Monday, 25 September, 2017

NZ dollar heading to a weekly 0.8% decline, eyes on US

US Dollar Looking Vulnerable Ahead of US Inflation and Retail Sales Data US Consumer Prices Unchanged In June Amid Falling Energy Prices
Juana Turner | 16 July, 2017, 00:39

The dollar's index against a basket of six major currencies was hovering at 95.58, just above its nine-month low of 95.47 plumbed at the end of June.

U.S. consumer prices were unchanged in June and retail sales fell for a second straight month, pointing to tame inflation and soft domestic demand that diminished prospects of a third interest rate increase from the Federal Reserve this year. Mining production shot up 1.6 per cent, adding to May's 1.9 per cent surge.

The US consumer price index increased 1.6 per cent, the smallest gain since October 2016, after rising 1.9 per cent in May, the Labour Department said. The CPI dropped 0.1 per cent in May and the lack of a rebound in June could trouble Fed officials who have largely viewed the recent moderation in price pressures as transitory.

"I would think the US CPI data on Friday could be more important". Markets' attention has been focused squarely on economic prints out of the USA economy of late, and as we discussed two weeks ago, this has done Dollar bulls very few favors as data continues to print below expectations.

With inflation still shy of the Fed's 2% target and retail spending dipping too, economists are now not quite so sure the Fed will raise rates in line with its prediction in the second half of the year.

But not everyone is convinced it's a good idea for the Fed to pull back on its tightening plans, if that's indeed how policymakers are going to react to this soft spot in the data.

Retail sales and CPI inflation are two of the most important pieces of U.S. data we get each month and both are due to be released shortly before the open on Wall Street.

US two-year yields slid as well, down at 1.343 percent, from 1.355 percent before the data's release. The 10-year German Bund ticked up nearly one basis point to yield 0.525 per cent.

The euro EUR= gained 0.64 percent to $1.468.

The greenback declined against the yen by 0.06 percent to 113.22 and still a bit far from reaching a four-month peak of 114.49 hit on Tuesday.

Meanwhile, Chicago Fed President Charles Evans, also a voting member of the rate-setting Federal Open Market Committee, will post his speech originally intended for Thursday at 1 p.m. MSCI's gauge of equity performance in 47 countries gained 0.65 per cent, and its world index rose 0.64 per cent. The 2 yr yield was at 1.35% before the data and is down 2 bps since.

Shares of JPMorgan, Citigroup and Wells Fargo, which have run up in recent weeks, were among the top five biggest drags on the S&P 500 as their earnings reports failed to excite investors.

A supply interruption in Nigeria boosted crude oil and prices posted a weekly gain of more than 4 percent on lower USA stockpiles.

Brent crude futures, the global benchmark for oil, settled up 49 cents at US$48.91 per barrel.

OIL: Benchmark U.S. crude gained 7 cents to $46.15 per barrel in electronic trading on New York Mercantile Exchange. Cor CPI inflation was 1.7%, same as in May.

Gas prices fell 2.8 percent in June, after a 6.4 percent fall in May.

The Retails Sales month-on-month reading is slightly misleading given it mostly oscillates within a range because a sharp increase or decrease in sales is not usually sustainable over a long period.

At the same time, retail sales unexpectedly fell by 0.2 percent last month, the Commerce Department reported.

Recommended

Bakayoko arrives in United Kingdom and posts Cobham picture ahead of Chelsea transfer Bakayoko arrives in United Kingdom  and posts Cobham picture ahead of Chelsea transfer He has been carrying an injury that may have held up a move away, but Chelsea's players are convinced Matic is on the brink of leaving.

House considers adding North Korea to Russian Federation sanctions bill House considers adding North Korea to Russian Federation  sanctions bill The House passed a standalone North Korea sanctions bill in May on a 419 - 1 vote, but the Senate has yet to take up the measure. Adding North Korea to the Russian Federation and Iran sanctions measure would ensure speedier Senate consideration.

Russian Federation vows to boot USA diplomats if compounds aren't reopened Russian Federation  vows to boot USA  diplomats if compounds aren't reopened President Donald Trump's son a year ago , Kremlin spokesman Dmitry Peskov said Wednesday. Moscow has had no contacts with Russian lawyer Natalia Veselnitskaya who met U.S.