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on the exchange. Conversely, too low inflation (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the foreign exchange market.
Read this term Pressures may ease, a further spike in energy prices has seen business input costs rise at a faster pace for the first time in five months, in turn leading to a further acceleration in average prices charged for goods and services.

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