Dollar Falls As Weak US Retail Sales, Inflation Cool Fed Rate Hopes

Jay Anderson
July 15, 2017

USA retail sales disappointed, falling 0.2% in June, marking the second straight decline.

However, the core consumer price index (CPI) is forecast to have risen only 1.7 percent year-on-year in June after a similar gain in May.

In a separate report, the Commerce Department said retail sales fell 0.2 per cent last month, weighed down by declines in receipts at service stations, clothing stores and supermarkets.

Borkin said if the numbers show an "inching higher" from an underlying and core perspective the market will be happy to continue to price in hikes and keep the NZD supported but "if its weaker across the board, you'll see the kiwi follow suit", he said.

"I would think the US CPI data on Friday could be more important". It rose as high as $1.3088 after a closely watched survey of US consumer sentiment came in worse than forecast at 1400 GMT and was also half a percent higher at 87.63 pence per euro.

The dollar index a measure of the USA currency against a basket of six trade-weighted peers ended lower at 94.90 as against 95.78 previously.

Fed policymakers have lifted their benchmark short-term rate four times in the past 18 months. Overall retail sales fell 0.2 per cent for the month to US$473.5 billion (S$651.7 billion), a surprise to analysts who had forecast a 0.1 per cent rise. Waiting too long to remove accommodation could eventually require the Fed to raise rates too rapidly and risk pushing the economy into recession.

The dollar pulled up 0.1 percent to 113.4 yen early on Friday, narrowing losses for the week to 0.4 percent. The Dow futures dropped 5 points or 0.02%, the S&P 500 futures were unchanged, while the Nasdaq 100 futures rose 13 points, or 0.23%. The consumer sentiment index is expected to edge down to 95.0 in July falling to 95.1 in June. It earlier fell to 2.279 percent, its lowest since June 30.

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Janet Yellen told USA lawmakers anxious about the health of the economy past year that expansions do not die of old age.

USA 10-year yield fell to 2.303 percent, from 2.348 percent late on Thursday.

"Yellen has indicated after the June policy meeting, in the clearest way as possible by her standards, that she plans to start balance sheet reduction and there will be one more rate hike this year".

Spot gold gained 0.96 pct at $1,228.61 per ounce by 3:01 p.m. EDT (1901 GMT) after hitting $1,232.76.

The euro gained 0.64 per cent to US$1.468 (RM6.28).

Brent crude futures, the global benchmark for oil, settled up 49 cents, or 1.01 percent, at $48.91 per barrel.U.S. The contract finished the week up 1.5 percent, its first gain in six weeks. It was at $1.145 Friday.

Property firm Derwent London DLN.L was among top European gainers, up 3.4 percent after Exane BNP Paribas raised the stock to an "outperform" rating, citing the firm's "defensive" rents and strong pipeline.

USA crude futures rose 1.8 per cent to $45.83 per barrel, extending their recovery from Monday's near two-week low of $43.65.

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