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  • Before 54.6
  • Services PMI 56.3 vs. 57.2 expected
  • Before 57.6
  • Composite PMI 54.6 vs. 54.0 expected
  • Before 54.3

The German services sector continues to show great resilience, supporting economic activity even though manufacturing conditions improved slightly over the month. That said, there were signs that demand was starting to come under pressure from market uncertainty, rising prices and supply issues, with manufacturers reporting the biggest drop in new orders in nearly two years. .

Meanwhile, inflationary pressures remained elevated, although input cost and output price rates 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 according to 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 according to 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 slightly down from April’s records. S&P Global notes that:

“A post-lockdown recovery in services activity continues to provide a strong tailwind to the German economy, with May ‘flash’ PMI data signaling that output levels remain in growth territory.

“Even manufacturing performed slightly better in terms of production levels in May. However, goods producers are increasingly turning to backlogs to support production as new orders show a sustained decline, which bodes ill for the sector’s growth prospects if demand for goods continues to falter.

“Business confidence in the outlook remains subdued, with heightened uncertainty, sharp price increases and supply chain disruption all beginning to impact demand and posing risks to the outlook in the sector. of the production of particular goods.

“Although the survey gauges for business costs and output prices have fallen from record highs in April, they remained historically high and indicated acute inflationary pressures across the country. economy, with the high cost of transport, energy and raw materials in general continuing to work its way through supply chains.”


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