Soft Chinese Data, A Downgraded French Credit Rating, Upcoming Monetary Policy Reviews, and a Japanese Holiday – Currency Thoughts
Soft Chinese Data, A Downgraded French Credit Rating, Upcoming Monetary Policy Reviews, and a Japanese Holiday
September 15, 2025
(174) Japanese markets were closed today in observance of Respect for the Aged Day, but China released August economic figures, which on the whole surprised to the downside.
- A 3.4% 12-month rate of rise in Chinese retail sales was the slowest in nine months and down from the 7.2% increase in 2024.
- Industrial production rose 5.2%, their smallest gain in 12 months.
- Fixed asset investment in January-August was a mere 0.5% above its year earlier level, down from a 3.2% in full-2024.
- China’s jobless rate edged 0.1 percentage point higher to a six-month peak of 5.3%.
- Property prices slid 0.3% on month and 2.5% on year. There hasn’t been a year-on-year rise since mid-2023.
With U.S.-Chinese trade talks underway in Madrid, China engineered a fresh tension, accusing Nvidia of an antitrust violation.
French President Macron wasted little time replacing the prime minister slot with a close ally, but further fallout emerged from last Monday’s vote of no confidence with the decision by the Fitch credit rating company to downgrade French government debt to A+ from AA-.
Markets are positioned for a virtually certain rate cut of 25-basis points most likely in the federal funds target this Wednesday. Updated forecasts and Chairman Powell’s press conference are eagerly awaited for clues to the timing of ensuing interest rate changes. The Bank of Canada’s key interest rate of 2.75% is also believed likely to get cut this week, but policy reviews in the U.K. and Japan are expected result in unchanged rates of 4.0% and 0.5%.
The U.S. dollar began this third week of September with a downtick, dropping overnight by 0.4% against sterling, 0.2% versus the euro, yen and Swiss franc, and 0.1% relative to the Australian, Canadian and New Zealand dollars.
Ten-year sovereign debt yields are down four basis points in Italy and Spain and two bps in Germany, France and the U.K. but unchanged in the United States. Prices for Bitcoin and oil drifted 0.3% lower, while oil edged 0.1% higher.
Most Asian and European stock exchanges show comparatively modest changes. Exceptions include the markets of Indonesia and France, which are up by 1.1% and 1.2%.
Wholesale price figures were released in India and Germany. The Indian WPI inflation rate rose 1.1 percentage point from an 82-month low in July to a 4-month high in August of 0.5%. The food and manufacturing components accelerated, while a 3.2% on-year drop in fuels was its most negative in nine months. As for Germany, where WPI inflation previously had imploded from 19.3% in September 2022 to -3.5% at end-2023, August’s reading of +0.7% was above zero percent for a ninth straight time.
Among other countries reporting price data today, the combined Swiss index of producer and import prices fell in August by 0.6% from the prior month and 1.8% from a year earlier. The on-year drop was twice as steep as in July and the most pronounced decline in ten months. Compared to August 2024, domestic producer prices dropped 1.3% , while import prices fell by 2.7%. Danish producer prices were 3.0% greater than a year earlier, their biggest rise in 13 months.
Croatian consumer price inflation in August matched July’s 4.1% 16-month high, and Bulgaria’s 5.3% rate of CPI inflation matched July’s 20-month peak. Finnish CPI inflation of 0.5% marked a 3-month high. Polish consumer prices were unchanged from July and 2.9% above a year earlier, constituting the lowest 12-month advance in 14 months.
New Zealand’s service sector purchasing managers index has been below its 50 neutral level since March 2024, including an eight-month low in august of 47.5.
Tariffs are taking a big bit out of the German trade surplus, which on a seasonally adjusted basis printed at EUR 5.3 billion after EUR 3.7 billion in June. The monthly surplus, by comparison, averaged 18.3 billion euros over the first five months of this year. Non-adjusted imports were 3.1% higher than in July 2024, versus a 0.4% rise in exports.
The State Bank of Pakistan’s policy interest rate was left unchanged at 11.0% as analysts had been expecting. Earlier this year, there had been percentage point cuts in both January and May, and 11.0% represents a halving of the 22% rate maintained from June 2023 until June of last year. Pakistani CPI inflation of 3.0% last month was below the central bank’s 5-7% target range, but officials feel it prudent to be caution and are worried about the inflationary fallout of historic flooding.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Chinese retail sales and industrial production, French credit rate downgrade, Indian WPI
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