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Polish Prime Minister Donald Tusk announced on Saturday that Poland will end its fuel price cap this summer, citing expectations of a de-escalation of the conflict involving Iran and price stabilization. In March, the Polish government announced a reduction in the fuel value-added tax (VAT) from 23% to 8%, lowered the excise tax to the lowest level in the EU, and began daily price caps on motor vehicle fuels. These measures have been extended every two weeks since their implementation. This Friday, Poland decided to extend the VAT exemption and price cap on gasoline and diesel until the end of June, but did not extend the excise tax exemption. Tusk stated, "Throughout the crisis, our fuel prices have been the cheapest in Europe, but we will end this measure this summer."On June 13th, Lei Jun, Chairman of Xiaomi Group, posted on Weibo that Xiaomi Auto highly values testing, investing heavily in its testing efforts. Currently, the entire testing team comprises over 800 people, more than 45% of whom are experts with over 10 years of experience. This team has completed over 35 million kilometers of testing in more than 300 cities. Xiaomi Auto has 126 laboratories in four cities: Beijing, Nanjing, Shanghai, and Wuhan, covering a total area of over 65,600 square meters. Additionally, it has rented two comprehensive vehicle testing grounds in Yancheng, Jiangsu, and Guangde, Anhui. There is also a dedicated team of approximately 500 people conducting extreme environment testing. They are divided into summer and winter testing teams, primarily responsible for testing in four extreme environments: Heihe (high-altitude and frigid), Turpan (high-temperature), Kunlun Mountains (high-altitude), and Hainan (high-humidity).Polish Prime Minister Tusk: Poland will end restrictions on fuel prices this summer.Pakistans Foreign Minister: Like the Swiss Foreign Minister, Pakistan hopes that the efforts of the United States and Iran will promote regional peace and stability.On June 13, European Central Bank Governing Council member and Bundesbank President Jean-Claude Nagel stated in an interview with German radio that even if the war with Iran ends quickly, prices may remain high for a longer period. Nagel said, "We may not even be able to return to the data levels we were based on before the conflict, because supply chains have clearly changed, and risk premiums may have increased." He was referring to the premiums that might be required for transporting goods through the Strait of Hormuz. Nagel stated, "I almost doubt we will ever return to the state before this regional conflict." The world "may continue to be affected by uncertainties and changes beyond the conflict." He indicated that interest rate hikes in the short term would make "refinancing" more expensive. "But in the long run, by clearly defining price stability as part of (economic health), we are making the greatest contribution to the economy."

EUR/USD recovers from low US inflation, EU energy plans, and trade talks

Daniel Rogers

Sep 14, 2022 11:44

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EUR/USD bids jumped to 0.9980 during Wednesday's Asian session due to US inflation-driven losses near the weekly low. In doing so, the main currency pair consolidates the greatest daily loss in the past two years prior to diplomatic efforts by the European Union (EU).

 

The US inflation data released on Tuesday revived concerns about the Federal Reserve's rapid rate hike and compounded recession fears. China and Russia-related geopolitical concerns are also acting as bearish factors for the EUR/USD. Despite this, the US Consumer Price Index (CPI) rose 8.3% year-over-year in August, above market estimates by 0.1%. In contrast, the monthly data increased to 0.1%, surpassing the -0.1% projected and the 0.0% seen in previous reports. The core CPI, or CPI excluding food and energy, also surpassed the 6.1% consensus and 5.9% prior to printing at 6.3% for the relevant month.

 

In contrast, Eurozone ZEW Economic Sentiment fell to -60.7 in September, compared to the expected -52 and the prior reading of -54.9. The sentiment indicator for Germany declined to -61.9, compared to market expectations of -60 and previous readings of 55.3. Following the announcement of the statistics on Tuesday, German Economy Minister Robert Habeck warned, "We face the potential of a recession next year." Similarly, the German economic outlook for the second half of the year has deteriorated dramatically, and second-half output may stagnate or decline.

 

Notable is the increase in hawkish Fed bets, with next week's 75 basis point (bps) rate hike looking increasingly plausible. At its meeting on September 21, there is a 25% chance that the US Federal Reserve (Fed) will announce a full 1% increase in the benchmark Fed rate.

 

After US inflation data, the inversion between short-term and long-term US Treasury bond yields deteriorated and exacerbated recession fears, which impacted on the EUR/USD due to the pair's reputation as a risk-barometer. However, following the announcement of the data, the yields on 10-year US Treasury notes increased to 3.412% and those on 2-year bonds increased to 3.76%, up from approximately 3.411% and 3.745%, respectively. In addition, following the release of the US CPI, US stocks saw their worst daily loss in over two years, which affected the pair.

 

Additionally, Sino-American tensions are exacerbated by US Vice President Joe Biden's efforts to highlight China's problems and the drive for better relations with China. In addition, market sentiment and the EUR/USD exchange rate were impacted by concerns that Russia could retaliate brutally after withdrawing from certain regions of Ukraine.

 

Recently, US President Joe Biden declared, "I am unconcerned by today's inflation figure," adding that the stock market is not always a reliable predictor of the strength of the economy. The cause may be tied to the greatest drop in US stocks in two years following the publication of US inflation data.

 

Ursula von der Leyen's plans for energy price capping and US Trade Representative Katherine Tai's visit to the European Union (EU) to see European Commission Vice President Valdis Dombrovskis will be vital to track for future developments. Prior to Thursday's US Retail Sales for the month of August and Friday's preliminary September Michigan Consumer Sentiment Index reading, the US Producer Price Index (PPI) will also be crucial.


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