US Dollar Pulling Back Ahead Of Economic Reports
Washington (Dec 9) The dollar is losing ground against all of its major competitors Wednesday afternoon as the US data drought drags on. There were no US economic reports earlier this week and the only report released this morning was wholesale inventories, which is typically not market moving.
Investors are looking forward to the release of weekly jobless claims and import and export prices on Thursday. Retail sales, the producer price index, business inventories and consumer sentiment are all slated for Friday.
Amidst the US data drought so far this week, concerns about global economic growth have crept into the markets. Although investors are predicting the Federal Reserve will hike interest rates by 0.25 basis points to 0.50% at its meeting on December 15-16 , ongoing global worries appear to have led to assumption that it may adopt a very slow path of rate increases subsequently.
Reflecting decreases in inventories of both durable and non-durable goods, the Commerce Department released a report on Wednesday showing an unexpected drop in US wholesale inventories in the month of October.
The Commerce Department said wholesale inventories edged down by 0.1% in October after rising by a downwardly revised 0.2% in September. Economists had expected inventories to rise by 0.2% compared to the 0.5% increase originally reported for the previous month.
Market analysts' expectations regarding the outcome of the December 3 policy session of the European Central Bank were exaggerated, leading to disappointment, a member of the bank's rate-setting body said Wednesday.
"It was really a massive failure of market analysts," ECB Governing Council member Ewald Nowotny said in Vienna .
Nowotny, who head Austria's central bank, also said that there was the ECB's communication never gave a false signal and hence, there was no need to review the bank's communication policy. He also asserted that markets cannot pressure the ECB to act.
The dollar began Wednesday's session around USD1.09 against the Euro, but has since dropped to a 1-month low of USD1.1025 .
Germany's exports declined more-than-expected in October and imports logged its biggest fall since 2012, reflecting a weak start to the fourth quarter.
Exports fell 1.2% in October from September, when they advanced 2.6%, figures from Destatis revealed Wednesday. Shipments were expected to fall 0.6%.
Likewise, imports declined 3.4% in contrast to September's 3.8% increase. This was the biggest fall since April 2012 , when shipments slid 3.5%. Economists had forecast a 1% drop for October.
As imports dropped more than exports, the trade surplus rose to a seasonally adjusted EUR 20.8 billion in October from about EUR 19.2 billion a month ago.
Germany's labor costs growth moderated in the three months ended September, after remaining stable in the previous quarter, data from Destatis showed Wednesday. Labor costs per hour worked consisting of gross earnings and non-wage costs grew a calendar-adjusted 2.4% in the third quarter, but slower than the 3.0% steady rate of increase in the second quarter, which was revised down from 3.1%.
The buck has fallen to a 2-week low of USD1.5180 against the pound sterling, from around USD1.5010 this morning.
The UK economy is set to continue moderate growth, mostly driven by strong expansion in the service sector and consumer spending, the British Chambers of Commerce said in a report on Wednesday, as it trimmed the growth forecast, citing weak trade and manufacturing activity.
Gross domestic product is forecast to grow 2.4% this year instead of 2.6%, the business lobby said in its latest Economic Forecast. The projection for next year was lowered to 2.5% from 2.7%. For 2017, growth is projected to be 2.5% compared to previous forecast of 2.7%.
The greenback has slumped to a 1-month low of Y121.225 against the Japanese Yen, from around USD122.800 this morning.
Core machine orders in Japan surged 10.7% on month in October, the Cabinet Office said on Wednesday, to 903.8 billion yen . The headline figure blew away forecasts for a decline of 1.5% following the 7.5% jump in September.
The M2 money stock in Japan was up 3.3% on year in November, the Bank of Japan said on Wednesday, coming in at 915.3 trillion yen . The headline figure was shy of expectations for an increase of 3.5%, and it was down from the upwardly revised 3.7% jump in October.
Source: RTTnews
