The greenback quickly erased yesterday’s gains as traders bought the Swiss Franc following domestic inflation data. Additionally, the USD has been broadly lower today, losing against its major peers.
Swiss franc strengthens
Earlier today, the Swiss Consumer Price Index (CPI) increased by 0.7% in May, above the 0.3% MoM projection and 0.4% previously. As a result, the yearly change also rose to 2.9%, up from 2.5 % previously and 2.6% predicted.
The rising inflation cast doubt on statements made by Martin Schlegel, Vice Chairman of the Swiss National Bank (SNB). He claimed that while Switzerland’s inflation is low compared to other nations, it is not unimportant, according to Reuters. Also, per Reuters, SNB Chairman Thomas Jordan earlier stated, “We are headed towards an uncomfortable moment for monetary policy.”
According to Reuters, Switzerland’s economic growth might be less than initially projected, citing statements from the country’s government economist.
According to the expert, the economic deterioration is attributed to the increasing inflation and China lockdown threats.
These remarks came after Switzerland’s Q1 GDP increased by 0.5% quarter-on-quarter, compared to +0.4% projected and 0.2% in the previous quarter.
You may also read: Inflation in the euro area rose again in May
The US is facing its own problems
As the economy grapples with an unprecedented confluence of obstacles, including tighter monetary policy and Russia’s assault on Ukraine, Jamie Dimon advised investors to brace for an economic “hurricane.”
“That hurricane is right out there down the road coming our way,” the JPMorgan Chase & Co. chief executive officer said at a conference sponsored by AllianceBernstein Holdings Wednesday. “We don’t know if it’s a minor one or Superstorm Sandy. So you better brace yourself.”
Last month, JPMorgan analysts decreased their growth forecasts for the second half of 2022 to 2.4% from 3%, the first half of 2023 to 1.5% from 2.1%, and the second half of 2023 to 1% from 1.4%. Falling stock prices, rising mortgage rates, and a stronger currency against trade partners were listed as reasons.
Meanwhile, the President of the Federal Reserve Bank of St. Louis, James Bullard, expressed skepticism about the likelihood of a recession on Wednesday. Similarly, Richmond Fed President Thomas Barkin told Fox Business that the most recent statistics and executive actions did not indicate a recession.
The ADP employment report for May is anticipated later today, with a forecast of 300,000 new jobs, up from 247,000 in April. In addition, Thursday’s unemployment claims are on the schedule.
Last but not least, nonfarm productivity in the United States, as well as industrial orders, are on the agenda.
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