Chinese GDP and U.S. CPI Highlight Today’s Data Menu – Currency Thoughts
Chinese GDP and U.S. CPI Highlight Today’s Data Menu
July 15, 2025
A slew of Chinese economic data were reported earlier today, and now investors await U.S. June consumer price figures that are expected to reveal a further acceleration of both total and core inflation. The initial effect of higher tariffs may be clarified, and this release will play a guiding role in what the Fed officials decide at their next FOMC meeting at the end of July.
The dollar touched its highest level against the yen since late March overnight. The dollar currently is unchanged today against the euro but down 0.1% versus the Swiss franc, sterling and Canadian currency. Ten-year sovereign debt yields have settled back six basis points in Great Britain, France, Italy and Spain and by 5 bps in Germany, but the comparable U.S. and Japanese yields are respectively down a basis point and unchanged. The price of Bitcoin has fallen back 2.7% but is holding onto ground above $115k. Oil and gold prices are down 0.3% and up 0.2%. Share prices rose 1.6% in Hong Kong, 1.0% in Taiwan, 0.7% in Australia and 0.6% in Japan today but fell 0.4% in China. European share prices are little changed.
Chinese GDP in 2Q 2025 grew 1.1% on quarter and by a slightly greater-than-forecast 5.2% on year. Higher tariffs on exports to the United States were not discernible in the results, or perhaps effectively counter-balanced by Chinese government actions to stimulate demand. The 5.3% on-year rise of GDP in the year’s first half exceeded average growth in 2024 of 5.0%.
Among other Chinese data releases today,
- Retail sales growth of 4.8% year-on-year in June was lower than expected and down from 6.4% in May. Their 4.0% rise in the first half attests to continuing difficulty getting more consumer fire power into the economy even though the unemployment rate in June remained at May’s six-month low of 5.0%..
- Industrial production growth accelerated to a higher-than-forecast 6.8% year-on-year in June. That exceeded the average 6.0% increase in the first half and an average 5.8% increase in 2024.
- On year growth in fixed asset investment in the first half slowed to 2.8% from 4.2% in first quarter and 3.2% in full-2024.
- Capacity utilization dipped further last quarter to 74.0%, which was not much above the 4-year low of 73.6% in the initial quarter of 2024.
- A 3.2% on-year drop in house prices in June was the smallest decline in 14 months.
U.S. consumer price figures from June conformed to expectations for the most part. Total CPI was 0.3% higher than in May,the biggest monthly advance since January but resulting in an as-expected 2.7% 12-month rate of increase that exceeded 2.8% in May and was also its highest since January. The energy component (-0.8%) was its least negative since February, and services (+3.8%) was also at a 4-month high. Although higher than the 2.8% reading in March, April and May, core CPI inflation of 2.9% was not quite as high as the consensus of forecasters.
It has been confirmed that the search process for Fed Chairman Powell’s successor has begun even though Powell’s term has roughly ten months left. Today’s CPI figures are likely not low enough to elicit a decision to cut the 4.25-4.5% federal funds rate target range. Paradoxically, the heavy criticism of current Fed policy emanating from the Trump administration makes it harder for Fed officials to ease policy because doing so would damage the central bank’s credibility and expose the dollar to greater selling pressure.
Consumer price data for several other economies were also released today, including Canada where inflation rose to a 3-month high of 1.9% overall and a four-month high of 2.7% when excluding the volatile energy and food components. Canadian consumer price inflation peaked in June 2022, the same month that such peaked in the United States but at a full percentage point below the U.S. level then (8.1% versus 9.1%). The U.S. inflation premium versus Canada has subsequently narrowed only marginally.
Spanish CPI inflation in June of 2.3% was revised up 0.1 percentage point from its initial estimate but is well below the 2022 peak of 10.8%.
Polish consumer price inflation in June was left unrevised from the 2-month high 4.1% reported earlier. In Slovakia, consumer price inflation accelerated 0.2 percentage points to an 18-month high of 4.3%. Bulgarian CPI inflation of 4.4% is likewise at an 18-month high.
Investor sentiment regarding Germany, according to the monthly ZEW Institute figure, rose to a 41-month high of 52.7 in July from 47.5 in June and a 2025 low of -14.0 in April. Perceived current conditions were less negative than anticipated with a reading of -59.5 after -72.0 in June and -90.7 at the start of this year. Investors are excited about the new German government’s fiscal plans and perhaps too inclined to think that an EU/U.S. trade deal could be worked out in a way that would have greatly lowered tariffs.
The ZEW expectations index of investor sentiment toward the whole euro area improved to a 4-month high of 36.1, but the sub-index of inflation expectations was its least negative since April.
Same-store sales in the U.K. were 2.7% greater in June than a year earlier. That was greater than what analysts were anticipating.
President Trump announced a 17% planned tariff on Mexican tomatoes and threatened Russia with a 100% tariff if it fails to agree to a cease-fire with Ukraine within 50 days.
The Empire State manufacturing index compiled by the NY Fed improved to a five-month high this month.
U.S. share prices moved marginally higher in the first minutes following the opening bell.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Chinese GDP and unemployment, Chinese retail sales and industrial production, U.S. & Canadian CPI, ZEW expectations for Euroland and Germany
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