Dollar Rising Against European Rivals As "Brexit" Concerns Mount
Frankfurt (Jun 14) The dollar is gaining ground against the Euro and the pound sterling Tuesday afternoon, as growing concerns over a potential "Brexit" continues to turn investors more risk averse. The Japanese Yen is continuing to benefit from the uncertainty, due to its safe have appeal.
Meanwhile, many investors remain on the sidelines ahead of tomorrow's announcement from the Federal Reserve . The Fed will wrap up its 2-day policy meeting on Wednesday and is widely expected to make no change with regard to interest rates. Investors will be paying close attention to the accompanying statement for any clues to when the central bank will hike rates again.
Investors were also confronted with the question of how today's retail sales report will impact the Fed's outlook. Retail sales in the US increased by more than expected in the month of May, according to a report released by the Commerce Department on Tuesday. The Commerce Department said retail sales climbed by 0.5% in May after surging up by 1.3% in April. Economists had expected sales to rise by 0.3%.
Reflecting another substantial increase in fuel prices, the Labor Department released a report on Tuesday showing that US import prices surged up by much more than expected in the month of May. The report said import prices jumped by 1.4% in May after climbing by an upwardly revised 0.7% in April.
Economists had expected import prices to rise by 0.8% compared to the 0.3% increase originally reported for the previous month.
The Labor Department said export prices also shot up by 1.1% in May following a 0.5% advance in April. Export prices had been expected to edge up by 0.2%.
Business inventories in the US saw a slight uptick in the month of April, the Commerce Department revealed in a report released on Tuesday. The report said business inventories inched up by 0.1% in April after rising by a downwardly revised 0.3% in March.
Economists had expected inventories to edge up by 0.2% compared to the 0.4% increase originally reported for the previous month.
The dollar climbed to over a 1-week high of USD1.1189 against the Euro Tuesday, but has since eased back to around USD1.1210 .
Eurozone industrial production recovered at a faster than expected pace in April, Eurostat showed Tuesday. Industrial production climbed 1.1% in April from March when it fell by revised 0.7%. Production was forecast to expand 0.8%. This was the first increase in three months.
Eurozone employment increased at a stable pace for the second straight quarter in the three months ended March, figures from Eurostat showed Tuesday. The number of employed persons grew 0.3% quarterly in the first quarter, the same rate of rise as in the previous two quarters.
Two ICM polls, one online and one conducted by telephone, showed on Monday that Britain appears poised to leave the EU with just over a week to go before referendum day.
The buck has extended its recent gains against the pound sterling Tuesday, rising to a 2-month high of USD1.4088 from around USD1.4650 a week ago.
UK inflation held steady at a very low level in May as a rise in transport costs largely offset the decline in clothing and footwear prices. Meanwhile, factory gate prices continued the decline that started in mid-2014.
Inflation came in at 0.3%, the same rate as in April, data from the Office for National Statistics showed Tuesday. The figure was forecast to rise to 0.4%.
British house price inflation eased for the first time in eight months in April, figures from the Office for National Statistics showed Tuesday. The house price index rose 8.2% year-over-year in April, slower than previous month's 8.5% hike.
The greenback slipped to a low of Y105.621 against the Japanese Yen Tuesday morning, but has since rebounded to around Y106.025 .
Japan's industrial production increased more than initially estimated in April, final data published by the Ministry of Economy, Trade and Industry showed Tuesday. Industrial production climbed 0.5% in April from March instead of 0.3% reported initially.
Source: KitcoNews
