Germany PMI Manufacturing dropped from 54.8 to 52.0 in June, below expectation of 54.0. That’s the lowest level in 23 months. PMI Services dropped from 55.0 to 52.4, below expectation of 54.5, a 5-month low. PMI Composite dropped from 53.7 to 51.3, a 6-month low.
Phil Smith, Economics Associate Director at S&P Global Market Intelligence said:
“June’s flash PMI data show that Germany’s economy has lost virtually all the momentum gained from the easing of virus related restrictions, with growth in the service sector cooling sharply for the second month in a row in June.
“But perhaps the biggest cause for concern is a broad-based decline in demand, with a deepening downturn in manufacturing new orders coinciding with a first fall in service sector new business for six months, as rising prices and elevated levels of uncertainty take a toll. Activity is still being supported to some extent by workloads built up earlier in the year, however.
“Price pressures remain historically elevated. However, there are signs that businesses might be finding it increasingly difficult to pass on higher costs to customers, with average prices charged for goods and services rising at the slowest rate for three months despite a quicker increase in input costs that the survey in part linked to rising wage pressures.
“Thanks to a particularly grim outlook for the manufacturing sector, business confidence towards future activity is now at its lowest since the first wave of the pandemic two years ago, and we’re seeing this translate into a broad-based slowdown in job creation as companies start to reassess their staffing needs going forward.”
Full release here.
GBP/CHF in downside acceleration as SNB halted intervention
Swiss Franc is trading as the strongest one for the month so far. It was boosted by SNB’s surprised 50bps rate hike earlier. Also, latest data showed that total level of the central bank’s sight deposits fell by CHF -3.37B to CHF 748.46B last week, the biggest drop since early 2012. That’s seen as a sign that SNB had halted interventions in stopping Franc’s appreciation.
GBP/CHF extended the down trend from 1.3070 and hit as low as 1.1716 so far. The break of the near term channel support is a sign of downside acceleration. But the biggest test lies in 100% projection of 1.3070 to 1.2134 from 1.2598 at 1.1662. Sustained break there could prompt even steeper selloff towards 1.1107 (2020 low). In any case, risk will stay heavily on the downside as long as 1.1969 support turned resistance holds.