Core Insights - The dollar index (DXY) has risen by +0.63%, reaching a 1.5-week high, driven by signals from Fed Chair Powell indicating a less dovish stance than market expectations [1] - US new home sales in August surged by +20.5% month-over-month to 800,000, marking a 3.5-year high, contrary to expectations of a decline [2] - The euro is under pressure due to a decline in German business confidence, with the IFO business climate survey falling to a 4-month low [3][4] Group 1: Dollar Strength and Economic Indicators - The dollar's strength is supported by a 93% market expectation of a -25 basis point rate cut by the Fed at the upcoming FOMC meeting [3] - The unexpected jump in US new home sales to 800,000 contrasts sharply with the anticipated decline to 650,000, indicating robust housing market activity [2] - The euro's weakness is compounded by the German IFO business climate survey dropping -1.2 points to 87.7, below the expected increase to 89.4 [4] Group 2: Central Bank Divergence - The European Central Bank (ECB) is perceived to be nearing the end of its rate-cutting cycle, while the Fed is expected to implement two more rate cuts by year-end [4] - ECB Executive Board member Cipollone noted that inflation risks in the Eurozone are balanced, with a minimal chance of a rate cut at the upcoming ECB meeting [5] Group 3: Japanese Economic Activity - The USD/JPY exchange rate increased by +0.77%, with the yen falling to a 2.5-week low due to weak manufacturing activity in Japan, as indicated by a contraction in the S&P manufacturing PMI [6] - Japan's August machine tool orders were revised upward to +8.5% year-over-year, the largest increase in five months, suggesting some positive momentum in the manufacturing sector [7]

German business confidence unexpectedly dropped, highlighting the fragility of Chancellor Friedrich Merz’s plan to restore growth in Europe’s biggest economy https://t.co/3xHF8w9HUH ...

Business confidence in Peru is holding strong despite political uncertainty emanating from a potential field of more than two dozen presidential candidates next year https://t.co/xpjTgxXHnt ...

Business confidence rises despite tax hikes, Gen Z's shopping habits skew data and Germany's Bundesliga taps content creators -- get briefed ahead of your morning calls with The London Rush https://t.co/xdyfkMO9MN ...

Business Sentiment & Expectations - Companies report a flat and weak business situation [1] - Expectations are improving, anticipating increased government spending in the future [2] - Order intake and other indicators are not yet showing improvement [2] - Companies are increasing capacity in anticipation of government spending [4] Economic Challenges - German company insolvencies have reached the highest level since 2005 [3] - The housing and apartment sector remains weak [4] - GDP figures disappointed with a -0.0% [10] Trade Deal Assessment - The current trade deal is considered a humiliation for the EU, reflecting an imbalance of power [5] - The trade deal is worse than previous arrangements, posing a challenge to the German economy, estimated around 15% [6] - Companies do not fully trust the trade deal due to uncertainty and potential changes [7] Fiscal Stimulus & Reforms - A fiscal stimulus package targeting defense and infrastructure has been unveiled [8] - The stimulus is expected to have a positive impact next year [8] - The sustainability of the stimulus depends on complementary structural reforms [9][11] - Without structural reforms, the effects of government spending will be short-term and may lead to price increases [10][11]

Business Confidence - South African business confidence reached a four-month high [1] Risk Factors - Trump's tariffs pose a threat to reverse the gains in business confidence [1]

Sector Activity - Australia's services sector activity accelerated in June [1] Cost Inflation - Cost inflation in Australia's services sector softened [1] Business Confidence - Business confidence in Australia reached its highest level in more than three years [1]