Daily Brief – EU Inflation

EU Inflation

With the ECB annual symposium meeting in sunny Sintra, Portugal, inflation is very much on President Lagarde’s mind ; that is because it is showing signs of rising with the monthly inflation rate showing an increase of 0.3% and that presages a break above the target 2% rate just as she and her colleagues were congratulating themselves on having vanquished EU inflation. The hint that Lagarde will not be for further cuts was enough to convince the markets if they needed further convincing that EUR/USD is moving up further.

EUR/USD 1.1801.

Poland

A century ago Poland introduced the 38 hour working week and it looks as if later this month Poland may be about to lead the way once again with employment conditions. The plan is to trial an official 4 day week in Poland. The argument is that with improvements in technology, automation and what are coyly described as societal changes, productivity does not have to suffer. With one of the highest average number of working hours in the EU at 38.9 Poland has already demonstrated that it is working. To answer the unspoken question one of, if not almost the lowest, which is the Netherlands at 34.1, is surprisingly Germany at 33.9, so go figure. At the very top of the EU class is Greece with 39.8.

GBP/USD 1.3736.

Chinese Yuan

With the fixing set at 7.1534 versus USD yesterday, the Yuan is at its highest for more than 6 months having flirted with 7.35 earlier this year when the scale and depth of the US tariffs was unknown. Now that the vibes from the China-USA talks are positive and the Chinese economy seems to be showing signs of further growth where next for the Yuan? The answer is that with the USD under pressure due to concerns about the size and management of the US debt mountain, the US economy looking fragile and the apparent determination of POTUS and his Administration to manage down the Dollar, the Yuan looks as if it will strengthen further from the nearly 2% that it has appreciated in H1 2025. Add to that the fact that Central Banks are increasing their purchases of Gold and by definition reducing the proportion of USD that they hold and the case for the Yuan is further bolstered.

Gold $3364.

Quad

The unlikely Quad: USA, India, Australia and Japan is meeting right now and there is a packed agenda including: 1. US tariffs. 2. US reviewing the AUKUS submarine deal; 3. Australia and Japan being nice(r) to Korea and Taiwan. 4. US pressuring Japan to raise defence spending which they are reluctant to do. 5. The twin role of Marco Rubio as both Secretary of State and National Security Adviser and the consequences for the rest of the Quad. 6. India aligning itself closer to the USA despite India making it clear that they also want to be pals with Russia and Iran.

EUR/GBP 0.8591.

Strangers in the Night

This day in 1966 Frank Sinatra scored a UK Number One with his version of this song. Exactly 13 years later Sony launched the Sony Walkman the first portable audio cassette player which went on to sell 385 million machines in cassette, CD and digital file versions. Despite that commanding lead in the portable device market, they were still seen off by Apple.

Strangers in the night exchanging glances
Wondering in the night
What were the chances we’d be sharing love
Before the night was through

Something in your eyes was so inviting
Something in your smile was so exciting
Something in my heart
Told me I must have you

Strangers in the night
Two lonely people we were strangers in the night
Up to the moment
When we said our first hello
Little did we know
Love was just a glance away
A warm embracing dance away, and

Ever since that night we’ve been together
Lovers at first sight, in love forever
It turned out so right
For strangers in the night

Love was just a glance away
A warm embracing dance away

Ever since that night we’ve been together
Lovers at first sight, in love forever
It turned out so right
For strangers in the night

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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